FAR 1.75% 5.8¢ far limited

Why top analysts are gushing about FAR

  1. 1,100 Posts.
    Not sure if this has been posted before but its a gread read.


    Why top analysts are gushing about oil explorer FAR Limited

    This junior is about to drill two wells which could send its share price soaring by up to 800%, say brokers

    Shares in FAR Ltd, the junior ASX-listed oil explorer, could jump from their current level of 4.5c to as much as 35c thanks to two potentially lucrative wells the company is about to drill, according to two prominent London broking firms.

    Their forecasts are based on the immense potential of the wells which will start being drilled next month in the oil exploration hot spot of Senegal.

    FAR has close to $30 million cash in the bank. But it won’t need to spend any of this to take full advantage of these exploration opportunities because all the costs of the wells are being paid by global petroleum giants ConocoPhillips and Cairn Energy.

    FAR also has farm-out agreements covering wells set to be drilled early next year in Kenya.

    Broker GMP Securities has valued the blue sky in FAR upwards of 35c, describing the company in its latest research note as “the best-funded small-cap explorer in our coverage universe ahead of two fully-carried, high-impact exploration wells”.

    “Both relative to peers and in an absolute sense, FAR is in a very strong position ahead of its high-impact exploration drilling in Senegal,” said Tao Ly, GMP’s Head of Oil & Gas Research (Europe).

    “The two wells offer blue-sky upside of 35c a share.”

    GMP’s view is supported by another London broker, RFC Ambrian, which said it believes FAR shares are worth more than double their current price.

    Jonathon Williams, RFC Ambrian oil analyst and commentator, said FAR is currently worth 9.8 cents a share and potentially a lot more if the two imminent offshore oil exploration wells come in.

    Last year FAR farmed out interests in two offshore exploration permits in Senegal in West Africa.

    ConocoPhillips of the US and Cairn Energy of the UK bought into the permits, leaving FAR with more than $30 million in cash in the bank and a free-carried interest through the two wells up to a maximum cost of $190 million, leaving Far with a 15 per cent working interest in the permits.

    In his latest research note, Jon Williams said: “The first Senegalese well will test a 900 million barrel (MMbbl) prospect. The second well will test a ~400MMbbl prospect.

    “The first of these two Senegalese wells should spud in the next month. We reiterate our Speculative Buy rating on the stock and fair value estimate of A¢9.8/share.”

    In a separate commentary issued to RFC Ambrian clients, Mr Williams went further. “Our analyst, Stuart Amor, met with FAR’s managing director Cath Norman recently and he remains very enthusiastic about its projects. In fact, he tells me that it is one of the most exciting stories out there right now, so take note.

    But the FAR story is not restricted to Senegal and Kenya. It also holds exploration acreage in Guinea Bissau to the south of Senegal.

    RFC Ambrian likes what it sees in Guinea Bissau.

    Jon Williams noted: “FAR is also planning an exploration well for late 2014 in Guinea-Bissau, which I find interesting.”
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