Once or twice a year I like to take a look at shares I own , give them a bit of a stress test so to speak, like to bring out a long-term chart which is very good at seeing where we've been and can then match it up with what's happened in the period that created the chart in first place...
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IMO this a remarkable chart for a Company with no income, over that timeframe in that sector , it not only survived the biggest upheaval in the sector for decades but continued to not only appraise SNE but make two more discoveries , line up an AMI, take on COP and steal the most prospective target in Gambia ( or anywhere for that matter) and organise a 2 for 1 Farm out..amongst other things.
Some would say hang on Whisky the share price is still only 8.4c, get a grip on yourself man and change your drink to water...I say well that's a fair observation but doesn't give us the true picture and what impact it is likely further down the track..the MC is the value placed on a Company and at $450M is not small, the shareprice is just a division of that..
The chart is a five year one and I use it for FAR because it covers the period leading up to our first discoveries onwards, without those discoveries I'm not sure we would have a five year chart from 2013...
So what's happened between X on the chart and Y, where we are now, some of which is mentioned above...its worth refreshing occasionally.
1: The shareprice has increased by around 100% and the MC around 300 %, dilution created the disparity...
2: The oil price was around the $80-100 barrel range, went down to around $30 and is now back around $70..no direct influence as we don't produce but certainly had a large affect on sentiment in the sector... the biggest effect on FAR was having to raise at low shareprices however counterbalanced to some extend by slashed drilling costs, which meant less had to be raised..the longer term net effect of that should be positive for FAR IMO as the project goes on for years..
3: We raised a considerable amount of over subscribed cash in a very tough market..it simply had to be done and was.
4: As a result of #3 we now have more that twice the number of shares on offer.
5: Successfully appraised SNE and made two new discoveries , making four in total and not a duster in sight..almostbunheard of..
6: Increased our resources considerably...this is where the longer term value will come from.
7: Signed an AMI with CNOOC
7: Aquired an option over DJ which is now in limbo and will be untill the Govt. Produces its new Petroleum code at the very least.
8: Taken COP to arbitration with considerable potential upside for FAR but no guarantee.
9: Aquired the highly prospective Gambian leases with a large pre drill estimate and a superb pedigree...potentially a huge game changer for FAR but again with no guarantee.
10: Have now farmed out Gambia with Petrosen for what is essentially a free carry , initial operatorship and a 40% WI.
11. Increased the WI and extended the drilling period for the GB lease.
12: Stengthed the team and the register.
13: Entered the ASX 300.
14: Pissed off WPL, COP , any number of non holders and created hair loss and sphynter issues among many holders..
15: Done all the above and still remain debt free with cash on hand untill FID.
16: Plenty of challenges remain , none that cant be overcome..
What does all that mean?...well under trying circumstances we have held our ground very well IMO, while increasing our resources, hence future prospects considerably and you really can't ask much more from a Company with no income and playing with large operators in the riskiest and most expensive form of drilling around...off shore in deep water...the fact all our Major holders have continued to support Management and maintain or increase their holdings tells you as much as anything...
Conclusion : FAR has once again passed my stress test which means their assets hold more value than the MC in any circumstances that I can foresee and probably by a considerable margin...as for my personal stress test, well I never had much hair in the first place and am getting too old to stress over shares anyway..
Cheers Whisky
