Far Limited
I met with Cath Norman of Far when I was in Cape Town last week and I can confidently say that things are going very well in all their areas of operation. The situation in Senegal has been discussed many times and whilst arbitration is under way there is little more one can add. All I would say is that clearly the market hasn’t appreciated the value in the company that it has, for example, attributed to Cairn and that this will come out at an appropriate event in the future. Whether this is the arbitration or something different I can’t say but surely it will.
For what it’s worth I am as convinced as ever, if not more so that Cairn is seriously considering selling all or part of its 40% stake in the project, indeed this may already be underway. The reason I say this is that whilst Cairn is still the operator it has in its gift, or whoever buys that stake, the significant possibility of passing on that to any potential buyer. Should that buyer be a super major then, perhaps with the Far 15% stake added to it would give a majority in JV decisions, if I was advising them, with so much interest in the region I would consider it to be a value that would go once the operatorship transferred to woodside as currently envisaged. To give an idea of potential upside for Far, I understand that Cairn would only sell if the offer was just too good to be unturndownable…
Away from Senegal it is worth remembering that Far has an 80% stake in a potentially huge prospect in The Gambia which will be drill ready in 2018 and where Far has done a lot of the leg work already. Here where the data room is open the company can offer farminees the opportunity to get in at the ground floor on what might be another Senegal, who knows, may be even bigger. With the 80% stake Far can tempt majors with a big stake and of course the operatorship in a country where the new Government are very much open for business.
Shareholders in Far have been patient way beyond most would expect and you couldn’t blame them for abandoning ship things have taken so long. However I would seriously advise holding on as I think that the next few months will vindicate that patience and reward by what should still be a multiple and that is just in Senegal, in the Gambia they may yet have another….
