FAR Limited

FAR Details

FAR Limited (ASX: FAR) is engaged in the exploration and development for oil and gas deposits. Further it is also engaged in the monetisation of oil exploration and production interests.

Reinstatement to Official Quotation:

• As per a recent update, the suspension of trading in the securities of FAR has been lifted for the commencement of trading on 23 July 2021.
• This follows the successful sale of the Senegal RSSD project. FAR had been advised by ASX in October 2020 that its shares would resume trading once FAR releases a clean audit report which is free from a disclaimer of opinion with respect to going concern.
• On 12 May 2021, ASX has further advised FAR that the company’s interest in the Senegal RSSD Joint Venture will need to be completed before reinstatement of trading of its shares can be considered.

Completion of Sale of Senegal RSSD: On 7 July 2021, the company has announced the sale of its entire interest in the Senegal RSSD joint venture to Woodside Energy BV. It has received a payment of US$126 million from Woodside. Additional payments up to US$55 million are contingent on future oil price and timing of first oil.

Proposed Capital Return to Shareholders:

• The management has taken a review of the sale proceeds from Senegal RSSD project and plans to return the surplus of $80 million (80 cents per share) to shareholders by way of capital return.
• The proposed amount is considered after taking into account committed exploration costs and working capital requirements.
• The company is planning to put the proposed capital returns to the shareholders for their approval at a general meeting of shareholders, which will include the precise timing and other details.

FY20 Performance Overview: The company reported revenues of US$291,364 in the year ended 31 December 2020, compared to revenues of US$370,160 in the prior year. The loss from operations stood at US$75.69 million during the period.

 Top 10 Shareholders as of 12 July 2021 (Source: Analysis by Kalkine Group)

Key Risks: The company’s line of business makes it prone to exploration and drilling risks, and its operations may not always result in discovery of resources.

Outlook: FAR has continued with its operations and is preparing for drilling the Bambo-1 well offshore - The Gambia, which is scheduled for commencement at the end of October 2021. FAR is the operator and has a 50% working interest for the well, which is a part of A2 and A5 licences held offshore Gambia. The approved budget for the well is US$51 million, amounting to US$25.5 million for FAR. The company plans to drill three prospects in the Bambo-1 well.

Stock Update: The company has undergone a stock consolidation on 2 July 2021 and has issued 1 security for every 100 securities. The post-consolidation of securities on issue stood at 99,790,492 fully paid ordinary shares. It has recently announced the resignation of Non-Executive Chairman, Nicholas Limb, and Non-Executive Director, Reginald Nelson, and has appointed Patrick O’ Connor as Non-Executive Chairman and Robert Kaye SC as a Non-Executive Director to the FAR board. The stock of FAR gave a YTD return of ~15.45%. The stock of FAR traded in the range of $1.210-$1.430 and closed at $1.27 as on July 23, 2021.

FAR Daily Technical Chart, Data Source: REFINITIV 

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decision should be made depending on the investors’ appetite on upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting from the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above.

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