Malcy’s Blog – Far Limited and Jadestone Energy

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Oil price, Far, Jadestone. And finally RIP Graham Cowdrey.

WTI $41.36 +$1.07, Brent $43.61  +$1.21, Diff -$2.25 +14c, NG $2.95 +9c

Oil price

Oil continues to rise, another dollar or so this morning so over 5 bucks in a week and for very good reasons. At the moment, there is a perfect storm, Opec+ are looking to push back the January release at the Nov 30/Dec 1 meeting and despite some cheating they obviously think that they can do something.

The vaccine speaks for itself, clearly it will take time but should other vaccines behind Pfizer in the queue also have something then markets will light up again. Economic news regarding demand is mixed, of course the US and Europe are still gloomy but in China and East Asia is booming with oil demand growth up 9% in 2020 and even Indian demand now said to be ‘resilient’.

The API stats also helped, crude oil drew by 5.1m barrels including -913/- b’s at Cushing and gasoline was down 3.3m with distillates down 5.6m b’s, let’s see the EIA stats tonight. Finally G Sachs have picked an interesting time to reduce their oil price forecast for 2021, having been at $65 then $59.40 they are now down to $55 which must be wrong one way or another…

Far Limited (ASX:FAR)

Far has announced a SPA with ONGC for their PSC offshore Senegal for $45m plus working cap since 1 Jan of $66.58m. The offer, whilst looking lower than might have been expected a while ago ‘represents the best option available at this time.

FAR’s Managing Director, Cath Norman said: “We are pleased to bring this deal to our shareholders and wish to
thank ONGC for their interest and cooperation over the last few months. ONGC is a very reputable group with
global exploration and production interests. We believe they will be a valuable partner for Petrosen and Woodside
going forward.
As we have acknowledged, the market for financing and selling assets has been weak since the impact of COVID
was felt in March of this year. In these circumstances, the offer from ONGC represents the best option available
at this time and we trust that our shareholders will vote for this transaction.
FAR expects to have approximately US$130 million in cash at the close of this Transaction that will be used to
rebuild the Company and further our other West African prospects offshore the Gambia and Guinea-Bissau’.

Jadestone Energy (AIM:JSE)

JSE has announced a settlement in the case against Inpex Corp re Block 05-1 PSC offshore Vietnam. Jadestone had agreed to buy a 30% WI but the seller withdrew, JSE did not accept the termination and went to arbitration.

‘The Company and Teikoku have agreed a full and final settlement in respect of the dispute.  When considering the amount payable under the settlement, together with fees payable by the Company, Jadestone will not experience a significant increase in its cash position’.

JSE have settled and whilst there are clearly no huge damages I don’t think the company expected much, it was more important to win the argument which they plainly have done. Being in arbitration it wasn’t like a court case where costs would have been higher and also much management time and distraction caused. In my view JSE just couldn’t let the big guy get away with not honouring a binding agreement, whilst I don’t know about the detail this has reinforced that principle and Jadestone upheld and preserved their rights.

I’m still very positive about JSE and as things start to have better visibility I think that it will be a major league player in the sector next year and it will undoubtedly be a Bucket List participant. A great portfolio, one of the best managements in the sector and will put shareholders first.

 

And finally…

I’m forgetting anything else in todays ‘and finally’ to pay tribute to an old friend of mine and of many who read the blog. Graham Cowdrey or ‘Van’ as he was known for his love of Van Morrison who has died aged only 56 was a brilliant cricketer for Kent and in this day and age would have been a lethal white-ball player. More importantly he was a true mate, very funny and nothing was too much trouble for those of us fortunate to be called his friends. RIP Van and we are all thinking of the family right now. Graham Robert Cowdrey 1964-2020.

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