FAR - FAR Limited

[doctorj]

This oil/gas coy has been around for donkey's years with a share price that has made a few solid runs over the years only to fall back down again. It's currently sitting just shy of 8c up a cat's whisker on some unexpected preliminary good news today. The rumour mill has been working over time on this one and results of its drilling at Welder Ranch (TX), along side a large gas hole owned by Santos, are due in the next week or so. All indications are that the news will be very positive. Their options that expire in July are trading at a premium to the share price of about a cent.

They are expecting to begin production at Bay Courant in the next few weeks and they expect to begin drilling in February on another hole where the target it 3-5mill barrels (one sharescene poster claims this could be worth about 31.2m to FAR and 16.5cps - I've not checked the maths though this clearly does fall in to the too good to be true dept.)

Here's the chart. I'm considering going long on FAR but am waiting for the Technical Entry. Your thoughts and comments are greatly appreciated.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

I don't suppose anyone has any more insight into this?

 

[RichKid]

Re: Speccie - First Australian Resources (Far)

FAR looking a bit toppy to me with those last few candles looking spikey. Not much volume either. Bottom of last run is near long term support next time it approaches/bounces off that may be a lower risk entry. Last run was above the long term support though, maybe it'll become parabolic instead of linear support. Not too keen on the chart atm due to better candidates but if it breaks free on volume from last week's high I'll be impressed.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

Volume is the issue I feel with FAR. There aren't that many shares on offer when compared with other companies of a similar cap and many are tightly held. This is the only thread on FAR as best I can tell - certainly the only one I've made. The $0.001 climb and the low liquidity is the killer for this stock. Never the less, they seem to have a lot of potential in the ground. Do you have experience in trading (or investing) in tightly held stocks?

 

[RichKid]

Re: Speccie - First Australian Resources (Far)

This is the only thread on FAR as best I can tell - certainly the only one I've made. .... Do you have experience in trading (or investing) in tightly held stocks?

Sorry about the mention of the thread, I got mixed up, I edited it out.

I avoid thinly traded/tightly held stocks as I'm worried about slippage, large spreads, unmanageable volatility etc. Volume is not the best indicator on thinly held stocks imo so you'll be going on price unless you're watching everyday and buy in on a one day spike on high volume, another reason I avoid em as I don't day trade.
My basic view is: better candidates elsewhere, don't fall for the stock, it's just a graph with numbers and lines, find a prettier picture.

Having said all that I bet FAR will just go through the roof ; ) to prove me wrong.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

Forgive me for obsessing, but would this look like a cup and handle to you guys? Someone asked this over at sharescene, with a query on the tiny handle.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

Time to mention this one again. Welder Ranch has proven to be a nice, unexpected bonus for FAR and has provided a basis for it to break out from its 9 year down trend today. Dune Energy, FAR's partner has requested no more updates on their joint project until target depth is reached and the well evaluated. Early problems were caused by significant amounts of gas coming through the side of the well. A concrete liner has since been run successfully and they have begun drilling to target depth of 13,000ft. Welder Ranch is on the property next door to a significant Gas project owned in part by STO.

Last week FAR has begun a series of broker presentations, which by all accounts has been very well received and has coincided with some good price action.

FAR has been around a long time, has an established cash flow and has several drills planned over the coming 12 months. Bay Courant is due soon, and SGT is waiting for a rig for spudding. SGT is hoped to have "company maker" potential for FAR due to its geology, but in the meantime Welder Ranch offers a nice bonus.

For those interested in options, there is FAROA with a July Expiry and a 7c strike price. At today's open they had about a 1c time premium in their price. As of close today, they have no premium, last trade at 3.5c.

This definately is no NMS, but its fundamentals are very positive and technically, the break from the down trend is certainly not a negative. Expect some volatility, particularly until Welder Ranch's results are released. In the meantime Dune Energy (DENG) might provide some more indication to FAR's short term direction.

---
Disclosure: I hold FAR and FAROA. The warning to do your own reseach, as below, counts double for companies like this. Remember if there was no risk, the price would never go up - or down for that matter.

 

[canny]

Re: Speccie - First Australian Resources (Far)

Hi doctorj
I've been a long term holder of FAR and expect to see it up in the mid teens fairly shortly.
Next week should give us the end result of Welder - the broker presentation was great and triggered some healthy buying.
Anyone buying in now should be pretty pleased with themselves over the next few months in my opinion.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

It will be interesting to see what tomorrow brings for FAR after this annoucement from its partner at Welder.

HOUSTON, TX--(MARKET WIRE)--Mar 14, 2005 -- Dune Energy, Inc. ("Dune" or the "Company") (OTC BBENG.OB - News) announced today that it has made a significant natural gas discovery on its Welder Ranch property, located in Victoria County, Texas. The location for Dune's Vaquero #1 well was drilled utilizing 3D seismic interpretation, in conjunction with extensive geological and engineering analysis of leases acquired by the Company during 2003 and 2004.

The Vaquero #1 encountered significant stacked zones totaling more than 100 feet of gross pay at various depth intervals between 9,000 and 14,000 feet in the Middle Wilcox formation. In order to fully and efficiently develop the numerous pay horizons present, Dune intends to drill several offsetting wells. Testing of the highly geopressured well will commence immediately, to be followed by actual production and sale of natural gas.

Dr. Amiel David, Dune's President and Chief Operating Officer, stated, "We believe that the Vaquero #1 is one of the largest Middle Wilcox discoveries in the Tri-county area of south Texas in recent years. This discovery paves the way for Dune's extensive development program, which will lead to a surge in production and cash flow for Dune over the next several years. Our geological and geophysical team has also identified a number of other very large, high-quality, high-reserve potential prospects and leads on our Welder Ranch acreage. Dune will continue to review these amplitude anomalies, which could equal or exceed the success of the Vaquero #1."

Alan Gaines, Chairman and CEO, stated, "This enormous discovery validates our strategy with respect to the Welder Ranch, and will greatly increase our proved reserves. In addition to exploiting the numerous offset and twin locations relating to this discovery, Dune fully intends to drill other equally promising prospects on our acreage. By virtue of the success on our Welder Ranch acreage, together with the pending consummation of our acquisition of Barnett Shale natural gas properties announced on March 3, 2005, management is confident that Dune will quickly evolve into a sizeable independent exploration and development company."

Dune Energy, through its 85% owned subsidiary, holds a 64% working interest in the Vaquero #1 well and the surrounding Area of Mutual Interest (AMI).

Source: http://biz.yahoo.com/iw/050314/082605.html

 

[canny]

Re: Speccie - First Australian Resources (Far)

Looking good - and a good mention in the fin review yeterday too.
I'm hanging out for the next ann.

 

[doctorj]

Re: Speccie - First Australian Resources (Far)

In light of NEO getting some air time, I thought I'd bring FAR up again, with mention of some news (or possibly rumours from hopeful, overzealous holders).

Their latest WEEKLY DRILLING UPDATE REPORT on the 6th, mentioned the SGT well for the first time this year, based on all the other updates in 05.

>> Schwing #1 Type: Gas wildcat Location: Bayou Choctaw, Iberville County, Louisiana. Status: Currently awaiting the drill rig to move onto site.
Target Depth: 11,600 feet
Working Interest: 50%
Operator: Spartan Operating Company.

This suggests that they have sourced a well sometime in the past week and are waiting its arrival.

However, FAR's activity update on the same day didn't mention this which is unfortunate... maybe they got out of bed late again hey?!
Last info we got from FAR was on the 18/3 saying they were still sourcing a rig, hopefully we have got one now and can expect drilling to commence soon.

Who knows. That said, SGT drilling in time for the options is massive, given the potential impact on a CPS basis of the SGT site. Information in the recent investor presentation indicates a potential impact of 100cps - either way, commencement of drilling should see some increased volatility for FAR and FAROA.

Attached are FAR and FAROA.

 

[el_ninj0]

Re: Speccie - First Australian Resources (Far)

In light of NEO getting some air time, I thought I'd bring FAR up again, with mention of some news (or possibly rumours from hopeful, overzealous holders).



Who knows. That said, SGT drilling in time for the options is massive, given the potential impact on a CPS basis of the SGT site. Information in the recent investor presentation indicates a potential impact of 100cps - either way, commencement of drilling should see some increased volatility for FAR and FAROA.

Attached are FAR and FAROA.

From their chart and the speculation that doctorj has made, i'd say they are on the up. The only problem I see with it at the moment is the volumes being traded. These are very small ammounts, averaging 500,000 shares traded a day.

There would need to be alot more interest in the stock before i'd jump in.

 

[canny]

Re: Speccie - First Australian Resources (Far)

Hoping for news soon - there was a lot of good 10c buying today - seems to be getting ready for next run.

 

[el_ninj0]

Re: Speccie - First Australian Resources (Far)

Hoping for news soon - there was a lot of good 10c buying today - seems to be getting ready for next run.

Still very low volume canny, not a good sign of interest in the stock. RTM had a quiet day and it traded at 18 million. I think i'd need some more interest from other buyers before I jumped in.

 

[doctorj]

Re: Speccie - First Australian Resources (FAR)

Cluck Cluck!

No offence, but whenever I've posted on this thread, I have the overwhelming feeling that I know what it feels like to be Chicken posting on SBM (et al).

I'm sold on FAR fundamentally, but I won't bore the technically inclined here with those details. Suffice to say, it's happily been trading within a channel now for more than 3 years and it looks to be making a move towards testing the upper end of that band at 13c. Strong bounce off the lower end of the channel at 0.075c which coincided with the overhang from a large option conversion. Currently trading at 10c the Fibs suggesting its testing strong resistance - price action today and market depth as at close supports this. Volume today suggests increased interest in the stock with more than 12mill shares traded.

FAR has more than $10mill in the bank, a market cap of about $30 mill and is a self funded explorer with good leverage into drills planned within the next 3 months which combined are worth potentially in excess $1per share (assuming $20 oil and $5 gas). Risks to consider include the risk inherent in drilling for oil and gas and the tight rig market which may hinder FAR's ability to meet their timelines.

 

[doctorj]

Re: Speccie - First Australian Resources (FAR)

Time for my monthly venture into the world of Chicken.

Being bought up in expectation of a very strong quarterly within the next week with Henry Hub gas prices doubling from USD$7 to $14. Lake Long now online should provide significantly more production to the balance sheet.

Unfortunately, FAR's management is content being the junior player in their drills and thus are unable to apply pressure to operators to get things done on time. SGT has site approvals and the site pad and infrastructure constructed, but is waiting for an available rig - it has been delayed now for a year. Drilling at Welder Ranch is still, as far as the market is aware waiting for fraccing which, analysts believe could increase production by several hundred percent at the site.

The media whores at VPE have now turned their attention to drilling of Eagle 2 which is worth 25-30cps to FAR and is guaranteed a rig in the first week of November. The site has no exploration risk.

ROC advises that negotiations with Chinese govt are ongoing for the Beibu Gulf project.

Last word from WA-254P operator Apache is that drilling is still scheduled for this year - also potentially worth multiples of FAR's current price.

Finally, off topic - those that like to have a flutter with high risk/reward opportunities within oil and gas should check my tip for the stock tipping competition this month (GOP). They will be drilling a target worth 300-500cps to them within the next month.

 

[RichKid]

Re: Speccie - First Australian Resources (FAR)

Well, doc has been so crazy (do I exaggerate?!) about this stock that I've had a recent look at it and it looks like it's going to go sideways for a bit, which I believe is the start of an accumulation pattern, a bit early to call yet, I bet the falling oil price isn't helping this but oil is still relatively high.

 

[RichKid]

Re: Speccie - First Australian Resources (FAR)

Some charts on FAR, not the best quality I'm afraid but you should get the gist of it. Comments welcome, I'm encouraged by the low volume on declines and high volume on advances. Appears to be accumulation atm at a short term flip/flop line of regression at 10c, now acting as support. Downside is a dip to uptrend support but this trend is still strong imo.

 

[RichKid]

Re: Speccie - First Australian Resources (FAR)

FAR monthly, shows substantial increase in volume in recent years and start of trend reversal. If this continues to form the upside will be explosive to over $1, that's just the theory, reality maybe different.

 

[doctorj]

Re: Speccie - First Australian Resources (FAR)

At the risk of looking like an idiot... why?