You could well be right in the near term, but for FAR that will be good.
It will weed out the weak companies and high cost producers and leave a bonanza in a few years to those left.
Oil will not stay at $30-40 forever and whether it goes down to those levels again, $30, I have my doubts.
Most oilers are going broke with oil at $40 so there is no need for OPEC to have it much lower than that.
What you want to invest in is a company who can produce at the very low price per barrel, just like BDR are trying to do in Brazil with there gold tenements.. FAR will be exactly that when they reach production. At 330MB there ppb break even would be approx $40.
With the amount of oil that will eventually be uncovered the breakeven I would guess would be $20 or less.
Given the huge cost reductions in the industry it is a great time to be going
forward with a development of an oil field. It speaks volume that they weighing up the options
on this right now as opposed to canning it like 90% of all other oil projects are at the moment.
The fact that the 330MB has already been increased to 468MB (independent auditors),
after only the first well (still 2 successful wells to be analysed independently with flow rates more than double management expectations) tells a story in itself.
When all is said and done I expect this one field called SNE, of which they have many other monsters on their acreage to easily surpass 1BBO. There have been calcs done by Geos that show it could contain as much as 3-4BBO in this one field, it is truly huge. To put than in perspective, there has only ever been 1 oil find in the GOM that has reached 1BBO (on the USA side of GOM). They have discovered an absolute monster. They will be taken out over the next couple of years.
