Oz w, It's really simple; arbitration will determine whether FAR can buy 35% of the Senegal asset it doesn't already own from COP for $450m @ $2.2/pb and sell it at market price ($4.5 - $10/pb) for $900m to $1.8bn.
The reason PE rights exist is so companies who have undertaken the risks & cost of exploration have the first right of refusal to buy out their JV partners if they choose, especially if the price is cheap, (which it appears to be in this case).
FAR was the original owner of the block, have been exploring in the region for over 10 years, and allowed COP and CNE to farm in, so they certainly have a lot of knowledge of the value of the asset.
WPL shareholders shouldn't be too worried however since they will likely get their $450m back from COP, this contingency scenario was mentioned in COP's reporting a couple of years ago.
PC in previous reporting indicated he is not so worried and will "move onto other things" if he loses the asset, so all is good on that front as well. It certainly looks like WPL has a full dance card with other projects anyway.
I reckon arbitration is a 50/50 bet at the moment, will be fascinating to see the outcome. I was a WPL holder recently, but sold at $34; may enter a bit later once the dust has settled.
WPL Price at posting:
$32.14 Sentiment: None Disclosure: Not Held
