AT A GLANCE
FEL’s aim has been to position itself to capitalize on the early stage “value creation” phases of typical oil and gas asset life cycles. It is here that initial entry costs for FEL have not been overly prohibitive, and in aiming to manage the commensurate high risk, the objective of achieving superior returns for its shareholders may be achieved.
The Company has built a small and capable management team experienced in exploration, appraisal and development of oil and gas fields, which when supplemented by its close group of external consultants to execute this strategy.
In order to achieve its aim, FEL has developed a strategic plan that can be summarized by the following key points and examples:
- FEL will aim to gain early entry with a high degree of equity interest in attractive exploration or appraisal assets, preferably oil, that offer the potential for substantial upside.
- This upside potential may be achieved through the application of a new idea/technology, as was the case with the WA-424-P permit where FEL acquired new 3D seismic data to assess a small part of the permit.
- A high equity position is seen by FEL to provide leverage to exploration upside in the event of success while enabling potential funding of future work programs through a farmout or monetization of a portion of the initially high equity position.
- The Company will aim to optimise its asset holdings for strategic value:
- FEL will continue to aim to reduce and diversify downside risk inherent with early stage oil and gas exploration:
- The presence of the oil discovery at Gwydion in the WA-424-P permit has the potential to also reduce commercial thresholds of any potential future oil discovery in the vicinity of this accumulation.
- Obtaining diversification within the asset portfolio.
- FEL will continue to seek out and review attractive opportunities and diversification options, including assessing any new blocks made available by the government.
- Farmout interests in its permits by being carried on future exploration work programmes.
Notwithstanding FEL’s ongoing objective to investigate additional complementary and risk-diversifying opportunities, if there is early and significant exploration success in the Permit, the substantial follow-up potential already identified could provide FEL with enough opportunity for value creation and growth well into the future.