Key points
- The FAR share price has jumped more than 70% in the last week
- The price movement comes amid a takeover offer from an investment company
- A decision on the takeover is pending
The FAR Ltd (ASX: FAR) share price is having a stellar week, jumping by 71%.
The oil and gas company’s shares have been climbing since FAR received a takeover offer earlier this week.
At the time of writing, the FAR share price is up 16.5% today to 60 cents.
Let’s take a closer look at what’s going on with the ASX energy share.
FAR responds to takeover offer
Earlier this week, the energy explorer received a conditional takeover offer from Samuel Terry Asset Management (STAM), a Sydney-based investment management company.
STAM proposed to acquire all FAR shares, offering 45 cents cash per share, with conditions including a 50.01% acceptance level.
However, on the same day, FAR advised its shareholders to take no action as the offer was not yet open.
The company said the offer recognised its shares were undervalued given the company’s cash reserves and a potential $55 million payment from the sale of its interest in an oil project in the West African nation of Senegal.
FAR advised it has appointed legal advisors and said it would consider the offer and advise shareholders in due course.
FAR proud of strong cash position
Prior to the acquisition offer, FAR released its activities and cash flow report for the quarter ending 31 December 2021.
In it, the explorer revealed cash holdings of US$55.6 million and said it allowed the company to “consider its options for the future, not limited to its current portfolio of oil assets”.
FAR also reported its efforts to decrease costs. It estimated employment, administration, and corporate costs to be $820,000 for the upcoming quarter.
It paid 80 cents a share of capital return in late September. In October, the company announced the Australian Taxation Office had issued a class ruling that no part of the payment would be assessable as a dividend.
FAR share price snapshot
Over the last 6 months, the FAR share price has dropped by 45%. In the days leading up to its September business snapshot presentation, it dived 48%.
However, year to date, the company’s shares have gained almost 56%.
The company has a market capitalisation of almost $60 million with 99 million shares on offer.
The post This ASX energy share is rocketing 71% so far this week. Here’s why appeared first on The Motley Fool Australia.
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Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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