Drilling programme potential, page-96

Hi Gilbert,

Re: "Are you valuing everything outside the 70mbbl at zero, or are you of the opinion that $50 per barrel is on the high side for the project term"

I am not sure exactly what you mean by the first part of the above. If you look closely at the current and previous spreadsheets and the assumptions made you will see that I have created an oil value table which takes into account both the current oil price and discounts to costs in line with what Cairn were originally suggesting and then further extrapolating those discounts for lower prevailing oil prices.

It is as you say a mute point I think as to whether the market should value the shares on what might be termed a forward project oil price rather than the prevailing price. After much internal deliberation, in constructing the tables, I did in the end go for the prevailing price as the most relevant, otherwise there would be little scope for market improvement if the price of oil went back up again.

And on the basis of the relative maintenance of FAR's market price relative to most other oil stocks, I have long attributed that to a build in of expectations of increased resource volumes and that implied amount is indicated on some of the earlier full sheets - after all those on this thread have been expecting resource revisions for the better part of last year and all that has happened today is that what we have long been expecting has finally been confirmed.

Still, of course many of these points are arguable and I hope that what I have tried to explain above has not muddied the waters further for you, its hard to do in just a few words.

pj