The June quarter has been one of much activity for FAR as the...

The June quarter has been one of much activity for FAR as the team has been continuing to meet the timetable for deliverables in preparation for drilling the Samo-1 well offshore The Gambia in Q4 this year. A well location is being finalised and it is expected that rig acceptance will take place at the end of Q3 2018 in preparation for spud in early Q4 2018. We are thrilled to secure the Dakar shore base for drilling operations for the Samo-1 well and the Stena DrillMAX for the drilling. In doing so, FAR has guaranteed that the experience and knowledge gained in the previous Senegal drilling programs will be carried forward into the Samo-1 well. Completion of the PETRONAS farmin, that was expected to close in this quarter has been delayed but we continue to work closely with our new partner PETRONAS and the Government of The Gambia in closing out the preparations for the Samo-1 well and anticipate a timely completion. The completion of the farmout will result in a payment by PETRONAS to FAR of approximately A$19.3M based on current estimates. At the end of Q1, we had forecast closing cash at 30 June to be A$40.3M which included this completion payment from PETRONAS. Exploration expenditure during the quarter was lower than forecast for both Senegal and The Gambia but due to the delay in the completion payment, our closing cash was lower at A$28.9M. The expected addition of the A$19.3M in Q3 will put FAR in a strong cash position as we move forward. In Senegal, we continue to work with the JV on the submission of the Exploitation Plan, that is on schedule for submission to the Government in September 2018. We are expecting Government of Senegal approval of the Exploitation Plan at the end of 2018 and to achieve a Final Investment Decision (FID) in mid-2019 and first oil from the development of the SNE oil field between 2021-2023.

The International Chamber of Commerce arbitration that FAR initiated in June last year to seek its right to pre-empt ConocoPhillips’ sale of its 35% working interest in the Senegalese RSSD project to Woodside is ongoing. Following the appointment of the president of the tribunal in April, the parties have been settling the terms of reference and related procedural documents. The provisional procedural timetable is in the process of being finalised and the terms of reference signed. Current indications are that a final hearing in the arbitration is unlikely to occur before the second half of 2019, pending which the parties will be formalising their respective positions and going through various pre-hearing procedures. FAR appreciates that there is much shareholder interest in this arbitration process and FAR has attempted to expedite it as much as possible.

We reported last quarter that Erin Energy Corporation announced on 25 April 2018 that it and certain of its subsidiaries had filed voluntary petitions under Chapter 11 of the United States Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. On 13 July 2018, the Court converted the Chapter 11 cases into cases under Chapter 7 of the bankruptcy code. FAR is continuing to take advice and is consulting with the Government of The Gambia on this and other related matters. FAR has rights pursuant to the joint operating agreements governing the Gambian A2 and A5 joint ventures which, among other things, address the insolvency of a co-venturer.