Ann: Quarterly Cashflow Report, page-51

Cosmo, on first blush I would have to agree with you in relation to a CR.

I still contend that in all likelihood there will be a CR pre-appraisal, the recent Quarterly
has not changed my opinion in relation to this issue. I disagree however with your reasoning
re-exercise of options by CN. What is done is done, personal financial position etc etc. Let's
not forget that there is still "risk" involved with the upcoming A&E program, regardless of
the outstanding parameters achieved around the SNE reservoir upon discovery and analysis.
She manages "risk" like the rest of us. FAR as an entity also has form on being risk averse imo.
This is not likely to change going into the upcoming 3 well A&E program.

From the Quarterly Cashflow Report ;

Cash on hand $A43m end of June 2015.
All previous drilling cost over-runs now paid for.
Expected spend next quarter $A12m.

At the Perth IP {from notes}, $A47m was converted @0.86c US = $US40m. This would have
been converted early in the year at the latest. Previous quarter expenditure was $A11.868m,
this would have been paid from $US conversion = $US = approx $US9m {@77c approx} which
leaves about $US31m. Not exact but current cash balance {would contain some amount left in
$A--options conversions etc} equates to about $US30m {@75c currently} and I reckon about
$A3-4m left in $A. $US30m + $A3-4m = $A43-$44m cash on hand.

"FAR holds the majority of its cash in $US which has meant it has been hedged against the falling Australian dollar in the past months and are in a strong financial position as we enter into the forthcoming drilling program. "

Outlays for the next quarter {July-Sep} are estimated to be $A12m. Whether in fact they are
actually "expended" during this quarter or the next is irrelevant. One would assume that most
if not all of it will be fully expended in the next 2 quarters at least--that will still be half way
through the upcoming 3 well A&E program. These monies will be paid from our US dollar
account {assume 75c exchange rate} = $US9m, leaving cash balance of $US21m & say $A3m
left over. Now to the budgeted drilling costs in the upcoming 3 well A&E program ;

From the quarterlies we still do not know ;

1. Definitive rig rates & estimated costs for 3 drills.
2. No definitive date for spud {October still mentioned}
3. No news on that "new acreage".
4. No definitive drilling targets for the 3 well program.

We of course can summise about 1 from previous utterances and unofficial statements. 2 & 4
are no doubt coming "soon".

Until something "definitive" is released in terms of a firm & confirmed budget, we can extrapolate
on the following that have been thrown around.

1. "FAR estimates that the firm drilling program will cost approximately US$150 million with FAR’s share being approximately US$25 million (approximately AUD$33 million)". 13/4/15

2. " Wells are expected to cost in the vicinity of $US30-$40m". Assume the highside of $US40m
@16.7% paying interest = $US20m net to FAR.

3. The wells are expected to take 40 days to drill and 15 days for core analysis, flow testing etc.
Rate of $US750K per day have been mentioned. One and/or both appraisal wells will be core
tested and flowed. Assume all 3 wells take 55 days @$750K ; Far's share = $US20.5m.

Take your pick from these, but if you were conservative and a bit risk averse then 1 above
would be the more likely scenario. This would have something built into it as regards
some cost over-runs or technical difficulties possibly encountered in the A&E program.
I calculate that during the A&E program, if not by the end of it FAR will have $US21m
and $A3m in the bank. Enough for 2 wells as FAR have stated but not enough to complete
3 wells if in fact $US25m is what it eventually ends up costing.

Therein lies the dilemma and the still valid speculation of "topping up" prior
to appraisal. It will come down to Managements perception of risk and the reality of "raising"
whilst drilling continues {even on the back of a first successful appraisal well}. Assume no
raise prior to appraisal and the first well {after 55 days} is successful--what are the logistics
of raising capital when the 2nd appraisal well is only 55 days away or less from returning a
result--is that enough time to get a {part} retail raise completed? The "thing" that does it
for me though is the opposite result after the first appraisal well. Assume it is $US25m for
the 3 well program, assume we have $US21m and a few $Am and assume the first appraisal
well encounters some problems/setbacks. Here we sit with a probable knock to the SP and
the 3rd exploratory well unfunded. Talk about a rock & a hard place AGAIN. At the end of
the day, many scenarios can play out of course but it was always FAR's intention to my
understanding of being "fully funded" for 3 wells going in, NOT 2. We will have to wait further
until a FIRM budget is announced to get to the nitty gritty I suppose.

On a more positive note ;

FAR believes there is additional net pay and resource potential not included in the preliminary assessment of contingent resource estimates for the SNE field. This includes thin bed reservoir sands that, recent detailed post well analysis has indicated encouraging reservoir characteristics.

It has been quoted before that COP have had great success extracting oil from sands only a few
cm's thick. These thin sands will be important to increasing the size of the SNE resource as we
step out further to the east of the initial discovery. COP is the best in the business as far as this
goes.
Two wells in the firm well program will be located to appraise the SNE field. They are expected to intersect all potential reservoir zones. As expected, no estimates were released as to the
possible upside of these thin sands. The fact that mention was made at all in terms of "encouraging
reservoir characteristics" imo bodes well for increasing the resource at SNE within the existing
reservoir{s}.

Although no definitive target has yet to be finalised for the Exploratory Well......
The Bellatrix prospect is a yet to be drilled Buried Hills play which has a strong seismic amplitude response. It is located above and on the northern flank of the SNE discovery so a well can intersect both it and the SNE field. COS for Bellatrix CNE =80%, COS FAR = 49%. Although targeting a different
reservoir than Soleil & Sirius , Bellatrix has the advantage of proving the so called "flat egg"
effect that CN alluded to at the recent IP. It could deepen the SNE reservoir beyond what the seismic
currently indicates as well as possibly and hopefully open up a new play within the Buried Hills
complex. Double bang for your buck in other words. Success with this "prospect" in particular is
what will really set the SP alight.

Still a few twists and turns before the drill bit does the talking and probably many after that as
well. Happy to hold, happy to add when the time is right, still confident we will have our day in the
Sun.

GLTAH