hartleys update 1/11

FAR LTD (FAR)
Senegal drilling window narrows
The announcement last week by Cairn Plc (Cairn) that it had commenced drilling in Morocco has positive implications for FAR.

This sets in motion the African drilling campaign of the “Cajun Express” drill rig which includes
FAR’s two high impact wells offshore Senegal. Based on FAR’s estimates we can now expect the first of these wells to spud in mid 1Q 2014.

As we have highlighted previously investors need to position themselves in the stock well before drilling begins. We maintain our Speculative Buy
recommendation on the stock. (See link to the Cairn announcement
http://www.cairnenergy.com/index.asp?pageid=27&newsid=441)

The background to Senegal
The Senegal work program (Cairn as operator) will include two wells targeting two different play types. The exploration well over the deeper water fan play
is expected to be drilled back to back with the shallower shelf target.

Importantly, FAR is free carried through these two wells to US$190m and has received US$9.8m in cash for repayment of past costs. Further, these wells will be targeting over one billion barrels of prospective resources with up to
3.5 billion barrels of follow up in a success case.

Plenty of other catalysts
Farm out of L6: After an extended processing and interpretation phase of the 3D seismic data acquired in 2012, FAR has now recommenced farm out
discussions with a number of companies for the L6 block (60% interest). FAR recently released an independent best estimate of net 2.3 billion barrels of oil
across the various targets and leads across the L6 block.

The deadline for a commitment well to be drilled on the L6 block has been extended for two years to July 2015.
Farm out of L9: Having concluded joint venture negotiations with Ophir Energy Plc (Ophir) FAR is now in a position to initiate a farm down process for a portion of its 30% interest in the L9 block. Ophir is the operator of L9 and holds a 60% working interest.

Potential farm out of Australian assets: FAR expect to shoot 3D seismic over the Australian (offshore Western Australia) acreage in early 2014. The Company is preparing to farm down the blocks prior to the 3D seismic
survey.

Valuation
Our valuation methodology is based on risked value of resource potential using notional in ground valuation ranging from US$5 – US$15/bbl and conservative estimates for probability of success. This methodology results in
a risked Net Asset Value of 40cps. Our 12 month target price for the stock remains Ac10 / share.

A detailed breakdown of our assumptions can be
found on page 3. At the end of the September quarter FAR had a cash balance of A$25.7m. Spending in the current quarter is estimated at A$3.5m with US$5m due to be received in relation to the Cairn farm-in.