hartleys update 12/10

Hopefully someone else can put up the full link...gotta dash

FAR LTD
West Africa Agreement High Impact Well Q1 2011
FAR Limited (FAR, Company) has entered into a Heads of Agreement with unlisted Ophir Energy Plc (Ophir). As an outcome of the agreement, FAR will
participate in the drilling of the 448 million barrel, Kora Prospect, located in the
AGC Profond Block (between Senegal and Guinea Bissau). The well is scheduled to be drilled by the Maersk Deliverer in Q1 2011. FAR will pay 15% towards the cost of drilling the well in order to obtain a 10%
working interest in the permit. The estimated cost to FAR is US$4.8m, which will
be funded from a capital raising of at least US$6m (as specified in the
agreement).
As part of the deal, Ophir has secured the right to acquire 25% of FARs Senegal
acreage.
Kora Prospect Ticks All the Boxes, CSEM Included
The Kora Prospect is estimated by Joint Venture participant, Rocksource, to have recoverable potential of 448 million barrels of oil equivalent. Rocksource is an independent Norwegian oil and gas company that specialises in the use of Controlled Source Electromagnetic (CSEM) technology. The Kora Prospect has
exhibited a strong anomalous response from two CSEM lines crossing it, indicating increased likelihood for the presence of hydrocarbons. Kora is a large toe-thrust structure, in 2,600m water depth, that is interpreted to contain several stacked reservoir targets. Due to the strong correspondence between the mapped structure and the CSEM response, Rocksource has estimated that the chance of success for this prospect is greater than 50%. We have used a more conservative estimate of 20% for our valuation. Senegal Farm-Out Remains Likely
Since the Venus-1 discovery by Anadarko, off the coast of Sierra Leone in September 2009, the North West African margin has received significantly
increased focus. This will culminate in the drilling of up to 10 offshore wells in the
region over the next 12 months (including the Kora Prospect). In addition to the potential farm-in to the Senegal acreage by Ophir, we understand that FAR is
still engaged in discussions with several large oil and gas companies. NSX listed, African Petroleum Corp, has neighbouring acreage offshore Gambia and
one of its large prospects extends into FARs Senegal acreage. FAR recently
applied to have its licences extended, which would require a non-refundable US$5m deposit and a commitment to drill a well within 2 years (FAR has applied for a 3 year term). Whilst a farm-out has taken longer than we expected, the circumstances described above give us confidence that a deal will be consummated, possibly in H1 2011. Guinea Bissau Remains Underrated Despite Potential
FAR is also expected to commence seismic acquisition over its Guinea Bissau
permits in the near term. One of the permits contains an existing oil discovery, which may be commercial, as well as near field high impact exploration potential.
Whats it All Worth
Using FARs share of the potential of the Kora Prospect at 45 million barrels and
a 20% chance of success (at A$8 per barrel value for discovered oil), results in risked value of 8cps. Our view of the value of Senegal is similar, although we use a higher working interest and lower chance of success. Combined with the Companys cash and assets in Guinea Bissau and USA, gives a valuation of 19cps. We rate FAR as a Speculative Buy with a near term price target of 10cps.