Q and A with Cath Norman (1 December 2016)

Just thought of posting the Q and A with Cath Norman (1 December 2016), release not long ago...

I believe FAR management is doing its best to keep its shareholders informed as much as they could... no material changes so far I guess, so no update on PE or Djiffere status....

If you think FAR should give more info... you have no idea how difficult it would be to get a response from Woodside, Conoco or Cairn on these matters...

>>>>>>>>>>>>>>>>>>>>

1 December 2016
Q and A with FAR Managing Director Cath Norman
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Q: When will FAR start drilling offshore Senegal again?
A: The first well in the firm, two well program is expected to start drilling in the first quarter of
calendar 2017.
Two firm wells are proposed to be drilled into the upper reservoir units of the SNE oil field. The first
well, SNE-5, is expected to undergo drill stem testing (DST) in the upper 400 series sands and have
permanent gauges installed in these units.
The second well, SNE-6, is to be drilled immediately after SNE-5, and it is also expected to undergo an
extended DST program in order to generate a pulse that will be registered in the gauges installed
within the upper reservoir section at SNE-5 and SNE-3.
A final spud date and final details of well costs will be released in the coming weeks.
Q: What is the status of the Djiffere Block option agreement?
A: There has been some concern raised about an article that appeared in a little known African
newsletter claiming that FAR could not exercise its option to farm into the Djiffere block offshore
Senegal because FAR could not raise money to complete the transaction. The statements made in
relation to this issue were false and misleading and FAR has notified the editors.
There has been no contact made between FAR and the authors of this newsletter and we have
requested that they reveal their source of information and retract the article.
Secondly, FAR’s obligation under the agreement was to acquire the 400km2
of 3D seismic data that
was acquired in 2015, so FAR has met its obligations under the option agreement. There is no cash
payment to be made to the operator for entry into the permit. As reported in FAR’s September
quarterly report to the ASX, FAR finished the quarter with a healthy cash balance of $50M and
estimate spending $8M in the December quarter.
FAR has an option agreement with Trace Atlantic Offshore Limited to earn a 75% interest in the
Djiffere block (subject to Government approvals).
The Djiffere 3D seismic survey covering 400km² over the north western portion of the Djiffere block
was completed at the end of 2015 and preliminary processed products have been arriving over the
September quarter with final products expected to arrive at the end of 2016. FAR expects to be ready
to make a final decision regarding its option after this time.
In comparison to the water depth over the nearby SNE discovery, the water depth is shallow in the
Djiffere Block (<400m) which will allow for the use of a lower cost jack-up drilling unit. This means
the cost of an exploration well will be lower than for drilling over the SNE field and hence the
threshold economics for prospect will also be improved.
Page 2
Q: Does FAR have a pre-emptive right over the ConocoPhillips sale of its Senegal PSC Blocks?
A: The ConocoPhillips asset sale transaction to Woodside Petroleum is subject to the rights of coventure
partners to pre-empt and Senegal Government approval. This was noted by both
ConocoPhillips and Woodside in their respective announcements of the intended sale transaction
dated 13 July 2016 and 14 July 2016.
As previously reported to the ASX, FAR believes a valid pre-emptive rights notice has not been issued
to the joint venture partners by ConocoPhillips and FAR has invoked its right to resolve this dispute in
accordance with the Joint Operating Agreement.
FAR is not aware that the Government has advised ConocoPhillips of its approval of the transaction.
FAR continues to reserve its rights.
Q: Is the SNE field development commercially viable in a low oil price environment?
A: On 1 September FAR announced that SNE had been assessed to be a commercially viable project
with Minimum Economic Field Size (“MEFS”) threshold achieved. Most importantly, FAR’s economic
assessment of SNE field is consistent with the joint venture operator, Cairn Energy PLC reported
valuations.
In its August 2016 Half Yearly Result, Cairn reported economic scenarios for a standalone SNE
development project. Cairn estimated a breakeven oil price at US$35/barrel and based on a
US$70/barrel oil price; NPV at FID was US$12.5 per barrel and IRR at FID of 38%. Even at a
US$50/barrel oil price, Cairn estimates the NPV for the SNE Project at FID is around US$6.5/barrel
and the IRR is above 25% (ungeared).
This economic analysis implies SNE is a robust and potentially commercially viable project that is well
positioned to benefit from cost deflation. Moreover, development and operating costs estimates for
the concept development are relatively low, making the break-even oil price competitive in the
current oil price environment.
Q: What is the status of the SNE project development?
A: A phased SNE oil field development concept prepared by FAR is based on a standalone floating
production and storage offtake (FPSO) vessel with expansion capability for satellite tie-backs.
After successfully completing the 2015/2016 four well appraisal drilling program, the SNE project is in
development planning stage, with activities focused on determining the final project size and scope.
The new SNE-5 and SNE-6 wells are expected to provide important data for SNE reservoir
management and will play a key role in optimising the proposed SNE project development.
The Senegal joint venture is progressing towards the submission of a development plan for the SNE
field as quickly and efficiently as possible.
Page 3
Q: What have been FAR’s key achievements to date offshore Senegal?
A: FAR farmed-out to Cairn Energy and ConocoPhillips for US$196m in forward carry and cash for the
drilling of two Senegal wildcat exploration wells.
This resulted in the FAN-1 and SNE-1 exploration wells delivering new “world class” basin opening oil
discoveries in 2014.
SNE ranked as the world’s largest oil discovery in 2014 by IHS.
Four highly successful SNE appraisal wells drilled over 2015 / 2016 have confirmed:
 ~100m gross oil column,
 high quality 32⁰ API oil, and
 presence and correlation of principle reservoir units
Flow tests in SNE-2 and SNE-3 also confirmed reservoir quality and the ability of the SNE field to flow
oil at commercial rates.
Results from a comprehensive coring program (>600m in each well) are still being evaluated and will
further help in understanding the reservoir characteristics.
The SNE contingent recoverable resource estimate has been upgraded three times since the
discovery in November 2014, with FAR’s present independently audited SNE 2C of 641 mmbbls (2C
contingent resource, gross, unrisked, recoverable) being more than four times FAR’s pre-drill
estimated size of SNE of 154 mmbbls (on a best estimate, gross, recoverable, unrisked basis).
The SNE field aerial extent has grown to cover more than 350 km ².
A FAR statement on SNE commerciality was released 21 months from the announcement of the SNE
discovery.
The SNE development project is now undergoing joint-venture development planning activities, with
first production targeted for 2022.
FAR has mapped undrilled Senegal exploration prospects with > 1 billion barrels potential (best
estimate, gross, recoverable, unrisked).
Q: What can FAR investors look forward to over the coming months?
A: Update to the FAR’s prospective resources and drilling prospect inventory from the interpretation
of 2,400 km² of new 3D seismic data and reinterpretation of existing data.
Two firm well drilling program in the SNE oil field, including flow testing operations commencing
early 2017.
Decision to progresss Djiffere option in early 2017.