FAR LIMITED — AGM Information 2018

May 29, 2018

30 May 2018

Chairman’s 2018 Annual General Meeting Address

Fellow Shareholders, Ladies and Gentleman,

Welcome to the AGM of FAR Limited. It’s difficult to believe another year has passed and that FAR has passed so many more milestones.

The discoveries in Senegal are now moving towards a development decision and FAR has secured some highly prospective exploration acreage in The Gambia, immediately south of our SNE oil discovery in the waters off Senegal which we hope will provide us with another significant discovery and our Managing Director will be giving you a briefing on these projects shortly.

Meanwhile some administrative and other matters continue to occupy our minds and the minds of the investing public.

I am certain you will have noticed that our share price has been trading in a very tight band roughly between 7.5 and 8.5 cents for much of the past year.

This has been frustrating for the company and I am sure it has been just as frustrating for our shareholders.

The reasons for this tight trading band are numerous and I won’t go into all of them, but we remain encouraged that the key analysts who cover our stock generally agree that FAR shares have a potential value substantially higher than that reflected on the ASX.

Naturally we would agree with that view.

However, there are a couple of significant factors worthy of further discussion.

One is to do with the price of success.

FAR has been incredibly successful in discovering an entirely new oil province off the coast of West Africa. That success has attracted some very substantial partners and the eyes of the world’s oil industry which is now focussing a lot of attention on this area.

Our exploration successes of course can create significant potential upside if the fields are developed and the large oil reserves sold to the global market.

The cost of developing offshore oil reserves, and FAR’s exposure to its share of the cost of developing the offshore Senegal fields, are two factors that the share market is naturally concerned about but is a normal part of the process with which we have much experience. We are fortunate that development costs are at multi year lows which is helpful.

As you would expect there is an extensive engineering exercise being undertaken by the Senegal joint venture, to finalise the development parameters and the associated capital expenditure and this will continue for some time yet.

I am encouraged by the number of options appearing as we work on the financing task and I am confident we will achieve a sound outcome.

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Another factor which is weighing on the market is the arbitration case between FAR and our joint venture partner, ConocoPhillips.

As we have stated many times the arbitration does not impact our current participation in the project – our 15% working interest is not affected. I would also emphasise this is an arbitration, a simple and relatively inexpensive process and is far removed from litigation which can be very long and very expensive.

Let me recap the facts of this matter.

ConocoPhillips elected to sell its 35% equity share of the Senegal offshore production sharing contract to Woodside Petroleum with an effective date of 1 January 2016. The transaction was announced on 14 July 2016.

The arbitration case revolves around the issue of pre-emptive rights and whether FAR was entitled to such rights. FAR absolutely believes that it has pre-emptive rights and that FAR’s rights have been deliberately denied.

In its statement to the ASX announcing the acquisition Woodside stated, “Completion of the Production Sharing Agreement (PSA) is subject to satisfaction of customary conditions, including Government of Senegal approval and pre-emption and is targeting close by year-end 2016.”

In its public statements, ConocoPhillips also confirmed that its partners had been issued with a preemptive rights notice for the transaction.

FAR subsequently attempted to acquire the requisite information relating to the proposed transaction between COP and WPL to allow it to make an informed decision on whether to exercise its pre-emptive right, but was unable to obtain all the information requested. COP simply refused to provide the information that was required for us to make an informed decision, frustrating the legitimate exercise of our rights.

As a result, a notice of dispute was lodged in accordance with the provisions laid out in the Joint Operating Agreement. After failed attempts to resolve the matter amicably and again in accordance with the JOA provisions, in June 2017 FAR applied to the International Chamber of Commerce to commence arbitration proceedings.

The arbitration hearing is final and the decision is binding on the participants. There is no recourse.

If the arbitration hearing goes against FAR, that is, the tribunal determines that FAR’s pre-emptive rights do not or no longer exist, then the status quo remains: that is, FAR retains a 15% equity share in the Senegal production sharing contract. Our current assets and operations are not at risk in the arbitration process.

Under the ICC arbitration rules, the final award is to be issued within six months of the signing of the Terms of Reference.

If the arbitration outcome supports FAR’s claim for “declaratory relief”, or in other words granting us the opportunity to have our pre-emptive right properly recognised, then FAR will have the right to purchase COP’s 35% interest under the same terms and conditions as Woodside.

The arbitration process holds no fears for FAR and should not cause shareholders any real concern either. We have consistently maintained that the US$2.20/bbl price paid for the Senegal barrels was a low price and we want to opportunity to consider purchasing those barrels at the same price.

The operator has recently released information pertaining to the economics of the Senegal development. The project is not only break even at US$35/bbl but at an oil price of US$70/bbl at FID, the NPV per barrel is US$10/bbl. Clearly the oil price is in recovery mode and we are seeing a lot of strategic interest in these barrels.

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As far as possible within the constraints of the arbitration proceedings, FAR intends to keep the market closely informed of progress to minimise the opportunity for any misunderstandings or misinterpretations of the facts to arise.

Moving to other matters.

Climate change is at the forefront of global concerns. As an oil and gas company, and hopefully in the future a producer of this important energy source FAR shares the concerns of all of our stakeholders including governments, our investors and the public in the countries in which we operate and recognise that we have a responsibility to support global emissions reduction initiatives. I invite you to read our climate change policy on our website.

FAR is fast becoming a partner of choice and respected operator in the oil and gas industry. We take all our responsibilities very seriously and look to deliver to our broad range of stakeholders best in class, valuable results.

Looking forward to 2018, we have some ambitious tasks ahead of us, but I can assure you we have a small but very talented team who are passionate about what they do and dedicated to FAR’s ongoing success.

Nic Limb

Chairman

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