FAR LIMITED — AGM Information 2020

May 26, 2020

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27 May 2020

Annual General Meeting 2020 - Presentation

In accordance with the Listing Rules, FAR Limited (ASX: FAR) releases the attached, to be presented at the Company’s Annual General Meeting to be held at 10am today, 27 May 2020.

This announcement has been approved for release by the FAR Disclosure Committee.

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Annual General Meeting

27 May 2020

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Our Company

FAR has a dominant acreage position offshore Senegal, Gambia and Guinea-Bissau

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	Senegal RSSD(3)	The Gambia A2/A5	Guinea-Bissau 2/4A/5A
Type	JV	JV	JV
Workinginterest	15.0% (1)	50%	21.4%
Operator	Woodside	FAR	Svenska
Status	Under development	Exploration	Exploration

Market data(2)	A$	US$
Share Price	$0.016	$0.011
Market capitalisation	$160m	$105.6m
Cash	$122.9m	$80.3m
Enterprise value	$37.1m	$25.3m
Substantial shareholders	Meridian	19.17%
	Allan Gray	12.47%
	FARJOY	5.16%

Reserves & Resources (Sangomar Field)
2P Reserves	28 mmbbls
2C Resources	32 mmbbls
Total 2P & 2C	60 mmbbls

1. Other JV partners include Woodside (35%), Cairn (40%) and Petrosen (10%).

2. Cash as at 31 March 2020, AUD:USD exchange rate 0.66, market cap as at 26 May 2020

3. RSSD stands for the Rufisque, Sangomar and Sangomar Deep offshore Production Sharing Contract (which includes the Sangomar Oil Field).

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2019 Company highlights

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Senegal

Rufisque, Sangomar & Sangomar Deep 15% working interest

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RSSD Exploitation and evaluation permits

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RSSD Evaluation area (FAN, SNE North)

Sangomar Oil Field exploitation area

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2019 Senegal : Sangomar Field development highlights

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Sangomar Field development

Phased development[(1)]

P50 resource position[2 ] (gross)…

Phased development designed to reduce execution risks and upfront capital requirements

• Phase 1: targeting 231[1 ] mmbbls oil and peak production of 100,000 bpd (gross) or 13,670 bpd net to FAR

• Contracts awarded for subsea and drilling with FPSO in final stages

• Phase 2/Gas Export (Phase 1A): targeting a further 253[1] mmbbls oil and 160mmboe gas[3] , extending the production plateau to between 60,000-80,000 bpd (gross)

  • Phase 2 expected to comprise of approximately 16 production wells and 17 injectors[4]

• Phase 3: further phases, to be defined over the Phase 1/2 development periods.

1. Oil reserves, resources and production forecasts based on operator estimates.

2. Oil development phasing indicative only.

3. Gas estimates and project subject to JV decisions.

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700 160 3 644
600
1
500 255
400
300 1
231
200
100
0
Phase I Phase II Gas Export Phase I, II
(Exploitation (Exploitation and Gas Export
Plan) Plan)
(mmboe)
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…underpinning long term production growth

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Increased Sangomar
oil recovery
Sangomar oil Phase 2
Sangomar Gas
Sangomar oil Phase 1
2023 Timeline
Production
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Sangomar field development timeline (Phase 1)

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2020 2021 2022 2023
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FID taken
Key project Full Notice to Proceed (FNTP) for Steady state
milestones the drilling and subsea construction production reached
First oil [(2)]
and installation contracts
Rig 1 drilling
Drilling
Rig 2 drilling
Detailed engineering, Hook-up,
Subsea Installation
procurement and fabrication testing
FPSO Design, construction and pre-commissioning
100% WI Net FAR
Total Phase 1 (US$M)
(13.67%)
Capex
Profile [(1,2)] Budget 3,730 510
Contingencies (10%) 370 50
Total Phase 1 4,100 560
Transit, hook-up
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1. Capex estimates per Operator forecasts in US$ nominal including the estimated cost to purchase the FPSO

2. Project financials and timelines are currently under review by the Operator and may be subject to change

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Sangomar – robust economics at low oil prices

The Sangomar Oil Field will have a Brent oil price break-even of ~US$30/bbl (life of field) and ~US$22/bbl (from first oil)

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Indicative net-back price from first oil US$/bbl [(3)]
Peak production 13,670 bpd (net)
v DevelopmentProduction scale Peak production 13,670 bpd (net)
One of the larger ASX oil producers
US$65/bbl
Net-back price
US$11/bbl operating costs 24.7 from first oil
v Low costs
US$22/bbl break-even (from first oil)
12.0 Corporate tax
Government share
v Cash generative ~US$180m pa post capex [(1)]
5.9
of profit oil
Break-even oil price
(from first oil)
10.7 Capex
Unlevered project IRR: ~33% [(1)]
v Highly profitable
NPV10: US$650m [(][1)]
11.7 Operating costs
Improved recovery rates
v Upside Tie back FAN or SNE North discoveries Break-even oil price
(from first oil)
Gas monetisation [(2)]
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All estimates on this slide are based on the project’s Phases 1 & 2 with key assumptions including P50 production of 485 mmbbl and associated capital costs per Operator estimates 19 November 2019, US$65/bbl oil price flat real. Source: FAR financial model. Subject to the disclaimer on Slide 21. Project financials and timelines are currently under review by the Operator and may be subject to change.

1. Average estimated cash flow after tax and after capital costs for initial three years of production (net to FAR), updated to revised timetable from Operator (subject to change) and assumes a junior debt facility with margin over Libor of 12.5%. Unlevered NPV equals the estimated NPV of phases 1 & 2 of the project at a 10% nominal discount immediately following first oil after deducting all outstanding debt amounts.

2. Gas monetisation subject to JV decisions.

3. Indicative net-back economics are pre-financing costs and without inflation.

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Sangomar break even price comparison

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Sangomar
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Source Woodmac 2019

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Block A2 & A5 50% working interest & operator

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The Gambia

• Increase in FAR working interest from 40% to 50%

• FAR remains operator (partner PETRONAS)

• The Soloo prospect, the extension of the Sangomar Field into The Gambia, has resource potential of 152 mmbbls[(1)]

• The Bambo prospect has resource potential of 454 mmbbls[(1)] and is directly updip (and on a migration pathway) from the Samo-1 well which showed evidence of oil migration

• One well can be located to drill both the Soloo and Bambo prospects concurrently

• Operations currently suspended due to COVID-19

• Farm out activities ongoing

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1. Volumes quoted are recoverable prospective resources, best estimate, unrisked, 100% WI basis. These volumes have been determined according to the SPE-PRMS guidelines by FAR Gambia Limited as operator of A2 & A5. Estimated quantities of petroleum that may be potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

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Guinea-Bissau

Block 2 (Sinapa), Block 4A & 5A (Esperanca) 21.4% working interest

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Guinea-Bissau exploration project

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FAR LICENCES OFFSHORE SENEGAL, THE GAMBIA & GUINEA-BISSAU

SINAPA (BLOCK 2) & ESPERANÇA (BLOCKS 4A & 5A) 21.4% paying interest, 21.4% beneficial interest Operator: Svenska Petroleum Exploration AB

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Australia: Petroleum Exploration Permit WA-458-P 100% working interest & operator Kenya: Exploration licence L6 60% working interest and operator

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2020 Impact of COVID-19 and oil price rout

• FAR debt financing not completed as planned

• Reworking debt options for financing the Sangomar development

• Data room open to support option to sell all or part of FAR’s RSSD interest

• Preserving cash

• Overheads and costs of operated assets cut

• In process of surrendering Kenya L6 permit

• Gambian work program suspended

• People and capital expenditure cuts (with plans for second and third phases)

• FAR working with Senegal JV on rescoping, rephasing and repricing options for Sangomar development to cut and defer CAPEX

FOOTBALL & BASKETBALL GEAR CLEANING TOOLS TO TLOCAL COMMUNITIES LOCAL FOOTBALL CLUBS

DISTRIBUTION OF SCHOOL SUPPLIES TO 600 STUDENTS OF LOCAL PRIMARY SCHOOLS

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SENEGAL
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Governance & Sustainability

FAR is committed to managing its environmental, social and governance (‘ESG’) responsibilities and to embedding ESG into FAR’s philosophy, practices and business processes. PEARL is embedded throughout our organisation, from the most detailed Health, Safety and Environment plan on a rig, to our risk management process, to the social investments we make in our host countries.

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Climate change

FAR acknowledges the Paris Agreement and is working towards implementing the recommendations of the TCFD. FAR recognises its responsibility to support greenhouse gas emissions reduction initiatives where it can.

CURRENTLY:

ACTIVELY CONSIDERING:

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Using energyefficient products

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Encouraging video conference calls/reduce travel

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Encouraging climate change considerations in supply chains

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Embedding climate change adoption into executive KPIs

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Seeking independent expert input into our Climate Change Policy

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Regularly reviewing opportunities to improve energy efficiency

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Seeking alternatives to flaring and venting hydrocarbons

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Promoting transparency by publishing a sustainability report

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Contact us Level 17, 530 Collins Street Melbourne VIC 3000 Australia T: +61 3 9618 2550 info@far.com.au far.com.au

Connect with FAR Limited:

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Disclaimer

• This presentation has been prepared by FAR Limited (‘FAR’). It should not be considered as an offer or invitation to subscribe for or purchase any shares in FAR or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for shares in FAR will be entered into on the basis of this presentation.

• This presentation contains forward-looking statements that are not based on historical fact, including those identified by the use of forward-looking terminology containing such words as ‘believes’, ‘may’, ‘will’, ‘estimates’, ‘continue’, ‘anticipates’, ‘intends’, ‘expects’, ‘should’, ‘schedule’, ‘program’, ‘potential’ or the negatives thereof and words of similar import.

• FAR cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied by the statements. The forward looking statements are expressly subject to this caution. FAR makes no representation, warranty (express or implied), or assurance as to the completeness or accuracy of these forward-looking statements and, accordingly, expresses no opinion or any other form of assurance regarding them. FAR will not necessarily publish updates or revisions of these forwardlooking statements to reflect FAR’s circumstances after the date hereof.

• By its very nature exploration and development of oil and gas is high risk and is not suitable for certain investors. FAR shares are a speculative investment. There are a number of risks, both specific to FAR and of a general nature which may affect the future operating and financial performance of FAR and the value of an investment in FAR including and not limited to economic conditions, stock market fluctuations, oil and gas demand and price movements, regional infrastructure constraints, securing drilling rigs, timing of approvals from relevant authorities, regulatory risks, operational risks, reliance on key personnel, foreign currency fluctuations, and regional geopolitical risks.

• This presentation does not purport to be all inclusive or to contain all information which you may require in order to make an informed assessment of the Company’s prospects. You should conduct your own investigation, perform your own analysis, and seek your own advice from your professional adviser before making any investment decision.

• Cautionary Statement for Prospective Resource Estimates – With respect to the Prospective Resource estimates contained within this report, it should be noted that the estimated quantities of Petroleum that may potentially be recovered by the future application of a development project may relate to undiscovered accumulations. These estimates have an associated risk of discovery and risk of development. Further exploration and appraisal is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

• Information in this report relating to hydrocarbon resource estimates has been compiled by Peter Nicholls, the FAR exploration manager. Mr Nicholls has over 30 years of experience in petroleum geophysics and geology and is a member of the American Association of Petroleum Geology, the Society of Exploration Geophysicists and the Petroleum Exploration Society of Australia. Mr Nicholls consents to the inclusion of the information in this report relating to hydrocarbon Prospective Resources in the form and context in which it appears. The Prospective Resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, Petroleum Resource Management System.

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