FAR LIMITED — Interim / Quarterly Report 2018

Aug 29, 2018

1

This report does not include all the notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Consolidated Entity as the full financial report. Accordingly, this report should be read in conjunction with the annual report of FAR Limited for the year ended 31 December 2017. It is also recommended that this financial report be considered together with any public announcement made by FAR Limited and its controlled entities during the half-year ended 30 June 2018, in accordance with the continuous disclosure requirements of the Corporations Act 2001 , including its quarterly reports lodged with the Australian Securities Exchange.

Expressed in Australian dollars unless otherwise stated.

Contents

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DIRECTORS’ REPORT 2
AUDITOR’S INDEPENDENCE DECLARATION 7
INDEPENDENT AUDITOR’S REPORT 8
DIRECTORS’ DECLARATION 10
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 11
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 12
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 13
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 14
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 15
1. SIGNIFICANT ACCOUNTING POLICIES............................................................................................................................................................................ 15
2. SEGMENT INFORMATION....................................................................................................................................................................................................... 16
3. LOSS FOR THE PERIOD.............................................................................................................................................................................................................. 17
4. CASH....................................................................................................................................................................................................................................................... 18
5. TRADE AND OTHER RECEIVABLES.................................................................................................................................................................................... 18
6. EXPLORATION AND EVALUATION ASSETS.................................................................................................................................................................. 18
7. TRADE AND OTHER PAYABLES............................................................................................................................................................................................ 18
8. ISSUED CAPITAL............................................................................................................................................................................................................................. 19
9. SHARE BASED PAYMENTS...................................................................................................................................................................................................... 19
10. COMMITMENTS............................................................................................................................................................................................................................. 21
11. CONTINGENT LIABILITIES........................................................................................................................................................................................................ 21
12. SUBSEQUENT EVENTS............................................................................................................................................................................................................... 22

CORPORATE DIRECTORY

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1

Half-Year Financial Report 2018

Directors’ Report

The directors of FAR Limited (the “Company”) submit herewith the Financial Report of the Company and its subsidiaries (‘the Consolidated Entity’) for the half-year ended 30 June 2018. In order to comply with the provisions of the Corporations Act 2001 , the directors report as follows:

The directors of the Company in office during or since the end of the period are:

Mr N J Limb Ms C M Norman Mr B J M Clube (resigned 27 August 2018) Mr R G Nelson Mr T R Woodall

All directors held office during and since the end of the period unless otherwise stated.

PRINCIPAL ACTIVITIES

The principal activities of the Company are:

• Securing exploration projects;

• Conducting exploration appraisal and evaluation for oil and gas resources; and

• Realising value from oil exploration and production interests.

FINANCIAL PERFORMANCE

	Half-year ended	Half-year ended
	30 Jun 2018	30 Jun 2017	Change
	$	$	$	%
Profit & loss
Revenues	243,518	201,695	41,823	20.7
Expenses	(12,321,233)	(22,549,790)	10,228,557	(45.4)
Loss for the period	(12,077,715)	(22,348,095)	10,270,380	(46.0)
Basic EPS (cents)	(0.22)	(0.46)	0.24	(52.2)
Cash flows
Operating cash flow	(15,957,296)	(17,170,945)	1,213,650	(7.1)
Investing cash flow	(6,314,789)	(12,125,617)	5,810,828	(47.9)
Financing cash flow	-	76,587,542	(76,587,542)	100.0
	Period	Ended
Financial position	30 Jun 2018	31 Dec 17
Net assets	165,182,466	171,587,571	(6,405,105)	(3.7)
Cash balance	28,886,653	49,926,796	(21,040,143)	(42.1)

RESULT FOR THE PERIOD

The Company reported a loss for the half-year ended 30 June 2018 of $12,077,715 (30 June 2017 – loss of $22,348,095) which included exploration expenses of $12,037,359 (30 June 2017 – $17,159,164), interest income of $243,518, administration expenses (including employee, consultant, depreciation and amortisation costs) of $2,644,921, net foreign exchange gains of $2,503,777 and other expenses of $142,730.

The loss for the period of $12,077,715 was $10,270,380 lower than the previous corresponding period principally due to lower exploration expenses of $12,037,359 compared with $17,159,164 and a foreign exchange gain of $2,503,777 compared with a foreign exchange loss of $2,678,983. Exploration expenses in the first half of 2017 of $17,159,164 included Senegal well costs of $7,190,683 which were nil in the current half. The lower Senegal costs in 2018 have been offset by the inclusion of The Gambia exploration expenses of $2,376,905 which were nil in the 2017 first half.

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Half-Year Financial Report 2018 Directors’ Report

FINANCIAL POSITION

Net assets decreased by 3.7% to $165,182,466 during the half-year. Total assets decreased by $9,818,831 to $171,473,803 and total liabilities decreased by $3,413,726 to $6,291,337.

Cash at 30 June 2018 was $28,886,653, a decrease of $21,040,143 or 42% from the prior year end, primarily resulting from payments for exploration and evaluation expenses of $13,345,563 principally relating to Senegal and The Gambia and payments for exploration and evaluation capitalised of $6,501,521 principally relating to The Gambia long lead, well planning and preparation costs for the Samo-1 well to be drilled in late 2018.

Exploration and evaluation assets increased by $11,000,690 during the half year to $139,735,334. The increase reflects the capitalisation of The Gambia Block A2 Samo-1 well long lead items, well planning and preparation costs of $6,237,481, offset by a reduction in the Senegal RSSD 2017 well campaign costs of $1,857,450 resulting from the completion of well reconciliations by the Operator, plus a foreign exchange gain on the revaluation of Senegal RSSD well costs of $6,327,362.

Trade and other payables decreased by $3,440,453 during the half to $5,129,247. The lower balance primarily relates to a decrease of $4,232,287 in Senegal joint venture payables partially offset by an increase in The Gambia accruals of $679,964.

REVIEW OF OPERATIONS

SENEGAL

Following the highly successful drilling campaign offshore Senegal in 2017, the Company and its RSSD co-venturers continued to progress pre-development activities for the first phase of the SNE Field development.

In February 2018, the RSSD joint venture released invitations to tender (ITT) packages to pre-qualified contractors for the Floating Production Storage Offtake vessel (“FPSO”), subsea infrastructure and drill rig. Responses have now been received and are under evaluation.

On 26 June 2018, the RSSD joint venture submitted the draft Environmental and Social Impact Assessment (“ESIA”) report to the Directorate of Environment and Classified Establishments in Senegal. The public hearing process on the ESIA is expected to commence in Q3 2018.

The development concept being considered by the joint venture is a standalone FPSO facility with subsea wells and infrastructure. The project will be designed to allow flexibility for anticipated subsequent development phases with subsea tie backs from other reservoir intervals and fields.

Subsequent to the period, the SNE and FAN Evaluation Report was submitted to the Government on 26 July 2018. This report includes a statement of commerciality of the SNE Field and describes the broad development concepts being planned in the Exploitation Plan which will be submitted to the Government in September 2018. The joint venture is targeting an initial production rate of 100,000 barrels of oil per day (bopd) and estimates up to 24 wells in the initial development phase.

The joint venture is targeting Final Investment Decision (FID) in the second half of 2019 and first oil between 2021 and 2023. The Production Sharing Contract allows for a 25-year term with 10-year extension(s).

Work on the project financing structure is ongoing.

Senegal resource updates

Earlier in the year, the Company completed detailed geotechnical studies and reviewed the contingent resources attributed to the FAN discovery that was made in 2014. The Company has also reviewed the undrilled prospects in the Senegal blocks, integrating data from the 3D seismic survey acquired in 2015, reprocessed data from the existing 3D survey and data from the 11 successful oil wells now drilled in the RSSD acreage.

These assessed contingent and prospective resources were reviewed by RISC Operations Limited Pty Ltd (“RISC”) and are detailed in the ASX announcement of 20 March 2018 and assess the probabilistic resource evaluation carried out by the Consolidated Entity in accordance with industry standard SPE-PRMS definitions. The contingent resource attributed to the FAN discovery is 198 mmbbls (best estimate, 100%, unrisked) while the prospective resources in the identified prospects total 673mmbbls (best estimate, 100%, unrisked).

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Half-Year Financial Report 2018 Directors’ Report

Senegal project arbitration

The International Chamber of Commerce (“ICC”) arbitration that the Company initiated in June last year to seek its right to pre-empt ConocoPhillips’ sale of its 35% working interest in the Senegalese RSSD project to Woodside is ongoing. The Company was advised by the International Court of Arbitration of the ICC that the president of the arbitral tribunal was appointed on 13 April 2018. Indications are that a final hearing in the arbitration is unlikely to occur before the second half of 2019.

GAMBIA

FAR Gambia Ltd (“FGL”) signed a Farm-out Agreement (“FOA”) with a subsidiary of Petroliam Nasional Berhad (“PETRONAS”) to assign a 40% interest in each of the highly prospective offshore petroleum licences, Blocks A2 and A5 in The Gambia. PETRONAS’s subsidiary will fund 80% of total well costs of the Samo-1 exploration well up to a maximum total cost of US$45.0 million. FGL is expected to be paid estimated cash of US$19 million (as at end June 18) for the reimbursement of back costs and cash consideration. Ministerial approval of the assignment was given on 23 August 2018.

FGL will retain a 40% working interest through the exploration phase of the A2/A5 licences, including the drilling of the Samo-1 well in Q4 2018. FGL is presently operator of the joint venture and PETRONAS has a right to become operator after a discovery in the licences.

The Samo-1 well is expected to be drilled in Q4 2018 and will be the first exploration well offshore The Gambia since 1979. It will be located on the Samo Prospect in the A2 block, approximately 29.6kms south of the discovery well in the giant SNE Field offshore Senegal and on the same shelf edge trend. There have been 9 successful oil wells drilled by the RSSD joint venture in Senegal on this trend with a 100% success rate.

FGL estimates the Samo Prospect contains Prospective Resources of 825mmbbls oil (best estimate, 100%, unrisked - refer ASX announcement of 21 Nov 2017). FGL awarded the drilling contract to a subsidiary of Stena Drilling who will provide the Stena DrillMAX deepwater drillship to drill the Samo-1 well.

FGL also executed a sublease contract with the Senegal RSSD joint venture to use the Dakar shorebase facilities for the Samo-1 drilling operations. These facilities have been used by the RSSD joint venture in the recent 11 well drilling campaigns and the A2/A5 joint ventures will benefit from the experience of the RSSD shorebase team when drilling the Samo-1 well.

The acquisition significantly expands the Company’s exploration portfolio in the offshore Mauritania-Senegal-GuineaBissau-Conakry Basin in West Africa.

GUINEA-BISSAU

The Company received an official government Decree in August 2017 for an approved 3 year licence extension in the Sinapa and Esperanca blocks to further evaluate the acquired 3D seismic data which will now end on 25 November 2020. During this time, the work obligation includes drilling one exploration well on each licence. The joint venture is currently planning a farmout for a well over the Atum Prospect in the Sinapa licence planned to be drilled before the end of 2021.

KENYA

During the quarter, no exploration activity was undertaken in Kenya Block L6. The suspension of activities in respect of Block L6 persists and, accordingly, no approved exploration activity was undertaken in Kenya.

During the quarter, FAR’s subsidiary terminated its farmin negotiations with Milio International Group. Enduring land access issues to the Kipini Conservancy was the prevailing factor as efforts to negotiate an alternative farmin agreement could not be reached. The onshore area of Block L6, however, remains highly prospective and the joint venture continues to pursue its onshore exploration efforts. Once unconditional land access to the Kipini Conservancy is obtained, FAR’s subsidiary expects to carry out its intended onshore exploration program with the acquisition of a 2D seismic survey. In addition, the joint venture plans to take advantage of the same field season to conduct an onshore drilling EIA study as well.

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Half-Year Financial Report 2018 Directors’ Report

AUSTRALIA

Following an application in 2017 to the National Offshore Petroleum Titles Administrator (“NOPTA”) to withdraw from Petroleum Exploration Permit WA-457-P, NOPTA advised that the permit was cancelled with no outstanding work obligations.

Following on from the Company’s annual report, it is anticipated that the remaining 3D seismic survey obligation over WA-458-P will be acquired through geophysical services company, CGG. This data acquisition is anticipated to begin in Q4 2018. FAR’s wholly owned subsidiary Lightmark Enterprises Pty Ltd intends to farm down its high interest in WA458-P after completing its evaluation of the prospectivity of the permit using this new seismic data.

CORPORATE

Performance rights

On 14 June 2018, the Company granted 11,207,000 (30 June 2017: 10,837,000) unlisted performance rights as a longterm incentive to nominated members of its executive team, other employees and consultants under the FAR Ltd performance rights plan (“PRP”). The issue of these rights to the directors and their vesting conditions were approved by Shareholders of the Company at the AGM held on 30 May 2018.

At the date of this report, the unlisted performance rights granted by the Company are as follows:

Unlisted performance rights Grant date Vesting date Expiry date Exercise price A$	No. of performance rights issued
FARAN 20 May 2016 31 Jan 2019 31 Jan 2021 -	18,497,000
FARAN 31 May 2017 31 Jan 2020 31 Jan 2022 -	10,837,000
FARAN 14 Jun 2018 31 Jan 2021 31 Jan 2023 -	11,207,000
	40,541,000

Further details of unlisted performance rights including vesting conditions, vesting schedule and valuation methodology are contained in Note 9.

There were no share options outstanding at the end of the reporting period or at the date of this report.

DIVIDENDS

During the half-year, no dividends were paid. The directors have not recommended the payment of a dividend.

CHANGE IN STATE OF AFFAIRS

Other than as stated above, there was no significant change in the state of affairs of the Company during the financial period.

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Half-Year Financial Report 2018 Directors’ Report

SUBSEQUENT EVENTS

The Company announced on 28 August 2018 the Ministry of Petroleum and Energy of The Gambia approved the assignment of a 40% interest to PETRONAS in Blocks A2 and A5. The Company will retain 40% equity in Blocks A2 and A5 and Operatorship and receive cash proceeds comprising back cost reimbursements and consideration totalling A$19M on costs to 30 June 2018. PETRONAS and FAR plan to drill the Samo-1 well in late 2018 targeting a prospective resource of 825mmbbls (best estimate, 100%, unrisked). The Parent Company Guarantee provided to the Gambian Ministry of Energy as a result of the farmout has been reduced from US$33,000,000 to US$6,600,000 for the initial Exploration Period of the Block A2 Licence Agreement.

The directors are not aware of any other matters or circumstances at the date of this report, other than those referred to in this report, that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Consolidated Entity in subsequent financial years.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

AUDITOR

Deloitte Touche Tohmatsu continues in office in accordance with the Corporations Act 2001 .

AUDITOR’S INDEPENDENCE DECLARATION

The directors’ report includes the auditor’s independence declaration which is included on page 7 of the half-year financial report.

Signed in accordance with a resolution of the directors made pursuant to Section 306(3) of the Corporations Act 2001.

On behalf of the Directors

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N J Limb Chairman Melbourne, 30 August 2018

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Deloitte Touche Tohmatsu ABN 74 490 121 060

550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

The Board of Directors FAR Limited Level 17, 530 Collins Street Melbourne VIC 3000

DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 www.deloitte.com.au

30 August 2018

Dear Board Members

FAR Limited

In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of FAR Limited.

As lead audit partner for the review of the financial statements of FAR Limited for the half-year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

Yours sincerely

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DELOITTE TOUCHE TOHMATSU

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Ryan Hansen Partner Chartered Accountant

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Touche Tohmatsu Limited

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Deloitte Touche Tohmatsu ABN 74 490 121 060

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550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

DX 111 Tel: +61 (0) 3 9671 7000 Fax: +61 (0) 3 9671 7001 d l itt

Independent Auditor’s Review Report to the members of FAR Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of FAR Limited, which comprises the condensed consolidated statement of financial position as at 30 June 2018, the condensed consolidated statement of profit or loss and other comprehensive income, the condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the half-year ended, and a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out in pages 11 to 22.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of FAR Limited’s financial position as at 30 June 2018 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As the auditor of FAR Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Auditor’s Independence Declaration

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of FAR Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Liability limited by a scheme approved under Professional Standards Legislation.

Member of Deloitte Touche Tohmatsu Limited

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Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of FAR Limited is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2018 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

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DELOITTE TOUCHE TOHMATSU

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Ryan Hansen Partner Chartered Accountants Melbourne, 30 August 2018

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Directors’ Declaration

The directors declare that:

• (a) in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

• (b) in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and giving a true and fair view of the financial position as at 30 June 2018 and of the performance of the Consolidated Entity for the half-year ended on that date.

Signed in accordance with a resolution of the directors made pursuant to s.303(5) of the Corporations Act 2001.

On behalf of the Directors

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N J Limb Chairman Melbourne, 30 August 2018

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Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Half-Year Ended 30 June 2018

Note Continuing operations Interest income Depreciation and amortisation expense Exploration expense 3 Corporate administration expenses Employee benefits expense 3 Consulting expense Foreign exchange gain/(loss) Other expenses Loss before tax Income tax expense Loss for the period Other comprehensive income/(loss), net of income tax Items that may be reclassified subsequently to profit or loss Exchange differences arising on translation of foreign operations Total comprehensive loss for the period Loss per share: Basic loss (cents per share) Diluted loss (cents per share)	Half-year ended
	30 Jun 2018 AU$ 30 Jun 2017 AU$
	243,518 201,695
	(31,252) (18,460)
	(12,037,359) (17,159,164)
	(274,393) (424,642)
	(2,059,661) (1,900,355)
	(279,615) (183,270)
	2,503,777 (2,678,983)
	(142,730) (184,916)
	(12,077,715) (22,348,095)
	- -
	(12,077,715) (22,348,095)
	5,393,991 (6,235,079)
	(6,683,724) (28,583,174)
	(0.22) (0.46)
	(0.22) (0.46)

Notes to the condensed consolidated financial statements are included on pages 15 to 22.

11

Condensed Consolidated Statement of Financial Position As at 30 June 2018

Note CURRENT ASSETS Cash and cash equivalents 4 Trade and other receivables 5 Other financial assets Total Current Assets NON-CURRENT ASSETS Property, plant and equipment Exploration and evaluation assets 6 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 7 Provisions Total Current Liabilities NON-CURRENT LIABILITIES Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital 8 Reserves Accumulated losses TOTAL EQUITY	30 Jun 2018 31 Dec 2017 AU$ AU$
	28,886,653 49,926,796
	2,335,247 2,148,325
	125,087 123,489
	31,346,987 52,198,610
	391,482 359,380
	139,735,334 128,734,644
	140,126,816 129,094,024
	171,473,803 181,292,634
	5,129,247 8,569,700
	1,035,972 1,024,985
	6,165,219 9,594,685
	126,118 110,378
	126,118 110,378
	6,291,337 9,705,063
	165,182,466 171,587,571
	374,521,076 374,521,076
	11,179,000 5,506,390
	(220,517,610) (208,439,895)
	165,182,466 171,587,571

Notes to the condensed consolidated financial statements are included on pages 15 to 22.

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Condensed Consolidated Statement of Changes in Equity For the Half-Year Ended 30 June 2018

Balance at 1 January 2017 Loss for the period Exchange differences arising on translation of foreign operations Total comprehensive loss for the period Issue of shares Share issue costs Recognition of amortisation of performance rights Cancellation of performance rights Balance at 30 June 2017 Balance at 1 January 2018 Loss for the period Exchange differences arising on translation of foreign operations Total comprehensive income/(loss) for the period Recognition of amortisation of performance rights Balance at 30 June 2018	Share Capital AU$ 297,933,534 - -	Reserves Share based payments reserve(i) Foreign currency translation reserve(ii) Total Reserves AU$ AU$ AU$	Accumulated losses Total attributed to equity holders of parent AU$ AU$ (165,660,715) 144,800,225 (22,348,095) (22,348,095) - (6,235,079)
		8,445,445 4,081,961 12,527,406
		- - - - (6,235,079) (6,235,079)
	-	- (6,235,079) (6,235,079)	(22,348,095) (28,583,174)
	80,000,000 (3,412,458) - -	- - - - - - 327,495 - 327,495 (161,041) - (161,041)	- 80,000,000 - (3,412,458) - 327,495 - (161,041)
	374,521,076	8,611,899 (2,153,118) 6,458,781	(188,008,810) 192,971,047
	374,521,076 - -	8,891,614 (3,385,224) 5,506,390 - - - - 5,393,991 5,393,991	(208,439,895) 171,587,571 (12,077,715) (12,077,715) - -
	-	- 5,393,991 5,393,991	(12,077,715) (6,683,724)
	-	278,619 - 278,619	- 278,619
	374,521,076	9,170,233 2,008,767 11,179,000	(220,517,610) 165,182,466

(i) This comprises of the fair value of rights and options recognised as an employee expense

(ii) Foreign currency translation reserve represents the foreign currency movement on the revaluation of assets and liabilities held in currencies other than AUD

Notes to the condensed consolidated financial statements are included on pages 15 to 22.

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Condensed Consolidated Statement of Cash Flows for the Half-Year Ended 30 June 2018

Note CASH FLOWS FROM OPERATING ACTIVITIES Payments to employees and corporate suppliers Payments for exploration and evaluation expensed Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Payments for exploration and evaluation capitalised Payments for property, plant and equipment Payment of farm-in costs Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Payment for share issue costs Net cash provided by financing activities NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial period 4	Half-year ended
	30 Jun 2018 AU$ 30 Jun 2017 AU$
	(2,611,733) (2,332,848)
	(13,345,563) (14,838,099)
	(15,957,296) (17,170,945)
	266,973 150,553
	(6,501,521) (10,086,097)
	(80,241) (46,092)
	- (2,143,981)
	(6,314,789) (12,125,617)
	- 80,000,000
	- (3,412,458)
	- 76,587,542
	(22,272,085) 47,290,978
	49,926,796 46,978,179
	1,231,942 (3,003,079)
	28,886,653 91,266,078

Notes to the condensed consolidated financial statements are included on pages 15 to 22.

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

1. SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The half-year financial report is a general-purpose financial report prepared in accordance with the Corporations Act 2001 and Accounting Standard AASB 134 Interim Financial Reporting . Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The half-year financial report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent annual financial report.

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost except, where applicable, for the revaluation of certain non-current assets and financial instruments. All amounts are presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the condensed consolidated financial statements are consistent with those adopted and disclosed in the Company’s annual report for the year ended 31 December 2017, except for the adoption of new standards and interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

a. Going concern

The directors believe that it is appropriate to prepare the condensed consolidated financial statements on a going concern basis. As at 30 June 2018, the Group’s current assets exceeded current liabilities by $25,181,769 and the Group has cash and cash equivalents of $28,886,653. The Group will continue to manage its evaluation and operating activities and put in place financing arrangements to ensure that it has sufficient cash reserves for the next twelve months. For further details of future commitments refer to Note 10. In the opinion of the directors, the Group will be in a position to continue to meet its liabilities and obligations for a period of at least twelve months from the date of this report, because the Company believes it has adequate financing plans in place to be able to secure funding for its planned activities over the same period.

The opinion of the directors has been determined after consideration of the Company’s cash position and forecast expenditures and having regard for the following factors:

• The ability to issue share capital under the Corporations Act 2001 , if required, by a share purchase plan, share placement or rights issue;

• The option of farming out all or part of the Group’s assets;

• The option of selling interests in assets; and

• The option of relinquishing or disposing of rights and interests in certain assets.

Based on the above, the directors are satisfied that the Company will be able to realise its assets and discharge its liabilities in the normal course of business. It is reasonable to prepare the financial report on a going concern basis.

Amendments to AASBs and new interpretations that are mandatorily effective for the current reporting period

In the current period, the Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) that are relevant to its operations and effective for the current half-year.

Estimates

The preparation of half-year financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing the condensed consolidated financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial report as at and for the year ended 31 December 2017.

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

Financial risk management

The Consolidated Entity financial risk management objectives and policies are consistent with those disclosed in the consolidated financial report as at and for the year ended 31 December 2017.

2. SEGMENT INFORMATION

AASB 8 Operating Segments requires operating segments to be identified on the basis of internal reports about components of the entity that are regularly reviewed by the Managing Director (chief operating decision maker) in order to allocate resources to the segments and to assess its performance.

The Consolidated Entity undertakes exploration of oil and gas in Australia and Africa. The identification of the Consolidated Entity reporting segments remains consistent with prior periods, with management allocating resources to segments on a geographical basis with the inclusion of a ‘corporate’ segment which captures all head office and administrative income, expenses, assets and liabilities.

Information regarding these segments is presented below. The accounting policies of the reportable segments are the same as those of the Group.

Segment Assets and Liabilities

The following is an analysis of the Group’s assets and liabilities by reportable operating segment:

The Gambia Guinea-Bissau Kenya Senegal Other Corporate Total assets and liabilities	Assets Liabilities
	30 Jun 2018 31 Dec 2017 30 Jun 2018 31 Dec 2017
	AU$ AU$ AU$ AU$
	17,634,944 10,139,222 1,499,226 597,600
	1,501,539 1,168,431 59,526 30,150
	281,268 308,155 6,954 6,863
	122,374,393 120,630,687 3,156,471 7,610,239
	9,319 8,842 4,665 14,347
	29,672,340 49,037,297 1,564,495 1,445,864
	171,473,803 181,292,634 6,291,337 9,705,063

16

Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

Segment Revenue and Results

The following is an analysis of the Consolidated Entity’s revenue and results by reportable segment for the period under review:

Australia Guinea-Bissau The Gambia Kenya Senegal Other Corporate Total for continuing operations Income tax expense Loss after tax (continuing operations)	Interest Income Segment Loss Half-year ended Half-year ended
	30 Jun 2018 30 Jun 2017 30 Jun 2018 30 Jun 2017
	AU$ AU$ AU$ AU$
	- - (24,895) (39,550)
	- - (615,859) (358,970)
	- - (2,703,982) -
	- - (113,222) (90,813)
	- - (8,310,130) (15,207,241)
	- - (269,270) (1,462,590)
	243,518 201,695 (40,357) (5,188,931)
	243,518 201,695 (12,077,715) (22,348,095)
	- - - -
	- - (12,077,715) (22,348,095)

The revenue reported above represents revenue generated from external sources. There were no intersegment sales during the current and previous corresponding half-year.

3. LOSS FOR THE PERIOD

Loss for the period from continuing operations includes the following expenses:

Exploration expense Australia Guinea-Bissau The Gambia Kenya Senegal New ventures and other Employee benefit expense: - Short-term employee benefits – salaries and fees - Recharge of salaries and fees to exploration expense - Short-term employee benefits – termination Post-employment benefits - Defined contribution plans - Share based payments – equity settled - Increase in employee benefits provisions	Half-year ended 30 Jun 2018 AU$ 30 Jun 2017 AU$ (24,896) (39,550) (615,859) (358,970) (2,703,982) - (113,222) (90,813) (8,310,130) (15,207,241) (269,270) (1,462,590)
	(12,037,359) (17,159,164)
	(2,263,306) (1,625,819) 601,216 624,684 - (470,138) (92,222) (121,743) (278,620) (166,455) (26,729) (140,884)
	(2,059,661) (1,900,355)

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

4. CASH

Cash and cash equivalents Cash and cash equivalents held in joint operations . TRADE AND OTHER RECEIVABLES Interest receivable Other receivables Prepayments Joint operations receivables . EXPLORATION AND EVALUATION ASSETS Exploration and evaluation expenditure: Opening balance Additions(i) Impairment Net foreign currency exchange differences Closing balance		30 Jun 2018 AU$ 31 Dec 2017 AU$ 27,642,502 46,725,899 1,244,151 3,200,897
		28,886,653 49,926,796
		30 Jun 2018 AU$ 31 Dec 2017 AU$ 1,700 25,281 962,105 817,956 423,528 657,304 947,914 647,783
		2,335,247 2,148,325
		30 Jun 2018 AU$ 31 Dec 2017 AU$ 128,734,644 101,706,766 4,439,994 34,860,163 - (463,231) 6,560,696 (7,369,054)
		139,735,334 128,734,644

5. TRADE AND OTHER RECEIVABLES

6. EXPLORATION AND EVALUATION ASSETS

(i) Additions during the period principally relate to The Gambia Block A2 Samo-1 well including long lead items, well planning and preparation costs amounting to $6,237,481. These additions have been offset by a reversal of $1,857,450 of the Senegal RSSD 2017 well campaign accruals due to the completion of the 2017 well reconciliations in the first half of 2018 by the Operator.

7. TRADE AND OTHER PAYABLES

. TRADE AND OTHER PAYABLES
Current Trade payables Other payables Joint operation payables	30 Jun 2018 AU$ 31 Dec 2017 AU$ 703,338 553,401 106,903 392,381 4,319,006 7,623,918
	5,129,247 8,569,700

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

8. ISSUED CAPITAL

Fully paid ordinary share At beginning of the period Shares allotted during the period Share issue costs Ordinary fully paid shares at end of the period	30 Jun 2018 31 Dec 2017 30 Jun 2018 31 Dec 2017
	AU$ AU$ Number Number
	374,521,076 297,933,534 5,464,532,458 4,461,532,458
	- 80,000,000 - 1,000,000,000
	- (3,412,458) - -
	374,521,076 374,521,076 5,461,532,458 5,461,532,458

There were no shares issued by the Company during the half-year ended 30 June 2018.

Fully paid ordinary shares carry one vote per share and a right to dividends.

9. SHARE BASED PAYMENTS

The following share-based payment arrangements were on issue as at 30 June 2018:

Unlisted performance rights Grant date Vesting date Expiry date Exercise price A$	No. of performance rights issued Fair Value At Grant date A$
FARAN 20 May 2016 31 Jan 2019 31 Jan 2021 -	18,497,000 1,178,376
FARAN 31 May 2017 31 Jan 2020 31 Jan 2022 -	10,837,000 484,391
FARAN 14 Jun 2018 31 Jan 2021 31 Jan 2023 -	11,207,000 589,867
	40,541,000 2,252,634

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

Performance rights vesting conditions

The performance rights are subject to the following vesting conditions:

• Absolute Total Shareholder Return: a measure of the total shareholder return (share plus dividend) achieved over the Performance Period;

• Relative Total Shareholder Return: a measure of the total shareholder return achieved over a given time period relative to the total shareholder return over the same time period for a comparable set of companies; and

• Continuous service until the performance expiry date.

Absolute Total Shareholder Return (“TSR”)

50% of the Performance Rights will be subject to an absolute total shareholder return hurdle over the Performance Period and will be tested at 31 January (“Test Date”), 3 years after the start date. A TSR equal to a Compounded Annual Growth Rate (“CAGR”) of at lease 15% per annum over the Performance Period is required in order for any of the Performance Rights to vest. The TSR is calculated by comparing the Base Price against the share price on the Test Date plus any dividends paid throughout the Performance Period, which is then computed into an equivalent per annum return.

For the purposes of the Absolute TSR test, the Board have elected to set the Base Price of FAR shares as at 1 February, which is the 20-day volume weighted average price (“VWAP”) preceding 1 February.

Absolute TSR performance:

• Above 25% CAGR, 50% of the performance rights granted will vest.

• Between 15% and 25% CAGR, pro-rata 25%-50% of the performance rights granted will vest.

• At 15% CAGR, 25% of the performance rights granted will vest.

• Less than 15% CAGR, no performance rights will vest.

Relative Total Shareholder Return (“TSR”)

The remaining 50% of the Performance Rights will be subject to a Relative TSR hurdle over the three-year Performance Period to 31 January and will be tested at the end of this period. The TSR performance of FAR Shares will be compared to the TSR performance of all other shares in a comparator group, being the S&P/ASX Energy 300 Index, and Performance Rights will vest only if FAR’s TSR performance is at least at the 50[th] percentile.

The Performance Rights also contain other provisions including the ability for the Board at its discretion to determine that no relative TSR performance Rights will vest if the Company’s TSR performance is negative, change of control events and good and bad leaver provisions relating to unvested Performance Rights.

Relative TSR performance:

• At or above the 75[th] percentile, 50% of the performance rights granted will vest.

• Between 50[th] percentile and 75[th] percentile, pro-rata 25%-50% of the performance rights granted will vest.

• At 50[th] percentile, 25% of the performance rights granted will vest.

• Below 50[th] percentile, no performance rights will vest.

Valuation of performance rights

Performance rights issued are measured at fair value at the date of grant and are expensed where there are no vesting conditions and in cases where a vesting restriction exists, amortised over the vesting period. In accordance with Australian Accounting Standards, fair value is determined using a generally accepted valuation model.

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Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

10. COMMITMENTS

In order to maintain rights to tenure of exploration permits, the Group is required to perform minimum work programs specified by various state and national governments. These obligations are subject to renegotiation in certain circumstances such as when application for an extension permit is made and at other times. The minimum work program commitments may be reduced by the Group by entering into sale or farm-out agreements or by relinquishing permit interests. Should the minimum work program not be completed in full or in part in respect of a permit then the Group’s interest in that exploration permit could be either reduced or forfeited. In some instances, a financial penalty may result if the minimum work program is not completed. Approved expenditure for permits may be in excess of the minimum expenditure or work commitment. Where the Group has a financial obligation in relation to approved joint operation exploration expenditure that is greater than the minimum permit work program commitments then these amounts are also reported as a commitment.

The current estimated expenditure for approved commitments and minimum work program commitments are as follows:

	30 Jun 2018	31 Dec 2017
	AU$	AU$
Exploration and evaluation
Not longer than 1 year *	38,896,951	47,308,527
Longer than 1 year and not longer than 5 years	1,736,453	-
Longer than 5 years	-	-
	40,633,404	47,308,527

*Included in the not longer than 1 year total is The Gambia commitment of AU$35,227,644, to drill the Samo-1 exploration well by 31 December 2018. Subsequent to period end FAR announced the Ministry of Petroleum, The Gambia approved the assignment of a 40% interest from FAR Gambia Ltd to PETRONAS in Blocks A2 and A5. As a result of the farmout PETRONAS will fund 80% of the exploration well costs of the Samo-1 well up to a maximum total gross cost of US$45 million, reducing the Consolidated Entities Gambian commitment to $7,045,529.

11. CONTINGENT LIABILITIES

Contingent liabilities Guinea-Bissau – contingent payment from future production Guinea-Bissau – contingent withholding tax liability Kenya L6 – performance Bond	30 Jun 2018 AU$ 31 Dec 2017 AU$ 17,556,298 16,658,167 766,821 727,592 123,484 121,968
	18,446,603 17,507,727

21

Notes to the Condensed Consolidated Financial Statements For the Half-Year Ended 30 June 2018

12. SUBSEQUENT EVENTS

Subsequent Events after balance sheet date

The Company announced on 28 August 2018 the Ministry of Petroleum and Energy of The Gambia approved the assignment of a 40% interest by FAR Gambia Ltd to PETRONAS in Blocks A2 and A5. The Company will retain 40% equity in Blocks A2 and A5 and Operatorship and receive cash proceeds comprising back cost reimbursements and consideration totalling A$19M on costs to 30 June 2018. PETRONAS and FAR plan to drill the Samo-1 well in late 2018 targeting a prospective resource of 825mmbbls (best estimate, 100%, unrisked). The Parent Company Guarantee provided to the Gambian Ministry of Energy as a result of the farmout has been reduced from US$33,000,000 to US$6,600,000 for the initial Exploration Period of the Block A2 Licence Agreement.

The directors are not aware of any other matters or circumstances at the date of this report, other than those referred to in this report, that have significantly affected or may significantly affect the operations, the results of the operations or the state of affairs of the Consolidated Entity in subsequent financial years.

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CORPORATE DIRECTORY

DIRECTORS

Nicholas Limb (Chairman) Catherine Norman (Managing Director) Benedict Clube (Executive Director resigned 27 August 2018) Timothy Woodall (Non-Executive Director) Reginald Nelson (Non-Executive Director)

COMPANY SECRETARY

Peter Thiessen

REGISTERED OFFICE

Level 17, 530 Collins Street Melbourne VIC 3000 Australia Telephone: +61 3 9618 2550 Facsimile: +61 3 9620 5200

Website: www.far.com.au Email: info@far.com.au

SHARE REGISTRY

Computershare Investor Services Pty Ltd 452 Johnston Street Abbotsford VIC 3067 Australia Telephone: +61 (0) 39415 4000 Facsimile: +61 (0) 3 9473 2500

BANKERS

Westpac Banking Corporation 150 Collins Street Melbourne VIC 3000 Australia

Stanbic Bank Limited Level 5, Stanbic Building Kenyatta Avenue Nairobi Kenya

Standard Chartered Bank Gambia Limited 8 Ecowas Avenue Banjul, The Gambia

SOLICITORS

Baker & McKenzie Level 19, 181 William Street Melbourne VIC 3000 Australia

AUDITORS

Deloitte Touche Tohmatsu 550 Bourke Street Melbourne VIC 3000 Australia

Website: www.computershare.com.au

STOCK EXCHANGE LISTINGS

Australian Stock Exchange ASX Code: FAR

ADR DEPOSITARY

BNY Mellon 101 Barclay Street New York NY 10286 United States of America

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