FAR LIMITED — Interim / Quarterly Report 2019

Aug 28, 2019

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ABN 41 009 117 293

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FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED
30 JUNE 2019
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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 Group 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 2018. 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 2019, in accordance with the continuous disclosure requirements of the Corporations Act 2001 , including its quarterly reports lodged with the Australian Securities Exchange.

Expressed in United States dollars ( USD, US$ or $ ) unless otherwise stated.

Forward looking statements - This document may include forward looking statements. Forward looking statements include, are not necessarily limited to, statements concerning FAR’s planned operation program and other statements that are not historic facts. When used in this document, the words such as “could”, “plan”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions are forward looking statements. Although FAR Ltd believes its expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forwardlooking statements. The entity confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning this announcement continue to apply and have not materially changed.

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CONTENTS

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DIRECTORS’ REPORT 2	DIRECTORS’ REPORT 2
AUDITOR’S INDEPENDENCE DECLARATION 8
INDEPENDENT AUDITOR’S REVIEW REPORT 9
DIRECTORS’ DECLARATION 11
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 12
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 13
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 14
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 15
NOTES	TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 16
1.	SIGNIFICANT ACCOUNTING POLICIES ..................................................................................................................................... 16
2.	SEGMENT INFORMATION ...................................................................................................................................................... 20
3.	OTHER INCOME ...................................................................................................................................................................... 21
4.	LOSS FOR THE PERIOD ............................................................................................................................................................ 21
5.	PROVISION FOR DOUBTFUL DEBTS ........................................................................................................................................ 21
6.	CASH ....................................................................................................................................................................................... 22
7.	TRADE AND OTHER RECEIVABLES .......................................................................................................................................... 22
8.	PROPERTY, PLANT AND EQUIPMENT ..................................................................................................................................... 22
9.	EXPLORATION AND EVALUATION ASSETS .............................................................................................................................. 22
10.	TRADE AND OTHER PAYABLES ............................................................................................................................................... 23
11.	RIGHT-OF-USE ASSETS AND LEASE LIABILITIES ....................................................................................................................... 23
12.	FINANCIAL ASSETS AND LIABILITIES ....................................................................................................................................... 24
13.	ISSUED CAPITAL...................................................................................................................................................................... 25
14.	SHARE-BASED PAYMENTS ...................................................................................................................................................... 25
15.	EARNINGS PER SHARE ............................................................................................................................................................ 26
16.	CONTINGENT LIABILITIES ....................................................................................................................................................... 26
17.	SUBSEQUENT EVENTS ............................................................................................................................................................ 26

CORPORATE DIRECTORY

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HALF-YEAR FINANCIAL YEAR REPORT 2019 DIRECTOR’S REPORT

The directors of FAR Ltd submit herewith the Financial Report of the Company and its subsidiaries (‘the Group’) for the half-year ended 30 June 2019. 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 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

Profit & loss Other income Expenses Loss for the period Basic EPS (cents) Cash flows Operating cash flow Investing cash flow Financing cash flow Financial position Net assets Cash balance		Half-year ended 30 Jun 2019 30 Jun 2018
		US$ US$ % change
		161,856 187,813 (13.8)
		(7,715,552) (10,337,860) (25.4)
		(7,553,696) (10,150,047) (25.6)
		(0.13) (0.19) (30.0)
		(9,694,113) (12,402,631) (21.8)
		(4,057,374) (4,975,307) (18.4)
		29,962,694 - -
		Period Ended
		30 Jun 2019 US$ 31 Dec 18 US$
		142,839,951 120,106,526 18.9
		35,770,874 19,540,172 83.1

RESULT FOR THE PERIOD

The Company reported a loss for the half year ended 30 June 2019 of $7,553,696 (30 June 2018 – loss of $10,150,047) which included other income of $161,856, exploration expenses of $4,609,043 (30 June 2018 - $9,286,353), employee benefits expense of $1,332,891 and provision for doubtful debts of $1,151,975 relating to outstanding cash calls in The Gambia joint venture.

The loss for the period of $7,553,696 was $2,596,351 lower than the previous corresponding period principally due to lower exploration expenses. Exploration expenses in the first half of 2019 of $4,609,043, included The Gambia post well exploration expenses of $1,255,090, Guinea-Bissau non-well costs of $568,167 and Senegal arbitration, engineering and financing costs of $1,804,076.

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HALF YEAR FINANCIAL REPORT 2019 DIRECTOR’S REPORT

FINANCIAL POSITION

Net assets increased by 18.9% to $142,839,951 during the half-year. Total assets increased by $24,825,408 to $147,794,971 and total liabilities increased by $2,091,983 to $4,955,020 explored further below.

The two material assets on the balance sheet are cash and exploration and evaluation assets. Cash at 30 June 2019 was $35,770,874, a net increase of $16,230,702 or 83% from the prior year end. The net increase was primarily the result of a successful capital raise of $30,134,340 (net of issue costs) less payments for exploration and evaluation expenses of $5,951,326 principally relating to Senegal and The Gambia and payments for exploration and evaluation assets of $5,555,626 principally relating to Senegal RSSD predevelopment costs.

Exploration and evaluation assets increased by $6,950,994 during the half year to $106,938,933. The increase reflects the capitalisation of Senegal RSSD front end engineering and design (FEED) and other pre-development related costs of $6,417,139 and Guinea-Bissau well planning costs of $533,855.

The material liability on the balance sheet is trade and other payables which increased by $1,176,804 during the half to $3,389,149. The higher balance predominately relates to an increase in Senegal joint venture payables at period end.

REVIEW OF OPERATIONS

SENEGAL

The Rufisque, Sangomar and Sangomar Deep (‘RSSD’) Joint Venture continued to progress FEED activities for the SNE Field Development – Phase 1 offshore Senegal that commenced in late Q4 2018 with award of a FEED contract to Subsea Integration Alliance. The FEED work being undertaken involves activities required to finalise budgets, schedules and technical definitions for the proposed development to enable a Final Investment Decision (‘FID’) targeted for H2 2019. The SNE development concept is a standalone Floating Production Storage and Offtake (‘FPSO’) facility with subsea wells and supporting subsea infrastructure that will be designed to integrate subsequent SNE development phases, including the opportunity for gas export to shore, and future subsea tiebacks from other reservoirs and nearby fields.

On 2 January 2019, the RSSD Joint Venture received approval from the Direction de L’Environnement et des Establissements Classes (‘DEEC’) in securing the vital Environmental and Social Impact Assessment certificate of compliance for the proposed SNE Field Development – Phase 1. The RSSD Joint Venture will continue to work with the Government of Senegal to implement its management plan and to ensure it remains in compliance with the provisions of the Environmental Code.

By Presidential Decree, the RSSD Production Sharing Contract (‘PSC’) was granted a further 10-month extension to the current Second Renewal Period, effective from 5 February 2019 to 4 December 2019. This important extension pertained to the SNE Development Area and will allow the RSSD Joint Venture to make the necessary amendments to the Development and Exploitation Plan for the SNE Field before re-submitting it to the Government of Senegal. The current extension will further enable the RSSD partners to finalise project financing with a view to achieving FID at the end of 2019.

On 17 February 2019, a further FEED contract was awarded to MODEC International Inc. for the SNE Field Development – Phase 1 FPSO facility. Subsea and FPSO FEED activities are advancing to establish key process and design performance, which is currently under assessment and review, are on schedule for completion in Q3 2019.

A well-based drilling contract was conditionally awarded by the RSSD Joint Venture to Offshore Diamond Drilling Inc. in April 2019. Two (2) ultra-deep water drillships, the Ocean BlackRhino and the Ocean BlackHawk, were secured for phased drilling expected to begin in Q4 2020 and later in Q1 2022 respectively. The work scope for development drilling consists of eighteen (18) production and injection wells with the option of drilling an additional eight (8) wells over a combined duration of four (4) years. The contract remains conditional on a notice to proceed being issued by the Joint Venture.

In anticipation of being granted an extension to evaluate the nearby FAN and SNE North discoveries for possible tieback production in future phases of the SNE full field development, the RSSD partners awarded a seismic survey contract to Shearwater GeoServices in March 2019 to acquire a high-density, multi-azimuth 3D seismic survey over the Evaluation Area encompassing the discoveries and over the SNE Development Area, with the aim to improve reservoir definition in supporting SNE well positioning and optimisation. In events post half year, Shearwater commenced 3D seismic acquisition across the RSSD blocks in late July 2019.

GAMBIA

During H1 2019, the Block A2 and Block A5 licensees continued their geotechnical evaluation of the prospectivity offshore The Gambia following the results and interpretations from the Samo-1 well drilled in Q4 2018. Samo-1 encountered excellent quality reservoirs that were consistent with pre-drill prognoses, and coupled with some hydrocarbon shows, have confirmed that the A2 and A5 offshore areas have access to an active charge system.

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HALF YEAR FINANCIAL REPORT 2019 DIRECTOR’S REPORT

The completion of drilling at Samo-1 ensured the licensees have fulfilled the minimum work obligation of the current Initial Exploration Period of the respective A2 and A5 Petroleum Licences, which were due to expire on 1 July 2019. The Government of The Gambia and licensees have mutually agreed to extend the current initial Exploration Period whilst studies are continuing and licence amendments are being finalised. These licence amendments will make clearer the obligations of the Government and Contractors in the event of a discovery in the A2 and A5 permits.

GUINEA-BISSAU

The Sinapa and Esperanca licences are currently within an approved extension of (Phase 2 of Part 2 of) the Initial Term as provided for under their respective Agreements for Joint Venture Participation (‘AJVP’) where a subsidiary of Svenska Petroleum Exploration AB (‘Svenska’) is Operator of the Joint Venture. The minimum work obligation requires the drilling of one (1) exploration well on each licence before 25 November 2020. During the first half of 2019, the Joint Venture significantly advanced well planning in preparation for the drilling of the Atum Prospect on the Sinapa Licence targeted for Q1 2020 spud.

At end of Q4 2018, Operator appointed Exceed Torridon Limited to lead and implement the Joint Venture’s drilling campaign management from project scoping and initial well planning to services contracting and drilling operations to address key aspects of risk, HSSE, engineering and logistics during progressive stages of the planning to ensure the business case for the project is delivered.

Well planning has advanced considerably during H1 2019 with long lead equipment such as wellheads, casing and related tubular goods ordered in February 2019. Contracts including the mobile offshore drilling unit and specialist well services, as well as shore base and related services, aviation and marine support vessels and HSSE and logistics support are expected to be awarded in H2 2019. Importantly, Government approval of the ESIA for drilling the Atum Prospect is expected at year end.

Post H1 2019, Svenska announced it had entered into an agreement to transfer a 55.55% participating interest in both licences to CNOOC West African Petroleum E&P SA (‘CNOOC’). Under the terms of the transfer, Svenska will retain Operatorship for the current drilling campaign. FAR will retain an unchanged 21.42% participating interest in each of the licences. Completion of the transfer agreement is subject to approval from the Government of the Republic of Guinea-Bissau and customary Joint Venture consents, which under the AJVP, is not subject to pre-emption rights. The transaction is expected to close in H2 2019.

FAR has received expressions of interest in farming out its interest in the Atum well and is currently considering options going forward.

KENYA

FAR, through a wholly owned subsidiary, Flow Energy Pty Ltd as Operator of the Joint Venture, with a 60% working interest remains in discussions with the Government of Kenya to resolve the land access issues that have inhibited commencement of the planned work programme over the permit. FAR has previously conducted 2D and 3D seismic acquisition in L6 which has revealed a number of prospects and leads which FAR is maturing. FAR continues to support an outcome that will allow it to achieve its exploration objectives in accordance with work requirements of the Block L6 PSC.

AUSTRALIA

FAR through a wholly owned subsidiary, Lightmark Enterprises Pty Ltd has a 100% interest in Petroleum Exploration Permit WA-458P, which is in the prolific oil-producing Dampier Sub-basin along Australia’s premier North West Shelf.

In early January 2019, FAR took part in the Davros Extension Multiclient 3D seismic survey. FAR’s phase of the survey was safely and successfully completed in mid-January 2019. Data acquired over FAR’s permit is currently being processed in conjunction with data acquired across other areas from the multiclient survey, which began in February 2019. FAR is working closely with the contractor during this seismic processing phase to ensure it receives final seismic data deliverables in late Q4 2019 as expected.

In July 2019, the National Offshore Petroleum Titles Administrator (‘NOPTA’), granted a request to suspend and extend the current licence term to enable completion of seismic acquisition, processing and interpretation. The current term now expires in January 2021.

CORPORATE

In April, FAR completed a share placement to institutional and sophisticated investors to raise approximately AUD$45M before expenses by issuing 818,854,544 shares.

Post H1 2019, the arbitration hearing against Woodside Energy (Senegal) B.V. took place at the International Chamber of Commerce in Paris between 8-10 July 2019. Written post-hearing briefs are due from the Parties by late September. A tribunal ruling is expected by end of the year.

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HALF YEAR FINANCIAL REPORT 2019 DIRECTOR’S REPORT

PERFORMANCE RIGHTS

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 on issue
FARAN 31 May 2017 31 Jan 2020 31 Jan 2022 -	9,353,000
FARAM 14 Jun 2018 31 Jan 2021 31 Jan 2023 -	10,293,000
	19,646,000

No performance rights were issued, vested or exercised at the end of the reporting period or at the date of this report.

MATERIAL BUSINESS RISKS

The international scope of the Group’s operations, the nature of the oil and gas industry and external economic factors mean that a range of factors may impact results. Material macro-economic risks that could impact the Company’s results and performance include oil and gas commodity prices, exchange rates and global factors effecting capital markets and the availability of financing. Material business risks that could impact the Company’s performance are described below. The Group updates the corporate risk register on a quarterly basis and maintains and regularly updates risk registers for key projects. Group risk is reviewed at all meetings of the board of directors.

TECHNICAL AND OPERATIONAL RISKS

Exploration

Oil and Gas exploration is speculative by nature and therefore carries a degree of risk associated with the discovery of hydrocarbons in commercial quantities. Exploration activity may be adversely influenced by a number of different factors including, amongst other things, new subsurface geological and geophysical data, drilling results including the presence, prevalence and composition of hydrocarbons, force majeure circumstances, drilling cost overruns for unforeseen subsurface operating conditions or unplanned events or equipment difficulties, changes to resource estimates, lack of availability of drill rigs, seismic vessels and other integral exploration equipment and services.

Other operational risks

In addition to the risks listed above the Group’s operations are potentially subject to other industry operating risks including fire, explosions, blow outs, pipe failures, abnormally pressured formations and environmental hazards such as accidental spills or leakage of petroleum liquids, gas leaks, ruptures, or discharge of toxic gases. The occurrence of any of these risks could result in substantial losses to the Group due to injury or loss of life; damage to or destruction of property, natural resources, or equipment; pollution or other environmental damage; clean-up responsibilities; regulatory investigation and penalties or suspension of operations. Damages occurring to third parties as a result of such risks may also give rise to claims against the Group.

The Group manages operational risk through a variety of means including selecting suitably experienced qualified Joint Arrangement partners, contractors and operators, regular monitoring of the performance of contractors and operators in accordance with the Group’s policies; recruitment and retention of appropriately qualified employees and contractors, establishment and use of Groupwide risk management system. In addition, the Group implements insurance programs in place and specific insurance policies in relation to drilling operations that are consistent with good industry practice.

JOINT OPERATION RISK

The use of joint operations are common in the oil and gas industry and usually exist through all stages of the oil and gas life cycle. Joint operation arrangements, amongst other things, mainly serve to share the obligations and benefits of exploration, development and production of oil. The key risk that is mitigated is the large cost associated with exploration and capital intensive development phases. However, failure to establish alignment between joint operation participants, poor performance of third party joint operation operators or the failure of joint operation partners to meet their commitments and share of costs and liabilities could have a material impact on the Group’s business.

The Group manages joint operation risk through careful joint operation partner selection (when applicable) stakeholder engagement and relationship management. Commercial and legal agreements are also in place across all joint operations and define the responsibilities and obligations of the joint operation parties and rights of the Group.

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HALF YEAR FINANCIAL REPORT 2019 DIRECTOR’S REPORT

GOVERNMENT AND REGULATOR RISK

The Group’s rights, obligations and commercial arrangements through all stages of the oil and gas lifecycle (exploration, development, production) in international oil and gas permits are commonly defined in agreements entered into with the relevant country’s Government as well as in the Country’s petroleum and tax related legislation and other laws. These agreements and laws are at risk of amendment by future Governments which accordingly could materially impact on the Group’s rights and commercial arrangements adversely. Further, due to the evolving nature of exploration work programs (as new technical data) becomes available and due to the fluctuating availability of petroleum equipment and services, the Group may seek to negotiate variations to permit agreements in particular in relation to the duration of the exploration phase in the permit and the work program commitments.

The Group manages Government and Regulator risk through careful Government and Regulator relationship management. Failure to maintain mutually acceptable arrangements between the Group and Government and regulator could have a material impact on the Group’s business including forfeit or relinquishment of permits or commercially less advantageous terms being imposed on permits.

The renewal or extension of licence or contract terms with the regulator in the countries in which the Company operates is an ongoing risk. The Company is cognisant that in H2, 2019, The Gambia A2 and A5 licences require renewal to enter the next term of the licences and also that the expiry of the Senegal RSSD Production Sharing Contract is currently 4 December 2019. With respect to the Senegal RSSD permit, the Joint Venture has received a letter from the Minister of Energy in Senegal stating the intention to extend the PSC for the appraisal of the FAN and SNE North discoveries. With respect to the SNE development it is expected that the Joint Venture will enter the exploitation phase of the PSC upon approval of the Exploitation and Development Plan by the Government of Senegal. Upon government approval to enter the exploitation phase, the PSC is extended over the exploitation area for a period of 30 years.

SOVEREIGN RISK

The Group strategy is focused on exploration in Africa. Some countries within which the Group operates are developing countries that have political and regulatory tax structures which are maturing and have potential for further change. Uncertainty exists as to the stability of the regulatory and political environment and there is potential for events to have a material impact on the investment and security environment within the country. The Group manages sovereign risk through closely monitoring political developments and events in country. For countries where the Group has a large investment, the Group has regional offices, staffed to ensure close monitoring and feedback. The Group manages and amends its investment profile within a country by taking into consideration developments in the security and business environment.

ENVIRONMENTAL RISKS

Oil and gas operations have inherent risks and liabilities associated with ensuring operations are carried out in a manner that is responsible to the environment. Although the Group operates within the prevailing environmental laws and regulations, such laws and regulations are continually changing and as such, the Group could be subject to changing obligations or unanticipated environmental incidents that, as a result, could impact costs, provisions and other facets of the Group’s operations.

The Group complies with all environmental laws and regulations and, where laws and regulations do not exist, it aims to operate at the highest industry standard for environmental compliance. The Group identifies risks, threats, hazards and other environmental considerations and implements control measures to mitigate such risks. Any accidents, incidents or near misses are reported to the Board. Careful selection and engagement of contractors is undertaken to ensure adherence to the Group’s policies and appropriate contingency arrangements are put in place which include but are not limited to having insurances in place that are consistent with good industry practice; and, selection and retention of appropriately qualified personnel

CLIMATE CHANGE RISKS

FAR considers that oil and gas will remain a large part of the global energy mix into the future and recognises its responsibility to support national greenhouse gas emissions reduction initiatives where it can. FAR supports governments in their efforts to take action on these emissions whilst maintaining a secure and affordable energy supply during a transition to a lower emissions future. FAR acknowledges its own responsibilities in this context and its commitment to be part of a combined approach of a reduction in greenhouse gas emissions. FAR's greenhouse gas emissions are currently negligible. Accordingly, there is limited scope to reduce these further at present. At the same time, FAR undertakes prudent, practical and cost-effective actions to be energy efficient to support emission reductions. Given that FAR is not currently an oil or gas producer, nor does it hold an interest in an oil or gas production project, FAR considers that it is not currently materially exposed to physical, regulatory, oil market, cost or legal risks related to climate change.

FAR intends to monitor climate change matters as FAR moves closer to oil or gas production in order to assess whether such matters might become a material risk. This will continue as Paris Agreement climate change commitments from various organisations throughout the world evolve, technology advances and FAR comes closer to oil or gas production. FAR recognises that the climate change landscape continues to evolve and commits to regularly reviewing and updating its climate change policy in order to consider ongoing developments, including regulatory developments, community expectations and peer approaches to climate change.

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HALF YEAR FINANCIAL REPORT 2019 DIRECTOR’S REPORT

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.

DIVIDENDS

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

SUBSEQUENT EVENTS

On 31 July 2019, the Company announced the arbitration hearing against Woodside Energy (Senegal) B.V. took place at the International Chamber of Commerce in Paris between 8-10 July 2019. Written post-hearing briefs are due from the Parties by late September. A tribunal ruling is expected by the end of the year. Should the tribunal’s decision be against FAR, the Company may be responsible for costs incurred by Woodside Energy (Senegal) B.V. if so, determined by the Arbitration tribunal. Conversely, should the decision be in favour of FAR, the Company would be seeking recovery of its costs.

Other than the above, 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 Group 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 period.

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 8 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, 29 August 2019

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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 www.deloitte.com.au

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

29 August 2019

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 2019, 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 Accountants

Liability limited by a scheme approved under Professional Standards Legislation Member of Deloitte Asia Pacific Limited and the Deloitte Network

Deloitte Touche Tohmatsu ABN 74 490 121 060 550 Bourke Street Melbourne VIC 3000 GPO Box 78 Melbourne VIC 3001 Australia

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

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 2019, 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 12 to 26.

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 2019 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 Asia Pacific Limited and the Deloitte Network

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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 2019 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 .

Material Uncertainty relating to Going Concern

We draw attention to Note 1 in the financial report, which indicates that the Group incurred a net loss of $7,553,696, and had a net cash outflow from operating activities of $9,694,113 during the half-year ended 30 June 2019. As stated in the Note 1, these events or conditions, along with other matters set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt about the Group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter.

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DELOITTE TOUCHE TOHMATSU

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Ryan Hansen Partner Chartered Accountants Melbourne, 29 August 2019

DIRECTOR’S 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 2019 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, 29 August 2019

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CONDENSED CONSOLDIATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the Half-Year Ended 30 June 2019

Note Continuing operations Other income 3 Depreciation and amortisation expense Exploration expense 4 Finance costs Corporate administration expenses Employee benefits expense 4 Consulting expense Foreign exchange (loss)/gain Provision for doubtful debts 5 Other expenses Loss before tax from continuing operations 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) 15 Diluted loss (cents per share) 15	Half-year ended
	30 Jun 2019 US$ 30 Jun 2018 US$
	161,856 187,813
	(104,360) (24,103)
	(4,609,043) (9,286,353)
	(24,745) -
	(314,628) (211,667)
	(1,332,891) (1,588,511)
	(60,291) (215,653)
	(42,338) 1,098,509
	(1,151,975) -
	(75,281) (110,081)
	(7,553,696) (10,150,047)
	- -
	(7,553,696) (10,150,047)
	- (1,363,283)
	(7,553,696) (11,513,330)
	(0.13) (0.19)
	(0.13) (0.19)

Notes to the condensed consolidated financial statements are included on pages 16 to 26.

12

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2019

Note CURRENT ASSETS Cash and cash equivalents 6 Trade and other receivables 7 Other financial assets Total Current Assets NON-CURRENT ASSETS Property, plant and equipment 8 Exploration and evaluation assets 9 Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 10 Other financial liabilities 11 Provisions Total Current Liabilities NON-CURRENT LIABILITIES Other financial liabilities 11 Provisions Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued Capital 13 Reserves Accumulated losses TOTAL EQUITY	Consolidated
	30 Jun 2019 31 Dec 2018 31 Dec 2017 US$ US$ US$
	35,770,874 19,540,172 38,962,772
	3,914,596 3,021,355 1,676,548
	96,168 88,132 96,370
	39,781,638 22,649,659 40,735,690
	1,074,400 331,965 280,459
	106,938,933 99,987,939 100,355,924
	108,013,333 100,319,904 100,636,383
	147,794,971 122,969,563 141,372,073
	3,389,149 2,212,345 6,687,777
	147,269 - -
	550,159 611,424 799,896
	4,086,577 2,823,769 7,487,673
	818,909 - -
	49,534 39,268 86,138
	868,443 39,268 86,138
	4,955,020 2,863,037 7,573,811
	142,839,951 120,106,526 133,798,262
	335,803,552 305,669,212 305,669,212
	4,288,622 4,135,841 6,205,650
	(197,252,223) (189,698,527) (178,076,600)
	142,839,951 120,106,526 133,798,262

Notes to the condensed consolidated financial statements are included on pages 16 to 26.

13

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the Half-Year Ended 30 June 2019

Balance at 1 January 2018 Loss for the period Exchange differences on translation of functional and presentation currency Total comprehensive loss for the period Recognition of amortisation of performance rights Balance at 30 June 2018 Balance at 1 January 2019 Loss for the period Total comprehensive loss for the period Issue of shares Share issue costs Recognition of amortisation of performance rights Balance at 30 June 2019	Share Capital US$ 305,669,212 - -	Reserves Share based payments reserve(i) Foreign currency translation reserve Total Reserves US$ US$ US$	Accumulated losses Total attributed to equity holders of parent US$ US$ (178,076,600) 133,798,262 (10,150,047) (10,150,047) - (1,363,283)
		7,554,018 (1,348,368) 6,205,650
		- - - - (1,363,283) (1,363,283)
	-	- (1,363,283) (1,363,283	(10,150,047) (11,513,330)
	-	202,740 - 202,740	- 202,740
	305,669,212	7,756,758 (2,711,651) 5,045,107	(188,226,647) 122,487,672
	305,669,212 -	7,890,201 (3,754,360) 4,135,841 - - -	(189,698,527) 120,106,526 (7,553,696) (7,553,696)
	-	- - -	(7,553,696) (7,553,696)
	31,506,577 (1,372,237) -	- - - - - - 152,781 - 152,781	- 31,506,577 - (1,372,237) - 152,781
	335,803,552	8,042,982 (3,754,360) 4,288,622	(197,252,223) 142,839,951

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

Notes to the condensed consolidated financial statements are included on pages 16 to 26.

14

CONDENSED CONSOLIDATED STATEMENT OF CASHFLOWS for the Half-Year Ended 30 June 2019

Note CASH FLOWS FROM OPERATING ACTIVITIES Receipts from other Payments to employees and corporate suppliers Payments for exploration and evaluation expensed Other – amounts paid to joint venture Interest and finance costs Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Interest received Payments for exploration and evaluation assets Payments for property, plant and equipment Proceeds from farm-out of exploration and evaluation properties Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares 13 Payment for share issue costs 13 Payment of lease liabilities Net cash provided by financing activities NET INCREASE/(DECREASE) 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 6	Half-year ended
	30 Jun 2019 US$ 30 Jun 2018 US$
	288,847 -
	(1,525,405) (1,999,615)
	(5,951,326) (10,403,016)
	(2,480,449) -
	(25,780) -
	(9,694,113) (12,402,631)
	154,473 205,902
	(5,555,626) (5,119,543)
	(30,985) (61,666)
	1,374,764 -
	(4,057,374) (4,975,307)
	31,506,577 -
	(1,372,237) -
	(171,646) -
	29,962,694 -
	16,211,208 (17,377,938)
	19,540,172 38,962,772
	19,494 (194,988)
	35,770,874 21,389,846

Notes to the condensed consolidated financial statements are included on pages 16 to 26.

15

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

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 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 United States 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 2018, except for the following changes:

• the functional and presentation currency for the condensed consolidated financial statements was changed from Australian dollars (AUD) to United States dollars and comparative disclosures have been translated and presented in United States dollars accordingly.

• the adoption of the new Standards and Interpretations described below.

Functional and presentation currency

The functional currency of the Group has been reassessed and it has been determined the functional currency is United States dollars. The change in functional currency has been determined due to the following:

• Preparation for the development of the SNE oil field has made significant progress and the majority of funding to be obtained for these assets will be in USD which is expected to be agreed in the current year;

• Any funding that is raised through equity issues denominated in AUD will continue to be translated into USD by the Company prior to being used to fund its foreign assets/interests;

• Future production income or dividend income will be denominated in USD.

For practical implementation and alignment of prior period comparative, the change in functional currency was deemed to be effective from 1 January 2019. The presentation currency for the consolidated financial statements was also changed from Australian dollars to United States dollars and comparative disclosures have been translated and presented in United States dollars accordingly.

Consequently, the Standard AASB 101 has required the presentation of a third statement of financial position at 31 December 2017 to reflect the change in presentation currency.

Under AASB121.35, when there is a change in an entity's functional currency, the entity should apply the translation procedures applicable to the new functional currency prospectively from the date of the change. The Company, based on its judgment and considering that the underlying transactions, events and conditions that justify the change in its functional currency have developed gradually, and those of greater relevance took place towards the end of financial year 2018 and beginning of the financial year 2019, it has decided to apply the translation procedures applicable to the new functional currency prospectively beginning on 1 January, 2019. This change in functional currency was accounted for prospectively from the date of the change by translating all items of the financial statements into the new functional currency, using the exchange rate of AUD/USD $0.704074 at the date of the change.

The change in the presentation currency has been accounted for as a change in accounting policy and applied retrospectively, as if the new presentation currency had always been the presentation currency of the consolidated financial statements. Consequently, comparative figures for years prior to the effective date of 1 January 2019 have been revised to the new presentation currency in accordance with AASB121, The Effects of Changes in Foreign Exchange Rates. The consolidated statements of comprehensive income and the cash flows for the years ended 31 December 2018 and 2017 have been revised to the presentation currency using the average exchange rates. The consolidated statements of financial position as at 31 December 2018 and 31 December 2017 have been translated into USD using the closing exchange rates of AUD/USD $0.704074 and $0.780398, respectively.

Issued capital and accumulated losses were translated into USD at the average exchange rates for the relevant financial year from 1 January 2010 to 31 December 2018. Prior to 31 December 2009, transactions within issued capital and accumulated losses were translated using a fixed average exchange rate of AUD/USD $0.751029 being the weighted average exchange rate for the relevant periods. All other reserves within equity have been translated using the historical exchange rates on the date of the transaction. All resulting exchange differences have been recognized in equity under the reserve for exchange differences in translation.

16

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

Adoption of New standards and Interpretations

The Group has adopted the new accounting pronouncements which have become effective this year, and are as follows:

AASB 16 - Leases

AASB 16 supersedes AASB 117 Leases, Interpretation 4 Determining whether an Arrangement contains a Lease, Interpretation 115 Operating Leases-Incentives and Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to account for most leases under a single on-balance sheet model.

Lessor accounting under AASB 16 is substantially unchanged from AASB 117. Lessors will continue to classify leases as either operating or finance leases using similar principles as in AASB 117. Therefore, AASB 16 did not have an impact for leases where the Group is the lessor.

The Group adopted AASB 16 using the modified retrospective method of adoption with the date of initial application of 1 January 2019. Under this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised at the date of initial application. The Group elected to use the transition practical expedient allowing the standard to be applied only to contracts that were previously identified as leases applying AASB 117 and Interpretation 4 at the date of initial application. The Group has considered applying exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value (‘low-value assets’). No such leases were identified.

The effect of adopting AASB 16 as at 1 January 2019

Assets Right-of-use assets Liabilities Other financial liabilities – Current Other financial liabilities – Non-current Total liabilities	1 Jan 2019 US$
	104,953
	35,693
	69,260
	104,953

(a) Nature of the effect of adoption of AASB 16

The Group has lease contracts for office premises. Before the adoption of AASB 16, the Group classified each of its leases (as lessee) at the inception date as either a finance lease or an operating lease. A lease was classified as a finance lease if it transferred substantially all of the risks and rewards incidental to ownership of the leased asset to the Group; otherwise it was classified as an operating lease. Finance leases were capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments were apportioned between interest (recognised as finance costs) and reduction of the lease liability. In an operating lease, the leased property was not capitalised, and the lease payments were recognised as rent expense in profit or loss on a straight-line basis over the lease term. Any prepaid rent and accrued rent were recognised under Prepayments and Trade and other payables, respectively. Upon adoption of AASB 16, the Group applied a single recognition and measurement approach for all leases. The standard provides specific transition requirements and practical expedients, which has been applied by the Group.

(i) Leases previously accounted for as operating leases

The Group recognised right-of-use assets and lease liabilities for those leases previously classified as operating leases, except for short-term leases and leases of low-value assets. The right-of-use assets for most leases were recognised based on the carrying amount as if the standard had always been applied, apart from the use of incremental borrowing rate at the date of initial application. In some leases, the right-of-use assets were recognised based on the amount equal to the lease liabilities, adjusted for any related prepaid and accrued lease payments previously recognised. Lease liabilities were recognised based on the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of initial application.

17

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

The Group also applied the available practical expedients wherein it:

• Used a single discount rate of 5% to a portfolio of leases with reasonably similar characteristics;

• Relied on its assessment of whether leases are onerous immediately before the date of initial application;

• Applied the short-term leases exemptions to leases with a lease term that ends within 12 months at the date of initial application (where applicable);

• Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application; and

• Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

Based on the foregoing, as at 1 January 2019:

• Right-of-use assets of US$104,953 were recognised as property, plant and equipment in the statement of financial position;

• Additional lease liabilities of US$104,953 (included in Other financial liabilities) were recognised.

(b) Summary of new accounting policies

(i) Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Unless the Group is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognised right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.

(ii) Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating a lease, if the lease term reflects the Group exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognised as expense in the period on which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the assessment to purchase the underlying asset.

(iii) Significant judgement in determining the lease term of contracts with renewal options

The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised.

The Group has the option, under some of its leases to lease the assets for additional terms of two to three years. The Group applies judgement in evaluating whether it is reasonably certain to exercise the option to renew. That is, it considers all relevant factors that create an economic incentive for it to exercise the renewal. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise (or not to exercise) the option to renew (e.g., a change in business strategy).

The Group did not include the renewal period as part of the lease term for leases of office premises and office equipment due to the significance of these assets in which the Group operates geographically in its current environment. These leases have a short non-cancellable period (i.e. two to three years). The renewal options for leases of office premises were not included as part of the lease term because the Group has a policy of leasing premises for not more than two to five years and hence not exercising any renewal options.

(c) Amounts recognised in the statement of financial position and profit or loss

The carrying amounts of the Group’s right-of-use assets and lease liabilities and the movement during the period are referred to in Note 11.

18

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

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 2019, the Group’s current assets exceeded current liabilities by $35,695,061 and the Group has cash and cash equivalents of $35,770,874. 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 9. 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 raise capital under the Corporations Act 2001 , if required, by a share purchase plan, share placement or rights issue including any necessary approval from shareholders;

• The ability to obtain funding from other sources including but not limited to:

• (i) Senior debt in the form of project finance;

• (ii) Subordinated debt; and

• (iii) Hybrid financial instruments

• 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.

The Directors are satisfied that the Group will be able to realise its assets and discharge its liabilities in the normal course of business. Uncertainty exists as to the result of the Group’s exploration activities, access to funds and the realisation of the current value of its assets. Consequently, the Directors regularly assess the Company’s and the Group’s status as a going concern and its changing risk profile as circumstances change.

In the event that the Group is unsuccessful in implementing one or more of the funding options listed above, such circumstances would indicate that a material uncertainty exists that may cast significant doubt as to whether the Group will continue as a going concern and therefore whether it will realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.

This financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

AMENDMENTS TO AASBS AND NEW INTERPRETATIONS THAT ARE MANDATORILY EFFECTIVE FOR THE CURRENT REPORTING PERIOD

In the current period, the Group has adopted all other 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. These amendments do not have a significant impact on these condensed consolidated financial statements.

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 2018.

FINANCIAL RISK MANAGEMENT

The Group’s 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 2018.

19

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

2. SEGMENT INFORMATION

The Group’s operating segments are 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 Group undertook exploration for oil and gas in Australia and Africa during the period.

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:

Continuing operations The Gambia Guinea-Bissau Kenya Senegal Other Corporate Total	Segments Assets		Segment Liabilities
	30 Jun 2019 31 Dec 2018 31 Dec 2017 US$ US$ US$ 4,189,862 4,315,266 7,804,294 1,612,827 1,085,218 911,841 626,272 575,832 240,483 106,804,381 100,143,280 94,139,947 6,901 6,901 6,901 34,554,728 16,843,066 38,268,607 147,794,971 122,969,563 141,372,073		30 Jun 2019 31 Dec 2018 31 Dec 2017 US$ US$ US$ 336,035 743,579 532,384 254,259 71,341 23,496 12,880 1,931 5,355 2,397,623 972,228 6,014,327 35,440 12,544 13,375 1,918,783 1,061,404 984,874 4,955,020 2,863,037 7,573,811

Segment Revenue and Results

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

Continuing operations Australia The Gambia Guinea-Bissau Kenya Senegal Other Corporate Total for continuing operations Income tax expense Consolidated segment loss after tax	Other income	Segment Loss
	Half-year ended	Half-year ended
	30 Jun 2019 30 Jun 2018	30 Jun 2019 30 Jun 2018
	US$ US$	US$ US$
	- -	(381,656) (19,200)
	-	(2,672,618) (2,085,444)
	- -	(568,167) (474,981)
	- -	(110,634) (88,978)
	- -	(1,795,374) (6,410,077)
	- -	(228,083) (207,674)
	161,856 187,813	(1,797,164) (863,693)
	161,856 187,813	(7,553,696) (10,150,047)
		- -
		(7,553,696) (10,150,047)

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

20

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

3. OTHER INCOME

Other income Interest income Rental income Other	Half-year ended 30 Jun 2019 US$ 30 Jun 2018 US$ 156,718 187,813 5,095 - 43 -
	161,856 187,813

4. 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 Post-employment benefits - Defined contribution plans - Amortisation of performance rights - Provision for leave entitlements	Half-year ended 30 Jun 2019 US$ 30 Jun 2018 US$ (381,656) (19,200) (568,167) (474,981) (1,516,427) (2,085,444) (110,634) (88,978) (1,804,076) (6,410,077) (228,083) (207,673)
	(4,609,043) (9,286,353)
	(1,442,311) (1,745,572) 285,315 463,687 (73,708) (71,126) (152,781) (214,885) 50,594 (20,614)
	(1,332,891) (1,588,511)

5. PROVISION FOR DOUBTFUL DEBTS

Provision for doubtful debts
- Joint venture receivable(i)

	Half-year ended	Half-year ended
30	Jun 2019	30	Jun 2018
	US$		US$
	(1,151,975)			-

(i) During the period the Group provided for in full its share of the Gambia Block A2 and A5 joint venture receivable from a Joint Venture participant relating to outstanding cash contributions due to the Joint Venture.

21

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

6. CASH

. CASH
Cash and cash equivalents Deposits at call & term deposits Cash and cash equivalents held in joint operations	30 Jun 2019 US$ 31 Dec 2018 US$ 31 Dec 2017 US$ 411,203 262,219 218,499 32,952,859 16,001,772 36,246,299 2,406,812 3,276,181 2,497,974
	35,770,874 19,540,172 38,962,772

7. TRADE AND OTHER RECEIVABLES

Interest receivable Other receivables Prepayments Joint operations receivables(i) Less: Provision for doubtful debts – Joint Venture receivable(ii)	30 Jun 2019 US$ 31 Dec 2018 US$ 31 Dec 2017 US$ 2,242 - 19,729 3,593,107 2,394,110 985,390 69,240 432,994 512,959 3,196,087 1,988,356 158,470 6,860,676 4,815,460 1,676,548 (2,946,080) (1,794,105) - 3,914,596 3,021,355 1,676,548

(i) includes The Gambia Blocks A2 and A5 joint venture receivable provided for as a doubtful debt.

(ii) represents the provision for The Gambia Blocks A2 and A5 joint venture receivable.

8. PROPERTY, PLANT AND EQUIPMENT

. PROPERTY, PLANT AND EQUIPMENT
Net carrying value Office furniture & equipment Right-of-use assets (Note 11) . EXPLORATION AND EVALUATION ASSETS Exploration and evaluation expenditure: Opening balance Additions (i) Exploration expensed Impairment Expenditure recouped from Gambia farm-out proceeds Closing balance	30 Jun 2019 US$ 31 Dec 2018 US$ 31 Dec 2017 US$ 317,054 331,965 280,459 757,346 - -
	1,074,400 331,965 280,459
	30 Jun 2019 US$ 31 Dec 2018 US$ 31 Dec 2017 US$ 99,987,939 100,355,924 73,259,822 6,950,994 24,086,130 27,096,102 - (12,136,527) - - (108,121) - - (12,209,467) -
	106,938,933 99,987,939 100,355,924

9. EXPLORATION AND EVALUATION ASSETS

(i) additions include Senegal RSSD pre-development FEED and related costs of $6,417,139 (31 Dec 2018: $17,298,937) and the Guinea-Bissau well planning costs of $533,885 (31 Dec 2018: $123,617).

22

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

Exploration and evaluation commitments:

The Group has exploration expenditure obligations which are contracted for, but not provided for in the financial statements. These obligations may be varied from time to time and are expected to be fulfilled in the normal course of operations of the Group. The current estimated expenditure for approved commitments and minimum work program commitments are as follows:

Not longer than 1 year(i)	30 Jun 2019 US$ 31 Dec 2018 US$ 10,180,583 3,814,354

(i) predominately relate to FAR’s share of Senegal RSSD JV pre-development FEED contracts of $7,446,452.

10. TRADE AND OTHER PAYABLES

0. TRADE AND OTHER PAYABLES
Current Trade payables Other payables Joint operation payables(i)	30 Jun 2019 US$ 31 Dec 2018 US$ 31 Dec 2017 US$ 744,286 735,542 431,872 371,388 351,352 317,048 2,273,475 1,125,451 5,938,857
	3,389,149 2,212,345 6,687,777

(i) Includes FAR’s share of Senegal joint operations payables and accruals of $2,126,037 (31 Dec 2018: $730,957)

11. RIGHT-OF-USE ASSETS AND LEASE LIABILITIES

The Group has leases which predominately relate to the Company’s head office premises and minor office equipment. Amounts recognised in the Statement of financial position and the carrying amounts of the Group’s right-of-use assets and lease liabilities and the movement during the period are as follows:

As at 1 January 2019 Additions during the period Depreciation expense Interest expense Lease payments Net foreign exchange differences As at 30 June 2019	Right-of-use assets Leased Premises Office Equipment Total Lease Liabilities US$ US$ US$ US$ 104,953 - 104,953 104,953 763,847 14,468 778,315 1,062,025 (122,305) (3,617) (125,922) - - - - 24,745 - - - (196,391) - - - (29,154)
	746,495 10,851 757,346 966,178

Lease liabilities are presented in the Statement of financial position as:

Other financial liabilities: Lease liabilities (current) Lease liabilities (non-current) As at 30 June 2019		Lease Liabilities US$ 147,269 818,909 966,178

23

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

12. FINANCIAL ASSETS AND LIABILITIES

The following table disclose the carrying value amounts of each category of financial assets and financial liabilities at period end:

Period ended 30 June 2019 Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Other financial liabilities Trade and other payables - current Lease liabilities – current and non-current Total Financial liabilities Year ended 31 Dec 2018 Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Trade and other payables Fair values	Amortised Cost US$ Fair Value through profit or loss US$ Fair Value through OCI US$ Total US$ 35,770,874 - - 35,770,874 3,845,356 - - 3,845,356 96,168 - - 96,168
	39,712,398 - - 39,712,398
	3,389,148 - - 3,389,148 966,178 - - 966,178
	4,355,326 - - 4,355,326
	19,540,172 - - 19,540,172 2,588,361 - - 2,588,361 88,132 - - 88,132
	22,216,665 - - 22,216,665
	2,212,345 - - 2,212,345

In estimating fair value of an asset or liability, the group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is in accordance with accounting standard

The Directors consider that the carrying amounts of the financial assets and liabilities recorded at amortised costs in the financial statements approximate their fair value. The financial assets and liabilities which are measured at fair value on a regular basis, are categorised as Level 2 measurements.

Financial assets Cash and cash equivalents Trade and other receivables – current and non-current Other financial assets – current and non-current Total Financial assets Other financial liabilities Trade and other payables - current Lease liabilities – current and non-current Total Financial liabilities	Carrying Amount Fair Value
	30 Jun 2019 US$ 31 Dec 2018 US$ 30 Jun 2019 US$ 31 Dec 2018 US$ 35,770,874 19,540,172 35,770,874 19,540,172 3,845,356 2,588,361 3,845,356 2,588,361 96,168 88,132 96,168 88,132
	39,712,398 22,216,665 39,712,398 22,216,665
	3,389,148 2,212,345 3,389,148 2,212,345 966,178 - 966,178 -
	4,355,326 2,212,345 4,355,326 2,212,345

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

13. ISSUED CAPITAL

Fully paid ordinary share At beginning of the period Shares allotted during the period: - shares issued on 12 April 2017 - shares issued on 19 May 2017 - shares issued on 7 May 2019 - shares issued on 17 May 2019 Share issue costs Ordinary fully paid shares at end of the period Fully paid ordinary share At beginning of the period Shares allotted during the period - shares issued on 12 April 2017 - shares issued on 19 May 2017 - shares issued on 7 May 2019 - shares issued on 17 May 2019 Ordinary fully paid shares at end of the period	30 Jun 2019 31 Dec 2018 31 Dec 2017
	US$ US$ US$
	305,669,212 305,669,212 248,095,907
	- - 40,423,439
	- - 19,702,320
	27,299,038 - -
	4,207,539 - -
	(1,372,237) - (2,552,454)
	335,803,552 305,669,212 305,669,212
	30 Jun 2019 31 Dec 2018 31 Dec 2017
	Number Number Number
	5,461,532,458 5,461,532,548 4,461,532,458
	- - 669,229,868
	- - 330,770,132
	707,854,544 - -
	111,000,000 - -
	6,280,387,002 5,461,532,548 5,461,532,458

During the period, the Company successfully raised $31,506,577 (A$45,037,000) through a placement to institutional and sophisticated investors, with a total of 818,854,544 shares issued at a price of A5.5 cents per share.

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

14. SHARE-BASED PAYMENTS

The following share-based payment arrangements were on issue as at 30 June 2019:

Unlisted performance rights Grant date Vesting date Expiry date Exercise price A$	No. of performance rights on issue No. of performance rights on issue
	30 Jun 2019 31 Dec 2018
FARAN-16(i) 20 May 2016 31 Jan 2019 31 Jan 2021 -	- 18,049,000
FARAM 31 May 2017 31 Jan 2020 31 Jan 2022 -	10,293,000 10,293,000
FARAN 14 Jun 2018 31 Jan 2021 31 Jan 2023 -	9,353,000 11,207,000
	19,646,000 39,549,000

(i) On 31 January 2019, the 3-year performance period for performance rights FARAN-16 lapsed. No performance rights vested.

No performance rights were issued or exercised during the half year ended 30 June 2019. Further details of unlisted performance rights are detailed in the 2018 Annual report.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Half-Year Ended 30 June 2019

15. EARNINGS PER SHARE

The Group presents basic and diluted EPS for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares for the dilutive effect, if any, of the outstanding share rights which have been issued to employees.

Basic and diluted loss per share (cents per share)	Half-year ended 30 Jun 2019 US cents 30 Jun 2018 US cents (0.13) (0.19)

The weighted average number of ordinary shares used in the calculation of basic and diluted loss per share are as follows:

Loss for the period attributable to members of FAR Ltd Weighted average number of ordinary shares	Half-year ended 30 Jun 2019 30 Jun 2018 (7,553,696) (10,150,047) 5,699,699,007 5,464,532,458

The outstanding performance rights are not considered dilutive as the Group recognised a loss for the period ended 30 June 2019.

16. CONTINGENT LIABILITIES

16. CONTINGENT LIABILITIES
Contingent liabilities Guinea-Bissau – contingent payment from future production Guinea-Bissau – contingent withholding tax liability Kenya L6 – performance Bond	30 Jun 2019 US$ 31 Dec 2018 US$ 13,000,000 13,000,000 567,811 567,811 87,996 88,132
	13,655,807 13,655,944

There has been no material change to the contingent liabilities since 31 December 2018.

17. SUBSEQUENT EVENTS

On 31 July 2019, the Company announced the arbitration hearing against Woodside Energy (Senegal) B.V. took place at the International Chamber of Commerce in Paris between 8-10 July 2019. Written post-hearing briefs are due from the Parties by late September. A tribunal ruling is expected by the end of the year. Should the tribunal’s decision be against FAR, the Company may be responsible for costs incurred by Woodside Energy (Senegal) B.V. if so, determined by the Arbitration tribunal. Conversely, should the decision be in favour of FAR, the Company would be seeking recovery of its costs.

Other than the above, 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 Group in subsequent financial years.

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CORPORATE DIRECTORY

DIRECTORS

Nicholas Limb (Chairman) Catherine Norman (Managing Director) Reginald Nelson (Non-Executive Director) Timothy Woodall (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

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

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

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

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