FAR LIMITED — Interim / Quarterly Report 2019

Jan 30, 2020

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01 October – 31 December 2019

Highlights

• Sangomar Field Development and Exploitation Plan submitted to Government of Senegal on 2 December 2019

• Subsequent to the quarter, Sangomar Field development was approved, FAR Limited took FID and Full Notices to Proceed (FNTP) in respect of certain development contracts were issued by the Operator

• Equity placement and SPP totalling over A$157m completed in January with FAR’s senior debt and residual funding plans progressing well

• FAR acquired additional 10% interest in Gambian blocks and updates combined prospective resources to 1.2billion barrels (unrisked, Best Estimate, recoverable, 100% basis with 621 million barrels net to FAR)*

• Dr Julian Fowles joins FAR board, Elisha Larkin appointed as Company Secretary

• Cash at end of Quarter of US$13.75m

Projects update

Offshore Senegal (FAR 15% Working Interest (WI))

During the quarter, FAR Limited released the economic data for the development of the world class Sangomar Oil Field (formerly SNE) offshore Senegal. The Sangomar Field is today recognised as a global tier one oil field.

FAR and the JV partners believe the robust economic returns for Sangomar have the potential to improve with acceleration of future development phases as well as the monetisation of gas, and improved oil recoveries.

During and subsequent to the quarter, FAR progressed and announced equity and debt funding totalling over US$400m to contribute to FAR’s share of the Sangomar Oil Field development. Further detail is provided in the Corporate update below.

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Figure 1: Location of the Senegal RSSD Blocks and Sangomar Field development area

• Refer to Cautionary Statement in this report (Page 6) relating to estimates of prospective and contingent resources

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On the 3[rd] of December, FAR announced that the Rufisque Offshore, Sangomar Offshore and Sangomar Offshore Deep (RSSD) JV submitted the Development and Exploitation Plan for the Sangomar Field offshore Senegal to the Senegal Ministry of Petroleum and Energy in Dakar.

Subsequent to the quarter, The Government of Senegal approved the Plan and granted the Exploitation Authorisation for the development. The Host Government Agreement was executed and key contracts awarded which was followed by the JV participants’ FID (final investment decision) in January 2020. The Operator reported that full notices to proceed (FNTP) have been issued to key contractors for commencement of the Sangomar Field development. The field development area is shown in Figure 1.

Offshore, The Gambia

Blocks A2/A5 (FAR 50% WI and Operator)

At the beginning of the quarter, FAR announced it had obtained an additional 10% interest in the Gambian blocks A2 and A5, giving FAR a 50% working interest and FAR retains Operatorship. The Government of The Gambia has issued new Licences to the Joint Venture in respect of the A2 and A5 Blocks, incorporating updates to the Licence terms.

On 24 October, FAR announced that a detailed geotechnical evaluation for its two offshore blocks in The Gambia were completed including an assessment of hydrocarbon resources. Combined

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prospective resources for the two blocks were assessed at 1.2billion barrels (unrisked, Best Estimate, recoverable, 100% basis) with 621 million barrels net to FAR. FAR has identified large prospects similar to the “shelf edge” play FAR has successfully drilled in Senegal that include the Soloo and Bambo prospects (refer to Figure 2).

Reservoir targets in Soloo were both hydrocarbon-bearing in the SNE wells. A well drilled into the Soloo Prospect may also be drilled into the shallower Bambo Prospect which has resource potential of 454 mmbbls and is directly updip and on an oil migration pathway as learned from the Samo-1 well. The Jobo Prospect is at a shallower level to the SNE reservoirs but has a similar trapping style and has access to the same source kitchens. It has resource potential of 280 mmbbls.

Figure 2: Location of blocks A2 & A5 The Gambia showing prospects

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Preparations for seismic acquisition in A5, including agreements and approvals, were completed in the fourth quarter 2019. Acquisition commenced on 16 January 2020 and is planned to be completed early February 2020. The seismic acquisition is being carried out by Shearwater Geoservices using the MV Amundsen seismic vessel, with state-of-the-art isometric streamers.

MV Amundsen seismic vessel

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Reprocessing of a portion of the existing A2 seismic and data from Samo-1 is ongoing. The data is being processed using Full Waveform Inversion (FWI) technique which is designed to improve the depth imaging for the Soloo, Bambo, Jobo and other prospects in A2.

Preparations for drilling in A2 in 2020 are ongoing. Exceed has been contracted to provide drilling services for FAR Limited. Exceed provided drilling services to FAR during the Samo-1 drilling program, which was a very efficient operation, coming in under time and within budget. Geological studies to support a prospect and well location are ongoing, with the final location being decided after receipt of the FWI reprocessing.

Guinea-Bissau

No update from previous quarter.

Kenya

No update from previous quarter.

NW Shelf (Australia)

No update from previous quarter.

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Corporate

Key appointments

At the beginning of the quarter, FAR announced Dr Julian Fowles had joined the Board as a NonExecutive Director. Julian is a petroleum industry professional who brings to FAR over 30 years of international oil and gas industry experience across many operating environments, including 17 years with Shell International, and positions with other international companies in India and Brazil.

Most recently Julian was a senior executive with Oil Search Limited, leading the PNG operated and non-operated oil and LNG production and development businesses, with responsibility for approximately 2,000 staff and contractors.

Elisha Larkin also joined the Company during the quarter, ahead of her appointment as Company Secretary on 21 January 2020. Elisha has held a range of commercial and governance positions including most recently as a senior executive and Company Secretary of biotechnology company Hexima Limited. Elisha’s appointment expands FAR’s executive team, with previous Company Secretary, Peter Thiessen, continuing as CFO.

Financing Activities

During and subsequent to the quarter, FAR made great progress on the planned financing package to fund the Company’s CAPEX to first oil for the Sangomar Oil Field development. In December the Company announced a A$146m (~US$100m) placement to institutional and sophisticated investors and a Share Purchase Plan (SPP) to existing eligible shareholders, both priced at 4.25c per share. The placement was approved by shareholders at the General Meeting held 16 January 2020, and the SPP received strong support, closing on the 14 January 2020 and raising A$11.18m.

In addition to the successful equity raising, FAR announced an update regarding its US$300 million senior secured reserve-based lending (“RBL”) facility. Over the coming months, FAR will conclude the documentation process for the RBL facility, select its preferred provider of junior debt and conclude the necessary funding for the Sangomar project.

Arbitration

During the quarter, FAR was notified that the draft award from the arbitral tribunal in respect of the issues heard in July 2019 had been received by the ICC (International Chamber of Commerce) International Court of Arbitration and that post quarter it has been approved by the Court. However, the result of the award has not yet been received by the Company.

Social Programs

Footballs and Football gear were again distributed to the local children during Q4 2019 to the local community of Gossas, Senegal.

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Managing Director comments:

2019 saw FAR transition from an exploration company to being well on our way to a mid-tier producer. FAR has firmly cemented itself as a strong player in the MSGBC Basin and a company that is expected to be one of the largest oil producers on the Australian Stock Exchange.

2019 saw the first year in sometime that we did not drill however that does not mean the work slowed down. The operations of the company were busier than ever as the management team worked to finalise the Senegal financing solution.

We continued to make excellent progress with the Sangomar Field Development in 2019 with several further milestones reached this year including submission of the final Development and Exploitation Plan which was also approved in early 2020, execution of the Host Government Agreement, and FID decision by all joint venture participants in the project which led to the project moving into execute phase.

Certain issues in the ongoing arbitration with Woodside Energy Senegal BV were heard in July 2019 and we are patiently waiting the outcome of that hearing which we believe is due imminently.

FAR received a Senegal delegation to the Melbourne FAR office in December which included the Minister of Petrole and Energies, Mouhamadou Makhtar Cisse and the Director General of Petrosen (the State oil company of Senegal), Mamdou Faye, accompanied by a delegation of Senegalese dignitaries. This visit was a wonderful opportunity for the Government to see the hard work FAR has accomplished during our 13 years in Senegal and further cemented the strong government relationships.

Subsurface work is ongoing for the Gambian project as we progress to finalising a well location for the 2020 drilling in H2. During the quarter, FAR opened the data room to farm down its interest and we look forward to bringing more news to our shareholders in the coming months as to the progress of the Gambian project.

FAR delivered a very successful 2019 social program in West Africa to include a renovation of a maternity ward at Soma Regional Hospital, The Gambia Volleyball Federation National volleyball championship sponsorship and the electrification and external security light installation for Serakunda Lower Basic school in The Gambia. In addition, FAR again donated footballs and uniforms to Senegalese children in the local community of Gossas.

I thank the management team for working tirelessly day and night to ensure no stones were left unturned in the financing process and we are very proud of the work that has now been completed. I thank our shareholders for their ongoing support which was kindly received during those long hours and especially the words of appreciation and congratulations now that the Sangomar project has reached FID. 2020 is shaping up to be an exciting year for FAR shareholders.

This announcement has been approved for release by the FAR Limited disclosure committee.

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Disclaimers

*Prospective Resource Estimates Cautionary Statement - With respect to the Prospective Resource estimates contained within this report, it should be noted that the estimated quantities of Petroleum that may potentially be recovered by the future application of a development project may relate to undiscovered accumulations. These estimates have an associated risk of discovery and risk of development. Further exploration and appraisal is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. The Prospective Resource estimates provided in this report are Low Estimate, Best Estimate and High Estimate and represent that there is a 90%, 50% and 10% probability respectively that the actual resource volume will be in excess of the amounts reported.

Prospective and Contingent Resources - All contingent and Prospective Resource estimates presented in this report are prepared as at 23/10/2019 (Reference: FAR ASX releases of 24/10/2019). The estimates have been prepared by the Company in accordance with the definitions and guidelines set forth in the Petroleum Resources Management System, 2007 approved by the Society of Petroleum Engineer and have been prepared using probabilistic methods. The contingent resource estimates provided in this report are those quantities of petroleum to be potentially recoverable from known accumulations, but the project is not considered mature enough for commercial development due to one or more contingencies. The Prospective Resource estimates provided in this report are Best Estimates and represent that there is a 50% probability that the actual resource volume will be in excess of the amounts reported. The estimates are unrisked and have not been adjusted for both an associated chance of discovery and a chance of development. The 100% basis and net to FAR contingent and Prospective Resource estimates include Government share of production applicable under the Production Sharing Contract or Licence.

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

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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Top 10 shareholders (as at 29 January 2020)

	Shareholder	Units	%
1.	CITICORP NOMINEES PTY LIMITED	2,422,751,851	24.30
2.	JP MORGAN NOMINEES AUSTRALIA PTY LIMITED	1,013,691,592	10.17
3.	HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED	935,547,435	9.39
4.	FARJOY PTY LTD	514,463,236	5.16
5.	CITY SECURITIES	351,255,832	3.52
6.	CS FORTH NOMINEES PTY LIMITED	258,223,562	2.59
7.	NATIONAL NOMINEES LIMITED	135,620,153	1.36
8.	CS THIRD NOMINEES PTY LIMITED	123,382,522	1.24
9.	NATIONAL NOMINEES LIMITED	92,287,286	0.93
10.	HSBC CUSTODY NOMINEES LIMITED – A/C 2	82,460,802	0.83
	TOTAL	5,929,684,271	59.48

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

(Expressed in United States dollars unless otherwise stated)

Name of entity

Name of entity	Name of entity
FAR Ltd
ABN 41 009 117 293	Quarter ended (“current quarter”)
41 009 117 293	31 December 2019

Consolidated statement of cash flows	Current Quarter US$’000	Year to date (12 months) US$’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Research and development refunds 1.8 Other (provide details if material) 1.9 Net cash (used in) operating activities	- (7,314) - - (964) (885) - 59 (23) - - 2	5 (16,464) - - (3,044) (2,079) - 355 (51) - - 380
	(9,125)	(20,898)

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current Quarter US$’000	Year to date (12 months) US$’000
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) tenements, (c) investments (d) exploration and evaluation 2.2 Proceeds from the farm-out of: (a) property, plant and equipment (b) tenements# (c) investments (d) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other – Repayment of loans from Joint venture 2.6 Net cash (used in) investing activities	(31) - - (8,990) - 1,048 - - - - 4,178	(73) - - (18,249) - 2,423 - - - - 1,332
	(3,795)	(14,567)
#receipt of conditional consideration from farm-out activities
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other – Payment of obligations under lease 3.10 Net cash from financing activities	- - - (58) - - - - (59)	31,507 - - (1,450) - - - - (331)
	(117)	29,726

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

Consolidated statement of cash flows	Current Quarter US$’000	Year to date (12 months) US$’000
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period(i) 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	26,897 (9,125) (3,795) (117) (107)	19,540 (20,898) (14,567) 29,726 (48)
	13,753	13,753
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current Quarter US$’000	Previous Quarter US$’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other – Term deposits(i) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	1,353 12,101 - 299	4,163 22,447 - 287
	13,753	26,897
(i) including a term deposit of US$209K (A$297K) restricted cash and not readily available for use. This term deposit is held as security over the Company’s corporate head office lease in the form of a bank guarantee. The remaining US$90K is held as unrestricted term deposit and available for use on maturity. 6. Payments to directors of the entity and their associates Current quarter US$'000 6.1 Aggregate amount of payments to these parties included in item 1.2 297 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report

7. Payments to related entities of the entity and their associates 7.1 Aggregate amount of payments to these parties included in item 1.2 7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3	Current quarter US$'000
	-
	-

7.2	Aggregate amount of cash flow from loans to these parties included in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $US’000 Amount drawn at quarter end US$’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $US’000	Amount drawn at quarter end US$’000
		-	-
		-	-
		-	-

9. Estimated cash outflows for next quarter	US$’000
9.1 Exploration and evaluation 9.2 Development 9.3 Production 9.4 Staff costs 9.5 Administration and corporate costs 9.6 Other 9.7 Total estimated cash outflow#	42,000 - - 700 500 -
	43,200

In December the Company announced a A$146m (~US$100m) placement to institutional and sophisticated investors and a Share Purchase Plan (SPP) to existing eligible shareholders, both priced at 4.25c per share. The placement was approved by shareholders at the General Meeting held 16 January 2020, and the SPP closed on 14 January 2020 raising an additional A$11.18m.

• See chapter 19 for defined terms 1 September 2016

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Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

10. Changes in tenements (items 2.1(b) and 2.2(b) above)	Tenement reference and location	Nature of interest	Interest at beginning of quarter	Interest at end of quarter
10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced	The Gambia Blocks A2 & A5.	Petroleum (Exploration Development and Production) Licence	40%	50%
10.2 Interests in mining tenements and petroleum tenements acquired or increased

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 31 January 2020 Company secretary

Print name: Elisha Larkin

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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