Slide 1: Chairman's Address
Chairman’s Address For personal use only Annual General Meeting of Shareholders 13 May 2016
Slide 2: The FAR corporate evolution
The FAR corporate evolution For personal use only Transitioning from a junior explorer 2013 share register (2) to a leading energy company Retail Investors • entry in to ASX Top 300 - March 2015 67% Institutional • ASX top 5 oil & gas company, behind Investors 16% Woodside Petroleum, Oil Search, Hig
Slide 3: The FAR share price evolution
The FAR share price evolution Attracting Partners Portfolio Flow/FAR merger in Senegal Mgment Exploration Evaluation & Appraisal For personal use only Feb-12 Jun-14 Oct-14 Oct-15 Apr-16 Capital raisings $15m, 4.3cps $8m, 4cps $46.7m, 11cps $40m, 8cps $60m, 8.5cps 0.16 150 Share price (A$p.s.) Brent
Slide 4: FAR's market capitalization increased by 300% in 3 years
FAR’s market capitalization increased by 300% in 3 yrs 140 450 For personal use only 400 120 Current market capitalisation 350 of A$350m 100 300 80 A$145m in value 250 through A$265m of capital market 60 raisings capitalisation growth over 200 the last 3 years 40 150 A$120m in price performance (1)
Slide 5: FAR have outperformed since last AGM
FAR have outperformed since last AGM For personal use only Last twelve months (% change)(1) Last three years (% change)(2) Cairn Energy 12% 12% FAR 157% FAR -6% Carnarvon Petroleum 67% ASX200 -8% ASX200 3% Carnarvon Petroleum -18% Cairn Energy -29% -8% Brent Oil price (A$) -26% Sino Gas & Energy -28
Slide 6: Funding FAR
For personal use only Funding FAR
Slide 7: What it takes to get Institutional Funding
What it takes to get Institutional Funding For personal use only • To present ourselves as highly professional • To deal with expectations on Governance and Remuneration practices - a one size fits all mentality is often not ideal for FAR • To recognise the ‘Proxy Advisor’ industry is inescapable -
Slide 8: We have upgraded our Governance Framework
We have upgraded our Governance Framework For personal use only • Corporate Governance Statement • Policies - Anti-Bribery and Corruption • Committees & Charters - Diversity - Board Charter - Environment & Sustainability - Audit Committee - Human Rights & Child Protection - Nomination Committee - Re
Slide 9: Remuneration frameworks
Remuneration frameworks For personal use only
Slide 10: Global Listed Company Remuneration Frameworks
Global Listed Company Remuneration Frameworks For personal use only • Post GFC listed companies globally have moved to to satisfy political and institutional demand that management’s interest are more clearly and transparently aligned with shareholders interests • This has led to remuneration struct
Slide 11: Frameworks
Frameworks For personal use only • Institutions rely on Proxy advisors to determine their voting - engaging and meeting the requirements of the proxy advisors is essential - but various advisors have different views making even this part difficult • retail investors generally are opposed to these re
Slide 12: What are Performance Rights?
What are Performance Rights ? For personal use only • They are not a share or an option • The requirements are measured in 3 years time (the vesting date) – until then the employee gets nothing – that’s why they call them long term incentives • If the grant requirements are satisfied then: - either
Slide 13: Cath and Ben
For personal use only Cath and Ben 13
Slide 14: FAR's overheads are very low
FAR’s overheads are very low For personal use only 2015 $0.24M In-house technical Admin expenses $0.55M Corporate salaries Corporate consulting $1.99M Other $4.51M $0.64M 14
Slide 15: Travel stats 2015
Travel stats 2015 For personal use only Cath Norman Ben Clube Percentage of 2015 Percentage of 2015 Europe 40 days Europe 59 days Africa 31 days spent travelling* Africa 33 days spent travelling* 42% 48% US 7 days US 0 days Domestic 11 days Domestic 4 days Asia 4 days Asia 10 days Melbourne Melbourn
Slide 16: The FAR Remuneration Framework
The FAR Remuneration Framework For personal use only • Total Possible Remuneration = base Salary (50%) + theoretical max ‘at risk’ component (50%) • base salary = cash $558,000 FAR MD example - subject to annual performance review On our MD’s recommendation • ‘at risk’ = 1/2 STI + 1/2 LTI FAR board
Slide 17: MD compensation benchmarking – LTM
MD compensation benchmarking – LTM Australian peer group comparison of Total Fixed Remuneration (“TFR”) and “At Risk” For personal use only compensation FAR TFR is the 350% lowest of the peer group 300% FAR at risk is 250% also one of the At risk remuneration (as % of TFR) lowest 200% Explorer
Slide 18: MD compensation benchmarking – LTM
MD compensation benchmarking – LTM International and Australian peer group comparison of Total Fixed Remuneration (“TFR”) and “At Risk” compensation For personal use only 600% FAR TFR is the lowest of the 500% peer group $3,575m $1,018m FAR at risk is also At risk remuneration (as % of TFR) 400%
Slide 19: Calculating the final number of performance rights
Calculating the final number of performance rights For personal use only • In 3 years time the 2016 LTI grant will be determined • Absolute Share Price Measure FAR MD example - If the share price has grown at less than 15% compound for the 3 years 0 shares i.e. the share price is <$0.119 - If the sh
Slide 20: Summary
Summary For personal use only • In 2016 our Managing Director will be paid (subject to the resolutions being passed today) - Cash A$558,000 - She will not be paid a cash bonus - She will not receive any free options or shares - She will receive 3,578,000 performance rights which in 3 years will turn
Slide 21: Evaluating the world's largest oil discovery
Evaluating the world’s largest oil discovery For personal use only FAR Limited Annual General Meeting 13 May 2016
Slide 22: Senior management
Senior management For personal use only Gordon Ramsay Business Development Ben Clube Peter Thiessen COO, Director CFO, Company Secretary Peter Nicholls Exploration Manager 2
Slide 23: FAR snapshot
FAR snapshot • Two major basin opening oil discoveries in Senegal in 2014 For personal use only • SNE Field largest global oil find since discovery in 2014 • SNE Appraisal drilling commenced 2015 • 5/5 successful wells offshore Senegal to date • Quality partners in Senegal discoveries: ConocoPhillip
Slide 24: SNE Oil field footprint
SNE Oil field footprint approximately 350 km2 For personal use only 4
Slide 25: Senegal
Senegal For personal use only • Strong in-country relationships OFFSHORE SENEGAL PSC FAR 16.7% paying interest, 15% beneficial interest • Peaceful democracy Operator: Cairn Energy PLC • Solid growth: 4.7% GDP in 2014 • S&P sovereign credit rating 'B+/B‘ • First offshore exploration wells for 40 year
Slide 26: Geological setting
Geological setting For personal use only W FAN-1 SNE-2 SNE-1 SNE-3 BEL-1 E Buried Hills play Shelf Edge play Fan play 0 10 km 6
Slide 27: FAN-1 Discovery
FAN-1 Discovery For personal use only W FAN-1 SNE-2 SNE-1 SNE-3 BEL-1 E – FAN-1 well drilled first – Results announced Oct 2014 – Oil gravity 28-41 degrees API – Gross oil bearing interval >500m – Operator gross oil (STOIIP) in place – P90: 250 mmbbls – P50: 950 mmbbls – P10: 2,500 mmbbls – De-riske
Slide 28: SNE-1 Discovery
SNE-1 Discovery For personal use only W FAN-1 SNE-2 SNE-1 SNE-3 BEL-1 E SNE Field – Result announced Nov 2014 – Largest oil discovery for 2014 – Has not been surpassed to date – Approximately 350 km2 footprint 0 10 km 8
Slide 29: SNE-1 oil discovery
SNE-1 oil discovery For personal use only • Results announced Nov 2014 • Excellent reservoir – 25% average porosity • Oil gravity 32 degrees API • Gross oil column of 96m (36m net) • Contingent recoverable resource* – P90 (1C): 150 mmbbls – P50 (2C): 330 mmbbls – P10 (3C): 670 mmbbls *Reference FAR
Slide 30: SNE Field: Growth of field before appraisal
SNE Field: Growth of field before appraisal For personal use only Pre-Drill Post discovery Pre-Appraisal P90 : 50mmbbls 1C: 150 mmbbls 1C: 240 mmbbls (+60%) P50 : 154 mmbbls 2C: 330 mmbbls 2C: 468 mmbbls (+40%) P10 : 350 mmbbls 3C: 670 mmbbls 3C: 940 mmbbls (+40%) *Reference FAR ASX releases dated 1
Slide 31: SNE appraisal well locations
SNE appraisal well locations For personal use only Objective of wells: • Size of oil pool • Test reservoir properties and deliverability from logging, coring and testing • Measure field connectivity BEL-1 SNE-2 SNE-1 SNE-3 N S Drilling Oil Traps ● Flow tested zones 11
Slide 32: SNE-2 Appraisal well
SNE-2 Appraisal well For personal use only • Excellent flow from two independent drill stem tests (DST) – Gross 12m zone: 8,000 bopd stabilised and constrained, interpreted flow > 10,000 bopd – Gross 15m zone: 1,000 bopd unstabilised • Flow considerably greater than prognosis • Confirmed commerciall
Slide 33: SNE-3 Appraisal well
SNE-3 Appraisal well • Excellent flow from two drill stem For personal use only tests (DST) 3 – Gross 15m zone: 5,400 bopd max and 4,000 bopd stabilised – Increased to gross 20.5m zone: 4,500 bopd stabilised • Flow greater than prognosis • Confirmed commercially viable flow rates • 32 degrees API •
Slide 34: Growth of the SNE oil field
Growth of the SNE oil field For personal use only 600 561 (84) 468 500 (70) 2C Contingent 400 330 resource (50) mmbbls, 300 unrisked, 100%basis oil only 154 (net to FAR) 200 (23) 100 0 Pre-drill prospective Post SNE-1 RISC, Pre Appraisal, RISC, post SNE-2, resource (June '14) contingent resource pos
Slide 35: BEL-1 Well results
BEL-1 Well results • Dual objective for well For personal use only • Bellatrix exploration prospect – Gas discovery in stacked sands – 8m net gas pay – No water contact detected – potential for down dip oil leg • SNE field northern appraisal – 100m gross oil column – Good correlation reservoirs, GWC
Slide 36: Appraisal progress to date
Appraisal progress to date For personal use only Objective of wells are to establish: – Size of oil pool ✔ – Reservoir properties and deliverability from logging, ● coring and testing ✔ Flow test SNE-2 – Reservoir connectivity ● Drilling program progressing ● safely, efficiently and under budget Flo
Slide 37: Interference testing
Interference testing For personal use only Pulsing well ● ● Observation well Observation well ● 17
Slide 38: Interference testing
Interference testing For personal use only Pulsing well ● ● Observation well Observation well ● 18
Slide 39: Interference testing
Interference testing For personal use only Pulsing well ● ● Observation well Observation well ● 19
Slide 40: Interference testing
Interference testing For personal use only Pulsing well ● ● Observation well Observation well ● 20
Slide 41: Interference testing
Interference testing For personal use only Pulsing well ● ● Observation well Observation well ● 21
Slide 42: SNE-4 Appraisal well
SNE-4 Appraisal well • Spudded 16 April For personal use only • Aims of the well – intersect key reservoirs in the oil – acquire reservoir information from all units – increase the contingent resources W E 22
Slide 43: Senegal prospects and leads
Senegal prospects and leads For personal use only • JV PSC area 7,490 km2 • 3D seismic coverage ~5,000 km2 23
Slide 44: Capturing more shelf edge exposure
Capturing more shelf edge exposure • For personal use only New FAR Djiffere 3D seismic bought FAR option to earn a 75% W.I. • New Senegal joint venture 2015 3D seismic shot along ● trend from existing mapped prospects and assists SNE ● delineation • Processing of data from both surveys now taking pl
Slide 45: Senegal economics
Senegal economics • Excellent PSC terms For personal use only • Minimum Economic Field Size (MEFS) approx 200mmbbls* • NPV/bbl of US$10 at US$50/bbl oil price and reduced CAPEX* • Estimated first oil 2021 • Costs coming down 25 *Reference Cairn Energy Capital Markets Day 2015/6
Slide 46: Industry woes, costs coming down
Industry woes, costs coming down • 75% drop in oil price since peaks of 2014 For personal use only • Dividends being widely reduced or cancelled – general negative investor sentiment • Exploration companies to weather the low oil prices well into 2017 • Estimated US$213 bn of deepwater developments
Slide 47: Global rig count
Global rig count For personal use only Africa Worldwide 160 4500 Discovery wells Appraisal 150 4000 program 140 3500 130 US$330/day1 3000 120 < 5% NPT2 2500 110 US$650/day1 2000 100 > 50% NPT2 90 1500 80 1000 Aug Aug Apr Apr Apr Dec Dec Feb Mar Oct Mar Oct Mar May May Sep Feb Sep Feb Nov Nov Jan Jan
Slide 48: What's happening next?
What’s happening next? • Results of SNE-4 well by end May For personal use only • Decision on future appraisal by end May • Upgrade to contingent resources mid year (inc BEL-1, SNE-4 and core data) • Receipt of Djiffere seismic data mid Q3 • FAR statement on SNE field commerciality Q3 • Decision to
Slide 49: Budget going forward (A$)
Budget going forward (A$) For personal use only • Cash 31 March = $31.7M • Capital raise = $57.6M • Outgoings current quarter : $30M • Expected Q3/Q4 : $30-40M – Includes 2 wells (plus interference test) – Licence retention – Geotechnical work – Administration • Estimated cash year end $20-30M • 90%
Slide 50: Guinea-Bissau
Guinea-Bissau • Three blocks, operator Svenska For personal use only • FAR 15% WI, 21.43% PI SINAPA (BLOCK 2) AND ESPERANÇA (BLOCKS 4A & 5A) 21.43% paying interest, 15% beneficial interest • New 3D seismic evaluating SNE look-a- Operator: Svenska Petroleum Exploration AB (‘Svenska’) like prospect (A
Slide 51: Kenya
Kenya For personal use only • Interest in two exploration blocks in BLOCK L6 BLOCK L9 the Lamu Basin 60% interest offshore 24% interest onshore 30% interest Operator: Ophir Energy PLC Operator: FAR Limited • Lamu Basin has proven oil at both ends of Miocene reef play (blue) • Farmout for onshore L6:
Slide 52: Australia
Australia For personal use only • WA-458-P exploration permit offshore WA-458-P OFFSHORE DAMPIER BASIN Western Australia is surrounded by 100% paying and beneficial interest Operator: FAR Ltd discoveries • Structural and combined structural- stratigraphic leads at proven reservoir levels • Combined
Slide 53: Social responsibility
Social responsibility FAR and its partners are committed to supporting For personal use only activities that deliver positive, lasting social and economic benefits to Senegal through the following programs: • Great Entrepreneur competition in Senegal • English language training for students, officer
Slide 54: 2016 revealing the prize
2016 revealing the prize For personal use only • 2013: Year of farmout • 2014: Year of discovery • 2015/2016: Evaluating the SNE Field • 100% success rate offshore Senegal • Undrilled exploration prospects with >1bn bbls potential • Expanding footprint through Djiffere • Possible lookalikes of SNE i
Slide 55: Contact us
Contact us For personal use only Level 17, 530 Collins Street Melbourne VIC 3000 Australia T: +61 3 9618 2550 far.com.au info@far.com.au FAR is going social! Follow us on Twitter, LinkedIn and on our U-tube channel
Slide 56: Disclaimer
Disclaimer For personal use only • This presentation has been prepared by FAR Limited (‘FAR’). It should not be • This presentation does not purport to be all inclusive or to contain all considered as an offer or invitation to subscribe for or purchase any shares in information which you may require