FAR is pleased to announce that it has received advice from the Minister of Energy for the Republic of Senegal confirming a one year extension to the First Renewal Period under the Contract for Exploration and Hydrocarbon Production Sharing covering the Rufisque and Sangomar and Sangomar Deep offshore blocks.

According to the Ministerial advice the extension granted to FAR will be for a one year period commencing from the date of a formal Presidential Decree to follow (as distinct from the current licence expiry date of 22 November 2009).

FAR is Operator of three offshore Blocks and holds a 90 percent interest with the balance being held by Petrosen (Senegal’s National Oil Company). These offshore concessions, located in the Mauritania-Senegal, Guinea Bissau Basin, offer potential for world class oil accumulations. The extension and large working interest of 90 percent will place FAR in a strong position with the continuing farm out process following Shell’s decision not to farm in to the Blocks.

The decision by Shell follows the completion of a Shell funded CSEM Data Acquisition and Geophysical Evaluation Programme over part of the Licence Area where a number of drilling prospects have already been identified by FAR and its partner Petrosen. Following Shell’s decision, FAR was paid US$3 million and recouped approximately $US0.5 million in past expenditures. Additionally, FAR retained full authority to use the technical report resulting from the Geophysical Evaluation Programme and CSEM data for all purposes, including the purpose of seeking an alternative farm in partner.

FAR has provided data packages to several large international exploration and production companies; detailed technical reviews are now in progress. To enable this process to continue and a farm-in partner or partners secured for the drilling of an exploration well, the co-venturers including FAR and Petrosen, requested the current contractual period of the licence be extended by one year.

The successful application for the extension had been based on the following:
• interest from industry participants with access to rigs and proven capacity to operate deepwater wells;
• the joint venture has met all their obligations under the first renewal period and have spent in excess of US$21 million being nearly three times the minimum amount specified under the Contract;
• in doing so the JV has acquired one of the largest 3D surveys off the northwest coast of Africa covering an area exceeding 2000 square kilometers resulting in a high quality data set that has been processed into a world class seismic volume leading to the identification of several plays and drillable prospects together with a CSEM study funded by Shell;
• work has been accomplished as rapidly as possible with due care and attention to detail thus resulting in the interest currently shown by E & P companies.

FAR is seeking cost recovery and a free carry through the drilling of one exploratory well.


BACKGROUND TO DEEPWATER PROGRAMME OFFSHORE SENEGAL
The Licence in respect of Sangomar Offshore, Rufisque Offshore and Sangomar Deep Offshore, was issued in July 2004. FAR farmed into the Licence area in January 2006 by contributing to a 2,050 square kilometre 3D seismic programme.

In November 2008, FAR was granted a one-year extension to the current exploration term. During the first quarter 2009, FAR concluded an Agreement with Shell to conduct a CSEM Data Acquisition and Geophysical Evaluation Programme and increased its interest in the Licences (aggregating 7,491 square kilometres) to 90 percent and assumed operatorship. The CSEM acquisition was completed on 26 May 2009 and was followed by processing and evaluation performed by Shell with a technical report delivered in September 2009.

Senegal Exploration Summary
• Deep water play with significant hydrocarbon potential in the Senegalese portion of the productive Mauritania-Senegal-Guinea Bissau Basin.

• The offshore Licenses cover an area of 7,491 sq km over the shelf, slope and basin floor, with potential multiple untested plays in a proven hydrocarbon system.

• A 2086 sq km 3D acquired during 2007 highlighted Multiple Santonian age fan systems with stacked amplitude anomalies, and a very large Albian to Neocomian shelf edge closure adjacent to a Turonian oil source rock kitchen.

• Excellent fiscal terms by world standards.

• FAR (Operator) is partner with Petrosen (National Oil Company).

• The northwest African margin remains relatively under-explored.

With its capital city of Dakar located on the westernmost point of Africa, Senegal is a gateway to the continent. The country is considered one of Africa’s most politically and economically stable countries, and hosts some of the best transportation, telecommunications and communications infrastructure in West Africa. It has been a functioning democracy since independence from France in 1960, and enjoys free and fair elections.