FAR is the lead participant in this onshore Texas Gulf Coast exploration opportunity with a 34% working interest which provides excellent leverage in the drilling phase.

During the last quarter of 2008, two wells, Pitchford #1 and Pitchford #2, were drilled at NE Waller.

The logging of Pitchford #1, a 4500’ Frio test, did not indicate the presence of hydrocarbons and the well was plugged and abandoned.

The Pitchford #2 well, a 7100’ Yegua test, encountered a thin zone at Frio level with the Yegua and Cockfield appearing wet. The well was drilled on prognosis running structurally high and had good sand development however the controlling fault and associated trap mechanism appears to have formed after migration occurred. The partners decided not to complete in the Frio which was considered marginal and the well was plugged and abandoned.

These first two wells were selected from a large drilling inventory of shallow horizons. A full modern log suite was run in the wells in order that they would serve as a calibration of the 3D seismic over remaining prospects and leads. Evaluation of deeper horizons, particularly Wilcox and Midcox continues.

The main thrust of the NE Waller program is at Wilcox level and it is FAR’s intention to introduce farm in partners for prospects at Wilcox and deeper intervals at a future date.

Shooting of the NE Waller 3D seismic survey was completed by Quantum Geophysical Inc during the first week of November 2007 and all the 3D field data delivered to Generation Services Group, LC, of Houston for processing. Data quality is excellent. The final surveyed area comprised some 41 plus square miles.

The 3D seismic survey covered a lightly explored area, on trend with significant Yegua and Wilcox production and was designed to evaluate a number of structural leads generated by extensive subsurface mapping and evaluation of over 100 miles of existing 2D seismic data acquired mainly in the 1980’s.

Prior to the shoot FAR continued to increase its acreage position in the survey area. The Operator reports that the volume of completed lease trades has increased as brokers reach final stages of land acquisition. 22,216 gross acres (approx 17,484 net) have now been signed up under favourable costs and conditions.

Primary objectives are multiple normally pressured prolific Yegua and Wilcox sands in structural traps. The area evaluated with 3D seismic is on depositional strike with several nearby fields which have produced over a quarter trillion cubic feet of gas and over thirty million barrels of liquids. Although targeting natural gas, most of the sands in this trend are condensate rich.

Additional objectives comprise highly productive Frio and Midcox sands. These sands have produced primarily from stratigraphic traps. The shallow sands are especially prone to displaying 3D amplitude anomalies.

Deeper potential is also present in a number of high risk – high potential objectives which lie within the Cretaceous section.

Subsequent to 2007 year end the operator completed initial interpretation of the 3D seismic data over NE Waller. As anticipated, multiple leads and prospects have emerged from the work conducted to date with drill targets defined from Frio level (3,000 feet) through Yegua, and down to Lower Wilcox Level (12,000 feet). Evaluation is continuing.

At Lower Wilcox Level a lead on 2D has been confirmed on 3D data as two large prospects separated by a structural saddle. In addition, a sizeable feature has been mapped in the Cretaceous Glen Rose section at 23,000 feet.

The 3D program is being used to locate optimal drill sites from which the sizeable hydrocarbon potential of the play area may be tested.
Potential reserves in excess of 50 BCFE from future exploration drilling, from the primary objectives alone, are anticipated.

The Operator, AYCO, has a successful track record of generating prospects and driving 3D programs in the Gulf Coast area. Importantly this early entry and significant equity in the program will enable FAR to farm out certain of the future drilling risk on favourable terms, should it so desire.