FAR Ltd : Quarterly Activities Report

Quarterly report for the period

1 October 2011 to 31 December 2011

Highlights

• FAR merger with Flow Energy Limited by agreed takeover successfully closed and integration of the two companies well underway

• Appointment of Catherine Norman as Managing Director and Nicholas Limb as non-executive director (both previously of Flow Energy) to augment the FAR board

• Strong cash balance of $23.8M moving into 2012

FAR Merger with Flow Energy

On 21 September 2011, the Company announced a merger with Flow Energy Limited ("Flow Energy") by way of a conditional off-market takeover bid by FAR for all of the issued shares in Flow Energy ("Offer"). On 10 November 2011, FAR announced that 93% of Flow Energy shareholders had accepted Offer and declared the Offer unconditional. The compulsory acquisition of the remaining shares was completed on 22 December 2011 giving FAR 100% control of Flow Energy at 31 December 2011.
At 31 December 2011, and the date of this report, there were 2,150,401,164 shares on issue.
As a result of the takeover, FAR has a strong and diversified suite of assets whilst retaining a focus on Africa. In particular, the addition of the high impact Kenyan project has added an East African arm to our portfolio. The recent exploration successes of Anadarko and BG offshore Mozambique and Tanzania have focussed the spotlight on East Africa where Apache is expected to drill its first well in Kenya in mid 2012.
In addition, FAR has strengthened its Board of Directors with the addition of Catherine Norman as Managing Director and Nicholas Limb as a Non-Executive Director. Cath was previously MD of Flow Energy and Nic previously a Non-Executive Director of Flow Energy. Both Cath and Nic look forward to the exciting challenges ahead with FAR.
(Full details of the terms and conditions of the Offer can be found in the Bid Implementation
Agreement, Bidder's Statement and Target's Statement released to the ASX on 21
September 2011 and housed on the FAR website at www.far.com.au)

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Projects update Senegal

FAR is Operator of three offshore Blocks and holds a 90% interest with the balance being held by Petrosen (Senegal's National Oil Company).

FAR permits offshore Senegal

The Company has given notice under the terms of the Production Sharing Contract (PSC) to the Minister for Energy for the Republic of Senegal of its intention to enter the next exploration phase (second renewal period) which commenced on 23 November 2010.
FAR's renewal under the PSC is subject to Ministerial approval and requires a Presidential Decree. The request is supported by Petrosen, the National Oil Company of Senegal. The approval process is ongoing.
The PSC terms currently specify the requirement to drill a well within two years of entering the renewal period backed by a surety of US$5 million that is forfeitable in the event of non- performance.
FAR remains committed to Senegal and positive about the future plans in country. 2012
is shaping up to be a landmark year for deepwater exploration generally along the Central Atlantic Margin with wells earmarked for drilling by Anadarko (Sierra Leone/Liberia), Hyperdynamics (Guinea), African Petroleum (Liberia and Gambia) and Chevron (Liberia). Recent transactions in Liberia and Gambia (abutting FAR's Senegal licence area) by NSX listed African Petroleum provide strong independent evidence supporting the underlying value of FAR's Licences.
During the quarter, Ophir Energy plc's option to acquire a 25 percent interest in FAR's
Sangomar Offshore, Rufisque Offshore and Sangomar Deep Offshore licences in Senegal expired with Ophir Energy choosing to not take up their option.

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

Rufisque, Sangomar, Sangomar Deep	Paying Interest
FAR	100% Operator

Guinea Bissau

During the quarter processing and interpretation of the 3D seismic data acquired in 2010 continued with the objective of identifying preferred targets for the drilling of up to two wells, the first of which is likely to be in late 2012/early 2013.
During October 2011, Svenska presented preliminary interpretation of data which supported the case for future appraisal drilling along the north-west flank of the Sinapa Dome and an exploration well to be selected from within the prospect inventory on the Blocks. Further work
continues.

FAR permits offshore Guinea Bissau

The permits are currently in Phase 1 of the exploration term, which has been extended for two years to 25 November 2012. A further optional four year Phase 2 exploration period has a
work commitment that includes a single exploration well.

Sinapa (Block 2), Eperanca (Blocks 4A/5A)	Paying Interest
FAR	21.43%
Svenska	78.57% (Operator)

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Kenya

FAR's Kenyan assets are located in the Lamu Basin, Kenya, and the permit names are Block
L-6 and Block L-9.

FAR permits offshore Kenya

FAR is the operator of Block L-6 and holds a 60% equity interest in the block. The Block covers an area of 3,134km2 in water depths ranging from zero to 350m. FAR has mapped seven prospects to date on 2D seismic and a 3D seismic program is planned for Q2 2012 with a first well targeted to be drilled in Q2 2013.
FAR is seeking a partner with appropriate expertise to contribute to the 3D Seismic and drilling phases of the Block L-6 project. This process remains underway.
In March 2011 Dominion Petroleum Kenya Limited (recently acquired by Ophir Energy plc) and its partners, including Flow Energy (now FAR), were awarded Block L-9, offshore Kenya. The block covers an area of 5,100km2 in water depths ranging from 300m to 1,400m.
Ophir Energy will operate the L-9 Joint Venture in which FAR has a 30% interest. The JOA
and Deeds of Assignment remain in the process of being finalised.
Block L-9 has had only one well drilled in it to date, the Simba-1 well in 1979, which encountered gas shows. As with other wells in the Lamu Basin the Simba results are considered to lend support to a possible working hydrocarbon system in the basin. Offshore oil seeps have also been identified to the north of Block L-9.
The initial exploration period of the PSC will last for two years. During this time, the acquisition of 500km2 of 3D seismic data is required. After this initial period, there is an option to commit to another two year exploration period with an obligation to drill one well in that time.
FAR has acquired these assets via the takeover of Flow Energy. The past year has seen a period of increased activity in Kenya, with Total acquiring a 40% stake in 5 offshore exploration Blocks in the Lamu Basin and Ophir Energy plc announcing a takeover bid for Dominion Petroleum, operator of Block L-9. This increased activity follows unprecedented
drilling success by Anadarko, BG and more recently ENI off the relatively unexplored East

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African margin in Mozambique and Tanzania. The Apache Energy led JV will be drilling the first well offshore Kenya following this wave of successes in mid 2012. The well will be drilled
in Block-L8 between the FAR Block-L6 and Block-L9.

Kenya Block L-6	Paying Interest
FAR	60% Operator
Pancontinental Oil and Gas Ltd	40%

Kenya Block L-9	Paying Interest
FAR	30%
Ophir Energy	60% Operator
Camac Energy	10%

AGC Profond

Work continues to evaluate leads in the block in readiness for entering a new exploration period in September 2012.

FAR permits offshore Kenya

AGC (Agence de Gestion et de Coopération entre le Sénégal et la Guinée-Bissau) is a joint commission set up by the governments of Guinea-Bissau and Senegal to administer the maritime zone between the two countries. The AGC Profond block consists of the deepwater portions of two blocks previously known as Cheval Marin and Croix du Sud. The block covers
an area of 9,838km2 and is located in water depths ranging from approximately 50 to 3,500m.
The PSC is currently in the First Renewal Period which was extended during the quarter for one year to 19 September 2012. The First Renewal Period carries a single well commitment

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which has been satisfied by the drilling of the Kora-1 well. A second renewal of a further two years is possible which will incur a commitment to drill another exploration well.

AGC Profond	Paying Interest
FAR	10%
Ophir Energy	50.23% Operator
Noble Energy	34.09%
Rocksource	5.68%

Australia

In July 2011 Flow Energy was awarded the WA-457-P and WA-458-P permits for offshore petroleum exploration in the Dampier Sub Basin in Western Australia. Following the takeover of Flow Energy, FAR now holds 100% of both blocks.
Both blocks have a three year initial exploration period consisting of seismic reprocessing and geophysical studies in year one, 3D seismic data acquisition in year two and geological studies in year three. After this initial period, there is an option to commit to another three year
exploration period, with the obligation to drill one well in the second year of that period.

FAR permits offshore Western Australia

WA-457-P, WA-458-P	Paying Interest
FAR	100% Operator

WA-254-P	Paying Interest
FAR	10.71%
Apache	72.27% Operator
Others	17.02%

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Jamaica

FAR's Jamaican project is located in the Walton Basin, Jamaica, and is owned by the Jamaica Joint Venture (JJV). FAR is a 50% equity partner in the JJV, with the other partner, and operator, being Finder Exploration Pty Ltd.
The JJV holds 5 licences covering an area of 14,335 km2 in water depths of up to 2,000m. New 2D seismic and FALCON® Airborne Gravity Gradiometer data were acquired in 2006 and all relevant pre-existing 2D seismic data in the area has been reprocessed. The JJV has mapped leads and prospects in the acreage and is currently seeking a partner for drilling, with
the first well due before Q4 2013.

FAR permits offshore Jamaica

JJV Blocks 6, 7, 10, 11, 12	Paying Interest
FAR	50%
Finder Exploration Pty Ltd	50% (Operator)

China

FAR currently awaits a US$3 million second tranche payment due following the sale of the Beibu Gulf assets in 2009. A further payment of US$3 million will be payable to FAR on the gross production of 1million barrels of oil from the project. Recent reports to the ASX by the operator, ROC Oil Company, state that first oil production is expected prior to the end of
2012.

USA

Gas sales during the quarter totalled 10 million cubic feet (Q3 2011: 10.3 million cubic feet) for an average of 109 thousand cubic feet per day at an average price of US$3.62 per thousand cubic feet before production taxes (Q3 2011: US$4.24/MCF). Oil sales during the quarter totalled 1,349 barrels (Q3 2011: 1,377 bbl) for an average of 14.7 barrels of oil per day at an average price of US$98.57 per barrel before production taxes (Q3 2011:
US$92.67/bbl).

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Management comment

At the beginning of 2012, global financial instability led by the financial crisis in Europe means that the uncertainty in the capital markets experienced in the latter half of 2011 seems set to continue for some months. It is comforting that the Company has adequate cash reserves to meet our commitments and grow the business during this period.
However, Africa is enjoying a resurgence in its oil exploration sector with large discoveries being made on both the East and West coasts in new geological provinces. It has to be said that these discoveries are driven by advancements in the 3D seismic technology to further allow our industry to increase drilling success and the momentum of a growing group of aggressive African explorers. FAR is in the fortunate position of securing their permits before this increase in activity and is enjoying the early entrant advantages of holding promising exploration blocks ready for 3D seismic and drilling at a time when industry interest levels are high.
We are seeing much activity planned for 2012 and a healthy amount of activity in and around the countries and permits in which FAR operates. The Venus-1 wildcat drilled by Anadarko late 2009 extended the Jubilee play-type several hundred kilometres to the northwest providing further evidence that potential remains to be exploited along the thinly explored northwest African margin. The Well has triggered a surge in activity with multiple deepwater wells now planned for 2011/12 between Liberia and Mauritania. Deepwater wells are planned by Anadarko (Sierra Leone and Liberia), African Petroleum (Liberia and Gambia), Tullow (Sierra Leone and Liberia), Chevron (Liberia), Dana/Hyperdynamics (Guinea). This all bodes well for our West African acreage.
A number of significant 3D seismic programs have been recently completed in close proximity to FAR's acreage, including PGS shoots in Guinea Bissau (FAR/Svenska) and Guinea (Dana/Hyperdynamics) and TGS Nopec in Gambia (African Petroleum). These 3D seismic programs are the likely precursors to further drilling activity with a well potentially earmarked for Gambia in early 2012 on acreage having a common boundary with FAR's Senegal holdings.
As discussed in the Kenyan update, this year will see the first exploration well being drilled by Apache in the Lamu Basin and 3D seismic acquisition by BG , Anadarko and Apache as well as our own L6 permit. We look forward to providing updates as news is available.
During the quarter, a series of presentations were made to stakeholders showing the expanded FAR following the takeover of Flow Energy. Competent Persons Reports were completed and estimates of reserves and resources in the Company were made (see investor presentation released to the ASX on 28 November 2011).
FAR intends to repay all remaining convertible notes at maturity on 31 January 2012. The total repayment due on these notes is $2.9 million.

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For further information, please contact Perth Office Michael Evans Executive Chairman

Phone [phone]

Fax [phone]

Melbourne Office Cath Norman Managing Director

Phone [phone]

Fax [phone]

www.far.com.au
[e-mail]

NOTE: In accordance with Chapter 5 of the Listing Rules, the geological information in this report has been reviewed by Peter Nicholls, the FAR Exploration Manager and a professional geophysicist with over 30years experience. He is a member of the American Association of Petroleum Geology and the Petroleum Exploration Society of Australia. Mr

Nicholls has given his consent to the information in the form and context in which it appears.

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