20 April 2016 Asia Pacific/Australia Equity Research Oil & Gas Exploration & Production

FAR (FAR.AX / FAR AU) Rating OUTPERFORM Price (20-Apr,A$) 0.09 INITIATION Target Price (A$) 0.12 Target price ESG risk (%) 0.0 Market cap (A$mn) 326.3 FAR out, Senegal sprout Yr avg. mthly trading (A$mn) 12.3 Projected return: ■ We initiate coverage on FAR Limited ("FAR") with a $0.12/share Target Capital gain (%) 36.4 Price and OUTPERFORM rating. Dividend yield (net %) 0.0 Total return (%) 36.4 ■ The appeal of FAR is for exposure to a potential world-class oil *Stock ratings are relative to the relevant country benchmark. development, in partnership with proven operators Cairn Energy and ¹Target price is for 12 months. ConocoPhillips. FAR's key catalyst is progressing towards an investment [V] = Stock Considered Volatile (see Disclosure Appendix) decision at the SNE field in offshore Senegal, West Africa. Future value will Research Analysts be defined by: commodity prices, exploration/appraisal success, further Sam Webb resource delineation and growth, and, in time, an investment decision. 61 2 8205 4535 [email protected] ■ Our $0.12/share TP and DCF-based NPV assumes CS commodity/FX Mark Samter assumptions (LT US$70/b, 70c AUDUSD), SNE field modelling consistent 61 2 8205 4537 [email protected] with our Cairn Energy UK analysts and nominal value for exploration/field upside at SNE and FAN. Key risks are anything that could impede an

investment decision; namely geological risk, funding/dilution risk and/or divergence of opinion with the operator as to future plans. Notwithstanding the risks that must be considered, the opportunity, whilst early stage, appears very prospective and if FAR is able to maintain a 15% stake and successfully fund its share of drilling, appraisal and ultimately development costs, there is considerable upside to our base case valuation which is heavily risk-weighted given the early stage. Removing our risk- weightings for a SNE project alone would see our NPV move to $0.19/share. ■ OUTPERFORM rating. We recognise that an investment in FAR will not appeal to all given the long-dated timeframe to first cash flow (CS est. CY22) and risks detailed above. Notwithstanding this, as the project is steadily de- risked, it is likely, in our view, that FAR may ultimately attract corporate interest. With plenty of drilling/appraisal/analysis in the next 12 months, this if nothing else will be a story that continues to evolve in a market starved, in our view, for virgin material resource discoveries.

Total return forecast in perspective Financial and valuation metrics

210% Year 12/15A 12/16E 12/17E 12/18E Production (mmboe) 0.0 0.0 0.0 0.0 110% Revenue (A$ mn) 0 0 0 0 EBITDAX (A$ mn) (3) (4) (4) (4) 10% EBIT (A$ mn) (20) (24) (19) (19) Net Income (Adj.) (A$ mn) (20) (23) (18) (20) - 90% EPS (Adj.) (Ac) (0.57) (0.57) (0.41) (0.46) 12mth 52 Week Hi- *Target Change from previous EPS (%) n.a. n.m n.m n.m Volatility Lo return EPS growth (Adj.) (%) n.m n.m n.m n.m Share Price CS Target Rtn Mean P/E (x) (15.4) (15.5) (21.4) (19.3) Source: Company data, Thomson Reuters, IBES, Credit Dividends (Ac) 0.00 0.00 0.00 0.00 Suisse estimates Dividend yield (%) 0.0 0.0 0.0 0.0

Performance 1M 3M 12M Price/Book (x) 3.2 2.8 3.2 3.8 Absolute (%) -12.00 29.41 -10.76 EV/EBITDAX (x) (83.3) (66.4) (66.4) (66.4) Relative (%) -12.96 22.18 0.414 Net debt/equity (%) Net Cash Net Cash Net Cash Net Cash

Source: Company data, Thomson Reuters, Credit Suisse estimates

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access

20 April 2016

FAR (FAR.AX / FAR AU) Price (20 Apr 2016): A$0.088; Rating: OUTPERFORM; Target Price: A$.12 Income Statement 12/15A 12/16E 12/17E 12/18E Earnings 12/15A 12/16E 12/17E 12/18E Revenue 0 0 0 0 Equiv. FPO (period avg) 3,431 4,064 4,424 4,424 EBITDA (20) (24) (19) (19) (mn)EPS (CS adj.) (c) (0.6) (0.6) (0.4) (0.5) Depr. & Amort. (0) -0 -0 -0 EPS growth (%) (122.1) 0.7 27.7 (10.9) EBIT (20) (24) (19) (19) DPS (c) 0.0 0.0 0.0 0.0 Associates 0 0 0 0 Dividend Payout (%) -0.0 -0.0 -0.0 -0.0 Net interest exp. 0 1 1 (1) Free CFPS (c) (0.1) (0.1) (0.1) (0.1) Other 0 0 0 0 Valuation 12/15A 12/16E 12/17E 12/18E Profit before tax (20) (23) (18) (20) P/E (CS) (x) (15.4) (15.5) (21.4) (19.3) Income tax -0 -0 -0 -0 PEG (x) 0.1 (21.0) (0.8) 1.8 Profit after tax (20) (23) (18) (20) EV/EBIT (x) (13.3) (10.3) (14.8) (16.7) Minorities - - - - EV/EBITDA (x) (13.4) (10.3) (14.8) (16.7) Preferred dividends - - - - Dividend Yield (%) 0.0 0.0 0.0 0.0 Associates & Other 0 0 0 0 FCF Yield (%) (1.1) (0.6) (1.0) (1.5) Normalised NPAT (20) (23) (18) (20) Price to book (x) 3.2 2.8 3.2 3.8 Unusal item after tax 3 0 0 0 Net profit (Reported) (16) (23) (18) (20) Returns 12/15A 12/16E 12/17E 12/18E Return on Equity (%) (19.2) (16.6) (15.0) (20.0) Balance Sheet 12/15A 12/16E 12/17E 12/18E Profit Margin (%) () () () () Cash & equivalents 61 79 45 59 Asset Turnover (x) 0.0 0.0 0.0 0.0 Inventories 0 0 0 0 Equity Multiplier (x) 1.2 1.1 1.2 1.7 Receivables 2 0 0 0 Return on Assets (%) (16.1) (14.5) (12.9) (11.8) Other current assets 0 0 0 0 Return on Invested Cap. (47.8) (39.6) (24.9) (20.6) Current assets 63 79 45 59 Gearing(%) 12/15A 12/16E 12/17E 12/18E Property, plant & equip. 0 1 1 1 Intangibles 0 0 0 0 ND/ND+E (%) Net Net Net Net Other non-current assets 59 79 95 110 Net Debt to EBITDA (x) Cash3.1 Cash3.3 Cash2.4 Cash0.5 Non-current assets 59 80 96 111 Int Cover (EBITDA) (x) 69.2 25.6 22.6 na Total assets 122 159 140 170 Int Cover (EBIT) (x) 69.3 25.6 22.6 na Payables 19 19 19 19 Capex to Sales (%) Capex to Depr (%) 72944.5 Interest bearing debt 0 0 0 50 Other liabilities 1 1 1 1 Total liabilities 20 19 19 69 MSCI IVA Rating Net assets 102 139 121 101 TP ESG Risk (%): 0.00 Ordinary equity 102 139 121 101 Minority interests 0 0 0 0 8 L 7 L C Preferred capital - - - - C Total shareholder funds 102 139 121 101 6 G G Net Debt (61) (79) (45) (9) 5 C L Cash Flow 12/15A 12/16E 12/17E 12/18E 4 G EBIT (20) (24) (19) (19) 3 Net Interest 0 1 1 (1) Depr & Amort 0 0 0 0 2 Tax Paid 0 0 0 0 1 Change in Working capital (11) 2 -0 -0 0 Other cash and non-cash items 28 20 15 15 Operating cashflow (3) (1) (3) (5) Environment Social Governance Capex (32) (1) (1) (1) Global Local Country Capex - expansionary (32) 0 0 0

Capex - Maintenance (0) (1) (1) (1) Share price performance Acquistions & Invest (16) (40) (30) (30) Asset sale proceeds 0 0 0 0 Other - - - - Investing cashflow (48) (41) (31) (31) Dividends paid 0 0 0 0 Equity raised 42 60 0 0 Net borrowings 0 0 0 50 Other financing cash in/(outflows) 0 0 0 0 Financing cashflow 42 60 0 50 Total cashflow (9) 18 (34) 14 Adjustments - - - - Movement in cash/equivalents (9) 18 (34) 14

On 20-Apr-2016 the S&P ASX 200 Index closed at 5216.0 On 20-Apr-2016 the spot exchange rate was A$1.29/US$1

Source: Company data, Credit Suisse estimates

FAR (FAR.AX / FAR AU) 2 20 April 2016

Investment thesis We assess FAR Limited ("FAR") to be attractive from an NPV valuation perspective. Our $0.12/sh NPV and Target Price are underpinned by:

■ House commodity (oil & gas) prices ■ A flat currency assumption (AUDUSD) of 70c ■ CS assumptions around expected field life from a commercial development at SNE, consistent with modelling of Cairn Energy ("Cairn", the operator) by our UK colleagues The appeal of FAR is for exposure to highly prospective exploration opportunities in Senegal, West Africa, that should in time convert to an offshore oil project. At Cairn's 2015 preliminary results day on 15 March, Chief Executive Simon Thompson when describing the progress the JV had made in Senegal, noted they were "substantially down the path of proving up the 1 billion barrel" figure that had been noted at their Capital Markets Day in 2015 and from FAR's perspective, the SNE field appraisal has by far exceeded expectations1. In our view, FAR offers material share price upside, but is not without risk. Key positive attributes of the FAR story include, but are not limited to:

■ Diligent management team that has positioned the company to leverage from a world- class resource which should in time lead to value extraction from a staged or full scale development ■ Exploration upside to grow and extend the field size and current resource base ■ Joint venture ("JV") relationships with proven operators ■ Following the recent A$60mn equity raising, a balance sheet position to fund the next stage of drilling and appraisal Despite our positive view, FAR is not removed, like its peers, from the current macro environment and uncertainty. Whilst our global Energy team forecasts oil prices to gradually move to a US$70/b long term oil price, medium term volatility is likely as the market adjusts to the supply overhang that has crystalised over the past 24 months. Oil prices will not impact earnings for FAR (no operating cash flow) but has the potential to impact investment decisions, development timings and future cash flow generation/value creation. Whilst we have an Outperform rating on FAR, we understand the investment thesis will not suit many in the investment community. The size of the prize for FAR however should not be underestimated, but neither should be the distance to travel to first cash flow:

■ FAR is well funded (year-end cash balance ~$61mn plus ~$60mn raised in April) but funding future drilling, appraisal activity and ultimately development costs will require effective management in using equity, debt, and/or JV financing structures ■ Whilst the SNE field looms to be an extremely prospective and sizeable resource, deep water, offshore oil drilling in Senegal comes accompanied with a comprehensive list of geological, operational, regulatory and financial risks Our NPV and $0.12/sh TP assumes the SNE field is developed with the following metrics:

■ FID in 2019 ■ Capex ~US$6.5bn (gross) ■ First production CY22, field life 20 years, 385mn bbl resource ■ Peak production – 76kb/d ■ Opex US$10/b, inflated at 2.5%pa thereafter ■ FAR equity stake 15%

1 FAR ASX Announcement, 18/4/16

FAR (FAR.AX / FAR AU) 3 20 April 2016

■ Breakeven oil price post development of

Is M&A the end play? In a sector bereft of material, new discoveries, FAR and its JV partners appear to have discovered a truly solid resource. It is unquestionably still early days, with a long path of de-risking to come, but given the lack of, (1) material resource discoveries, and, (2) lack of capital being directed towards exploration in the current environment, we expect that FAR's stake in Senegal may ultimately become attractive for E&Ps lacking organic growth opportunities. In our space, Woodside and Beach stand out as potential suiters given both have a lack of visible, organic growth options and balance sheet capacity to complete the acquisition. As we have noted previously, WPL, for example, has spent a material sum on exploration over the past five years, for very little (relative) reserve growth. This example of large expenditure to fund new exploration growth, or lack thereof, only warrants asking the question on whether acquiring de-risked exploration targets will gain greater focus in the future. If this is so, it would bring FAR into focus, in our view, as the opportunity is gradually derisked.

'Blue sky' vs 'Grey sky' scenarios We have tried to consider where our assumptions (outside commodity/FX prices, which you can view sensitivities in Figure 2) may be vastly wrong, and exercise some creative latitude to run both upside and downside (blue and grey sky) scenarios through our numbers. Our 'Blue sky' scenario drives a ~$0.29/sh NPV Assumptions:

■ Remove all risk-weightings ■ The ultimate field size and total development (incorporating SNE and FAN) grows to ~1.5bn bbls Our 'Grey sky' scenario drives a ~$0.01/sh NPV Assumptions:

■ The prospect never ultimately gets developed.

■ The acreage is sold for $1/b (for 385mn bbl), or 1.3cps net to FAR.

FAR (FAR.AX / FAR AU) 4 20 April 2016

Target price Our target price of A$0.12/sh is based on NPV analysis Consistent with our Oil & Gas coverage universe, we use a discounted cash flow method to underpin an NPV, upon which we base our $0.12/sh Target Price ("TP") for FAR. Under the Credit Suisse global rating system, this drives an OUTPERFORM rating. We note our TP is toward the low end of the consensus range2, however see numerous, and material, de-risking events on the horizon for FAR.

Figure 1:CS FAR NPV Rsc multiple NPV FAR Unrisked Unrisked Risked Risked Risk 2C A$mn/b share $Amn $ps $Amn $ps Weighting Net Net Senegal - SNE 15% 607 0.14 303 0.07 50% 58 5.26 Senegal - FAN 15% 355 0.08 89 0.02 25% 68 1.31 Senegal - SNE 3C upside 15% 270 0.06 68 0.02 25% 51 1.31 Exploration 1,232 0.28 460 0.10

Net cash (debt) f/cast (CS) Jun 30 95 0.02 100% Corporate -27 -0.01 100%

Base valuation 528 0.12

Target Price 0.12

Source: Credit Suisse estimates

Our NPV, as shown in Figure 1, assumes the following: ■ Credit Suisse House commodity and FX assumptions: LT Brent oil price of US$70/b (from 2020, inflated at 2.5% inflation assumption thereafter), AUDUSD 0.70;

■ Nominal discount rate of 10%;

■ Forecast net cash figure as at 30 June 2016 incorporating the April capital raising;

■ Shares on issue post the April capital raising (4,413,532,452 ordinary shares);

■ SNE modelled as a 385mn bbl project over 20 years, from 2022.

■ FAN 950mn bbl gross oil in place estimate, assumed 50% ultimate lifting, applied at ~A$5/b and then risked at 25%.

■ SNE upside 686mn bbl (FAR 3C less modelled 385mn bbl SNE NPV) resource, assumed 50% lifting, applied at ~A$5/b and then risked at 25%.

■ Corporate: Valued at the NPV of the annual corporate overhead until 2040.

2 Bloomberg

FAR (FAR.AX / FAR AU) 5 20 April 2016

Figure 2: NPV sensitivities to oil and FX assumptions 0.12 AUD:USD -$0.30 -$0.20 -$0.10 Base $0.10 $0.20 $0.30 -$50.00 -0.13 -0.10 -0.08 -0.06 -0.05 -0.05 -0.04 -$40.00 -0.05 -0.04 -0.03 -0.02 -0.02 -0.01 -0.01 -$30.00 0.02 0.02 0.02 0.02 0.02 0.02 0.02 -$20.00 0.08 0.07 0.06 0.05 0.05 0.04 0.04 -$10.00 0.14 0.11 0.10 0.09 0.08 0.07 0.07 Brent Base 0.20 0.16 0.14 0.12 0.11 0.10 0.09 $10.00 0.26 0.21 0.18 0.15 0.14 0.12 0.11 $20.00 0.32 0.26 0.22 0.19 0.17 0.15 0.14 $30.00 0.37 0.30 0.25 0.22 0.20 0.18 0.16 $40.00 0.43 0.35 0.29 0.25 0.22 0.20 0.18 $50.00 0.49 0.40 0.33 0.29 0.25 0.23 0.21 Source: Company data, Credit Suisse estimates

Figure 3: NPV sensitivities to discount rate WACC WACC 7.5% 8.0% 8.5% 9.0% 9.5% 10.0% 10.5% 11.0% 11.5% 12.0% 12.5% Valuation 0.18 0.17 0.15 0.14 0.13 0.12 0.11 0.10 0.09 0.09 0.08 Source: Company data, Credit Suisse estimates

Figure 4: NPV sensitivity to change in risk-weightings 0.35

0.30

0.25 0.07

0.20 0.03 0.29

0.15 0.07 A$/share

0.10

0.05 0.12

0.00 Base NPV Remove SNE Risk SNE/FAN Remove risk- De-risked NPV (385mn bbl) exploration weighting risk-weighting upside 50% (vs SNE/FAN 25%) exploration upside

Source: Company data, Credit Suisse estimates

FAR (FAR.AX / FAR AU) 6 20 April 2016

Figure 5: CS TP vs Consensus

200%

150%

100%

50%

0%

-50%

-100% WPL STO OSH BPT SXY CTX AWE FAR IOC WOR ORG Consensus Low Consensus High Credit Suisse Target Price Consensus Mean

Source: CS estimates, Bloomberg, as at 15/4/16

Figure 6: CS Energy Coverage universe CS Recommendation MCap Price Price performance Company TP (A$) Rating A$mn A$ 1 day 1 week 1 month 6 months 12 months ytd 19-Apr-16 13-Apr-16 21-Mar-16 21-Oct-15 21-Apr-15 01-Jan-16 Woodside Petroleum $27.10 N $22,241 $24.73 -1.6% 2.2% -2.8% -14.0% -23.9% -8.1% Oil Search $6.70 N $10,430 $6.38 4.9% 3.2% 0.3% -6.4% -15.3% 2.2% Origin Energy $5.50 O $8,941 $5.10 2.4% 5.8% -1.9% -8.9% -53.6% 8.5% Caltex Australia $40.00 O $8,832 $32.71 0.7% -3.1% 1.4% 3.4% -6.4% -13.2% Santos $4.10 O $7,469 $4.21 3.2% 2.7% 6.9% -11.1% -38.7% 14.4% Interoil Corporation (US$) $48.00 O $2,171 $34.09 0.0% 5.6% 13.3% -12.5% -31.1% 8.5% WorleyParsons $4.80 O $1,579 $6.44 2.9% 3.4% 19.9% -10.6% -39.8% 39.1% Beach Energy $0.60 O $1,209 $0.65 0.0% -8.5% -6.5% 1.6% -42.2% 32.7% AWE Limited $0.60 N $332 $0.63 -7.4% 5.0% -8.7% -11.3% -54.8% 26.0% FAR Limited $0.12 O $326 $0.09 0.0% -3.3% -12.0% -1.8% -10.8% 6.0% Senex Energy $0.30 O $305 $0.27 -3.6% -10.2% 3.9% 51.4% -35.4% 89.3% Source: Company data, Credit Suisse, Bloomberg, as market close 20/4/16.

FAR (FAR.AX / FAR AU) 7 20 April 2016

SWOT analysis Strengths

■ Prudent management team with extensive knowledge of the SNE opportunity and Senegal ■ Seemingly large and commercial, albeit early stage, resource ■ Significant exploration and resource upside potential ■ Reputable JV partners (Conoco, Cairn) ■ Adequately funded post recent capital raising ■ Successful exploration/appraisal program at SNE to date

Weaknesses

■ Sole commodity exposure (oil) ■ Sole country exposure (Senegal) ■ Non-operator ■ Long duration until first cash flow ■ Project not yet funded (dilution/funding risk)

Opportunities

■ Further exploration success ■ Growth in resource and extending of potential field life ■ Corporate attractiveness/takeover target

Threats

■ Weakness in oil prices ■ Regulatory/country risk – Senegal does not currently have any oil production from the country. As such, FAR has a higher risk that changes are made to regulatory framework, royalties, taxes, government participation, etc., as Senegal moves towards an oil producing nation. ■ Delays to project development/first cash flow ■ Unsuccessful exploration/appraisal activities ■ Conflicting views between JV partners on future drilling, scale, development, etc.

FAR (FAR.AX / FAR AU) 8 20 April 2016

Senegal (FAR 15%, Cairn operator)

Figure 7: Offshore West Africa Figure 8: FAR's acreage, Senegal & Guinea-Bissau

Source: FAR Source: FAR

Brief history FAN-1 and SNE-1 were the first exploration wells to be drilled offshore Senegal for over 20 years and the first wells ever to be drilled in water deeper than 500 meters. FAR announced in 4Q 2014 that both wells met key pre-drill objectives, and each well delivered a significant world class oil discovery with a potential resource volume to justify a stand- alone oil development project. Following the highly successful 2014 Senegal drilling campaign, FAR and its JV partners submitted a three-year evaluation work program to the Government of Senegal in early May 2015. This was subsequently approved by a Presidential decree which extends the current Petroleum Sharing Contract (PSC) by the requested three years starting from 6 February 2016. This extension allows the joint venture time to appraise the world class SNE and FAN oil discoveries and to evaluate the considerable exploration potential which remains within the PSC area. SNE/FAN FAR has seen significant progress take place over the past 12 months with the SNE oil discovery as it slowly progresses towards a commercial development decision. Two successful appraisal wells (SNE-2 and SNE-3) have been drilled thus far, and a fourth combined exploration/appraisal well (BEL-1) confirmed the northern portion of the SNE field. The SNE-4 well has just spudded. To prove commerciality, the JV must ensure there are sufficient volumes of recoverable oil (200mn bbls is the estimated economic threshold), test whether the oil is easily deliverable from the reservoir and establish interconnectivity within the oil reservoir. These three factors of volume, deliverability and connectivity will drive ultimate commerciality and value. The recent resource update by Cairn pushed 1C gross contingent resources at SNE to 200mn bbls, which is equal to the commercial threshold thought to be the minimum economic field size for a standalone development. Current 1C resources of 200mn bbls, only incorporates results from the SNE-1 discovery well and the SNE-2 appraisal well, so

FAR (FAR.AX / FAR AU) 9 20 April 2016

there is likely further resource upside from the successful SNE-3 appraisal well that was announced in early March to Cairn's estimates. The JV has also identified several exploration prospects and leads in the immediate area around the current finds at SNE, which could be jointly developed if economic. We note that Cairn and FAR's gross resource estimates are different. To us (non- geologists) it appears as the main reason for differences in resources estimates for SNE is that FAR incorporates SNE-3 results whereas Cairn is yet to at this stage. In reality, there will be many moving parts to different resource estimates completed by different independent resource certifiers, but we highlight this nonetheless. For our modelling, NPV and Target Price purposes, we use Cairn's 2C estimates for our NPV and assumptions for SNE. This ensures we are consistent with the operator and with our UK analyst team that covers Cairn. For growth beyond this 385mn bbl figure, we use FAR's FAN gross oil in place estimate and FAR's SNE 3C estimate. We risk-weight all opportunities, detailed further within this report.

Figure 9: SNE resource estimates Cairn v FAR (mn bbl, 100%) Cairn - SNE FAR - SNE 1C 200 277 2C 385 561 3C 690 1071 Source: Company data

Figure 10: SNE evolution – Cairn

Source: Cairn

FAR (FAR.AX / FAR AU) 10 20 April 2016

Figure 11: SNE evolution – FAR

April, 2016

Source: FAR Limited

Flow testing Flow testing results have been encouraging so far, with the SNE-2 appraisal well flowing at a constrained rate of ~8kbd from the lower reservoir and ~1kbd from one of the upper, thinner sands. SNE-3 was drilled on the southern extent of the field, and flowed at a reasonable 4-5kbd rate from the upper reservoir, which is an improvement vs the 1kbd rate from the comparable reservoir at SNE-2.

FAR (FAR.AX / FAR AU) 11 20 April 2016

Figure 12: Seismic section/schematic

Source: Company data

Connectivity Additional tests will have to be run during the appraisal phase to test the interconnectivity of the reservoir. Gauges have been run in the SNE-3 well to allow for future intra-field testing. A compartmentalised field makes it more difficult to extract oil from across the reservoir, and could require additional wells, thereby increasing development costs. Connectivity is likely to be a focus of future appraisal work. We assume US$17/bbl development capex, the low end of US$17-$26/bbl guidance.

FAR (FAR.AX / FAR AU) 12 20 April 2016

Figure 13: SNE appraisal well locations

Source: Company data

SNE-4 has just spudded The SNE-4 well, ~5km SE of SNE-1, was spudded over the weekend of 16th-17th April to appraise the eastern extent of the SNE field. The well will be drilled and logged and is expected to take ~4 weeks to complete. Timing and budget of further wells remains subject to JV decisions. FAR expects that the incorporation of core data, together with the results of BEL-1 and, hopefully, SNE-4, should support another review of the resource estimates.

Figure 14: SNE field outline & well locations Figure 15: Schematic cross section

Source: FAR Source: FAR

FAR (FAR.AX / FAR AU) 13 20 April 2016

NPV assumptions for SNE (main NPV contributor) – consistent with UK Analyst team's assumptions for Cairn Our modelled assumptions are consistent with our Cairn UK Analyst team (Thomas Adolff and Justin Teo). We forecast:

■ FID in 2019 ■ First oil in 2022 ■ Resource size 385mmbbls (Cairn 2C resource estimate) ■ Plateau production level of ~76kb/d ■ US$17/b development capex (low end of capex guidance range of US$17-26/bbl, to reflect global capex cost deflation) ■ Operating costs US$10/boe (guidance of $5-15/boe) ■ Profit oil split according to WoodMac estimates (see page 12 for further details) ■ US$5/b sustaining capex ■ Depreciation calculated on a units of production basis at both asset and corporate level. ■ 50% risk weighting We note the risks with valuing FAR (SNE) on a NPV basis. Our modelling is extremely sensitive to changes of any of the following drivers (in no particular order):

■ Development capex ■ Oil prices ■ First oil (date) We continue to model consistently with our UK colleagues, but will continue to monitor any potential changes in particular to these three assumptions. It is the view of FAR and Cairn that good fields tend to improve in time as you evaluate them so in our view, the risk is to the upside in our estimates.

Exploration upside Whilst the SNE field dominates the focus for FAR and the JV, an evaluation program over the whole license continues to explore any new exploration potential. Whilst we don't attribute any value to exploration (beyond SNE and FAN), this will be an area to watch as future drilling programs are determined and completed. As drilling and extensive seismic surveys have continued, FAR has mapped a total gross, unrisked best estimate of prospective resources of 225mn bbls (net to FAR, 1,500mn bbl gross) in several prospects that lie within subsea tie-back distance to a proposed SNE production hub. See Figure 20 for a breakdown of these estimates.

FAR (FAR.AX / FAR AU) 14 20 April 2016

Figure 16: Senegal prospects Figure 17: SNE field appraisal program

Source: FAR Source: FAR

Djiffere block option The Djiffere PSC covers an exploration area offshore Senegal, East to the Sangomar Block (see Figure 19). In September 2015, FAR announced it had entered into a farm-in option agreement to earn a 75% working interest. Under the agreement, FAR has the option to earn a 75% working interest in the Djiffere block by drilling an exploration well before 31 July 2018 and subject to Government approvals. The farm-in option can be exercised by FAR at any time before the end of October this year. FAR has identified a number of potential prospects within the block from existing seismic data, with one lead already estimated (FAR) to have potential to contain over 100mn bbls of unrisked prospective resources. Exploration, other Outside Senegal, FAR holds interests in the following permits. We do not attribute value in our NPV to these opportunities given the early stage nature of the prospects.

Figure 18: FAR exploration assets

Source: FAR Annual Report

FAR (FAR.AX / FAR AU) 15 20 April 2016

Figure 19: Senegal exploration permits Figure 20: Senegal exploration

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

Exploration upside included in our TP We crudely model exploration upside and attribute it to the FAN discovery and the 3C contingent resource (less our modelled 385mn bbl 2C figure) at SNE. Our assumptions apply the implied A$/b value from our SNE valuation to both estimates as follows:

■ FAN 950mn bbl gross oil in place resource, assumed 50% ultimate lifting, applied at ~A$5/b and then risked at 25%.

■ SNE upside 686mmboe (FAR 3C estimate (1071mn bbl) less our modelled 385mn bbl 2C project) resource, assumed 50% lifting, applied at ~A$5/b and then risked at 25%. We hold no specific read-through to the value of these opportunities, but are comfortable that the field appears likely to grow. As further appraisal drilling leads further resource clarification, we will continue to review our assumptions.

Regulatory framework Senegal operates a Production Sharing Contract (PSC) regime and the national oil company, Petrosen, represents the government in all contracts and is typically carried through the exploration phase. Senegal does not have any royalties, duties, etc., but for offshore oil contracts, a profit sharing structure is in place. Under this system, profitable production (determined by a daily production rate and water depth) is split via different tiers. We have no visibility as to the terms of this specific PSC and as such, use a Wood Mackenzie estimate as shown in Figure 21 in our modelling estimates.

FAR (FAR.AX / FAR AU) 16 20 April 2016

Figure 21: Profit oil split

Source: Wood Mackenzie

FAR (FAR.AX / FAR AU) 17 20 April 2016

Key risks

■ Exploration, development and field risk: Exploration and potential development activities may take longer than anticipated and field and production projections might fail to achieve projections, resulting in lower production at higher cost, undermining our valuation (and earnings projections in later years). For FAR, to ultimately reach a state of production from the project, there remain multiple derisking events (resource certification, JV alignment, FID, successful development, etc.) before reaching project cash flows. ■ Commodity price: Project revenues are susceptible to movements in commodity (notably oil) prices. Future movements may negatively impact the economics of the project and/or reserve classification. ■ Operational risk: Operating difficulties caused by inclement weather conditions, variations in drilling conditions from those projected from pre-production studies, unexpected equipment failures and other technical problems, environmental hazards and other events may adversely impact future production and operating costs. As non- operator, FAR has a lower opportunity to impact mitigating such risks. ■ Management risk: FAR may lose key management personnel and may not be able to recruit qualified replacements. ■ Equity dilution: In the event of future capital raisings, shareholders must recognise share dilution will occur. ■ Acquisition risk: FAR may make value-destroying acquisitions. There is a risk that the board may be influenced to buy assets and there can be no guarantee that such acquisitions would be at a price that is value creating for FAR shareholders. With the current focus on Senegal, we see this risk as low. ■ Earnings and cash flow risk: Forecasting earnings and cash flows is particularly difficult to forecast given the duration expected before cash flow from the project. ■ Regulatory/country risk: Senegal does not currently have any oil production from the country. As such, FAR has a higher risk that changes are made to regulatory framework, PSCs, royalties, taxes, government participation, etc., as Senegal moves towards an oil producing nation.

FAR (FAR.AX / FAR AU) 18 20 April 2016

Financial Funding FAR was in at net cash position at the end of December 2015 and raised A$60mn (pre- raising costs) in April. We estimate 30 June 2016 period end cash balance of $95mn.

Capital structure and ownership

Figure 22: Top 10 shareholders (per 2015 Annual Report) Name Number of shares % Held FARJOY PTY LTD 404,963,236 10.96 JP Morgan Nominees Aust Limited 318,312,944 8.62 HSBC Custody Nominees (Aust) Limited 117,293,271 3.18 Citicorp Nominees Pty Limited 107,334,199 2.91 National Nominees Limited 95,593,825 2.59 Mr Oliver Lennox-King 75,647,869 2.05 Toad Facilities Pty Ltd 61,411,765 1.66 BNP Paribas Noms Pty Ltd 39,779,430 1.08 Fountain Oaks Pty Ltd 34,200,366 0.93 CS Fourth Nominees Pty Ltd 26,389,214 0.71 Total 1,280,926,119 35% Source: FAR

Taxation and profit sharing assumptions We assume a flat 30% corporate tax rate for FAR. No royalties are modelled at the project level; rather a government profit oil sharing agreement is modelled as follows: Figure 23: Profit oil split

Source: Wood Mackenzie

In terms of equity stake, we assume for our modelling, that FAR maintains its 15% equity stake in the project. Once exploration/appraisal activity has concluded, the government has a right to take up 8% of the project. This would reduce FAR's equity position to ~13.8%.

Corporate expenses We assume a flat annual ~$4mn corporate overhead expense to CY40.

Dividends We have not assumed any dividends.

FAR (FAR.AX / FAR AU) 19 20 April 2016

Options The current outstanding options for FAR are: Figure 24: Options Number Exercise price Exercise date million A$ cps Unlisted options 48 4.4c 27-May-16 68 10c 1-Jun-18

Source: Company data, CS

FAR (FAR.AX / FAR AU) 20 20 April 2016

ESG Summary

■ ESG material has been reviewed by our Credit Suisse ESG team led by Sandra McCullagh. ■ We do not include a discount to our target price for ESG factors. Given the early stage nature of FAR's interests, we will revisit these assumptions in due course. In our view, until future project metrics are known, risk weightings to unsanctioned projects and resources capture adequately the risks to the company. ■ FAR has medium to low perceived political and social risk given operations are located in Senegal, West Africa. ■ We note there is no legal experience on the Board currently posts the resignation of Charles Cavness in May 2015.

Environment issues

■ In our view there are no material environmental issues facing FAR. All current activities are consistent with offshore exploration programs and continue to be carried out by operator Cairn Energy (using JV partner Conoco's rig). ■ MSCI ESG rates Cairn as AA, with strong ratings for Health & Safety, Corruption & Instability, Corporate Governance, Biodiversity and Toxic Emissions. ■ In our view, given the size of the field (which is growing), the minimum economic size (~200mn bbl), the positive initial flow tests and strong JV partners, we don't expect the SNE field to be a stranded asset. Cairn estimates that the gross breakeven of the SNE project will "be somewhere in the $30 oil price range". ■ FAR has no current operating assets.

Social issues

■ FAR has dedicated efforts to enact policies and practices that are ethically, socially and environmentally sound. All operational activities are carried out within international industry standards of safety and environmental consideration. ■ Alongside FAR’s commitment to contractual profit sharing agreements with host countries, FAR is dedicated to investing in the development of vital facilities and services in Senegal, Guinea-Bissau and Kenya. Such endeavours are evidenced by FAR’s recent participation in a hospital reconstruction project in Guinea-Bissau and sponsorship of a youth soccer tournament in Senegal. FAR is also involved in various community awareness and education programmes in Kenya.

Governance issues

■ No material governance issues identified. ■ Senegal rates 61/168 in the Transparency International Corruption Perceptions index. This compares to Nigeria at 136/168. ■ Senegal does not have any oil producing fields. Given this, there exists a heightened risk that changes, in time, are made to the regulatory framework, PSCs, royalties, taxes, government participation, etc. See p.16 for details of the regulatory framework. ■ As at 31 December 2015 director's shareholdings and options were as follows:

FAR (FAR.AX / FAR AU) 21 20 April 2016

Figure 25: Director's shareholdings

Source: Company data Remuneration

■ Managing Director Catherine Norman was paid a base salary of $520,000 in CY15 and $737,628mn total cash related remuneration. ■ In March 2016, the Remuneration Committee undertook a review of the Company’s remuneration structure, including short-term incentives and long-term incentives for executives. ■ The new policy provides guidance around what constitutes appropriate remuneration and provides clarity on the structure of remuneration in this regard. Remuneration packages may include a combination of ‘fixed’ compensation and a ‘variable’ performance-linked compensation referred to in total as Total Remuneration Package (‘TRP’). The ‘variable’ or ‘at risk’ performance-linked compensation includes both short- term incentives (‘STI’) capped at 25% of total compensation and long-term incentives (‘LTI’) capped at 25% of total compensation. ■ The remuneration structure for FAR executives for 2016 is follows: Figure 26: Rem structure

Source: Company data

■ Performance conditions for vesting: o Absolute Total Shareholder Return – 50% of the Performance Rights will be subject to an absolute total shareholder return (‘TSR’) hurdle over the three-year performance period (being 1 February 2016 to 31 January 2019 and will be tested at the end of this period). Absolute TSR rights will vest according to the following schedule:

FAR (FAR.AX / FAR AU) 22 20 April 2016

Figure 27: TSR rights

Source: Company data

o Relative Total Shareholder Return – 50% of the Performance Rights will be subject to a relative TSR hurdle over the three-year performance period (being 1 February 2016 to 31 January 2019 and will be tested at the end of this period). Relative TSR rights will vest according to the following schedule: Figure 28: Relative TSR rights

Source: Company data

o The comparator group is the S&P/ASX Energy 300 Index. ■ The current outstanding options are shown below; 48mn shares are currently in the money3.

3 Per 24/3/16 Appendix 3B

FAR (FAR.AX / FAR AU) 23 20 April 2016

Figure 29: Outstanding options Number Exercise price Exercise date million A$ cps Unlisted options 48 4.4c 27-May-16 68 10c 1-Jun-18

Source: Company data, CS

Directors

■ FAR's Board has solid executive and industry experience for a company of its size, however we note there is no legal experience on the board. ■ A summary of tenure, experience and remuneration can be found below.

Figure 30: Board skills matrix Universal board skills/experience - strengths Listed Professional Financial & managerial listed board Director Tenure on Board Gender Independent Position Geographic Accounting (CA, Risk Legal (LLB) leadership experience experience CPA, CFO) experience (ASX or (CFO or CEO) equivalent) Nicolas Limb Nov-11 4.4 Male  Non Executive Chairman     Catherine Norman Nov-11 4.4 Female  Managing Director    Reginald Nelson Apr-15 1.0 Male  Non Executive Director    Albert Brindal Dec-07 8.3 Male  Non Executive Director  Benedict Clube Apr-13 3.0 Male  Executive Director   Source: FAR, CS

Figure 31: Board tenure

Director Tenure on Board Gender Independent Position

Nicolas Limb Nov-11 4.4 Male  Non Executive Chairman Catherine Norman Nov-11 4.4 Female  Managing Director Reg Nelson Apr-15 1.0 Male  Non Executive Director Ted Brindal Dec-07 8.3 Male  Non Executive Director Benedict Clube Apr-13 3.0 Male  Executive Director Median_tenure median 4.4 Average_tenure mean 4.2 Source: FAR, CS

Figure 32: Board commitments Total workload - based on annual report (Chair is 2x)

Director Independent Chairmanships/Exe Working days per Other Significant Directorships Other Total executive position cutive Directorships appointment Boards

Nicolas Limb 3 6 38 MDL; WTR Catherine Norman 1 2 NA Reg Nelson 1 1 230 Albert Brindal 1 1 230 Benedict Clube 1 1 230

Source: FAR, CS

FAR (FAR.AX / FAR AU) 24 20 April 2016

Valuation impact We do not include an ESG impact in our valuation for FAR. We account for the early stage of the opportunities in our NPV via risk-weightings which is largely due to geological and development timing uncertainty, rather than specific ESG risks. If we were to remove all our risk-weightings, our NPV would be ~250% higher.

FAR (FAR.AX / FAR AU) 25 20 April 2016

Key management personnel and Board4 Nicholas Limb – Non-Executive Chairman Mr. Limb is a professional geophysicist and also has extensive experience as a stockbroker and merchant banker. He is currently Executive Chairman of Mineral Deposits Limited, an Australian listed company. Nic has significant in-country experience in Senegal. Catherine Norman – Managing Director Ms. Norman is a professional geophysicist who has twenty years’ experience in the mineral and oil & gas exploration industry, having held executive positions both in Australia and in the UK and carried out operating assignments in Europe, Africa, the Middle East and Australia. She has a strong background in the application of traditional and innovating geophysical technologies in the search for oil and gas and in new business development. Cath served as the Managing Director of Flow Energy for six years. Pete Thiessen – Secretary & CFO Mr. Thiessen is a Chartered Accountant with over fifteen years’ experience. He has contracted independently to the mining and exploration industry for the last five years and more recently was the CFO and Company Secretary of Flow Energy Limited. Prior to that he was a Client Director with Deloitte global accounting and professional service firm. Pete is a member of the Institute of Chartered Accountants and holds a Bachelor of Business (Accounting). Ben Clube – COO Mr. Clube joined FAR in September 2012 as Commercial Manager and was appointed as the Chief Operating Officer in December 2014. With over 20 years of experience, Ben brings senior finance executive expertise in the upstream petroleum industry. He has spent the majority of his career at BHP Petroleum and held roles across the full life cycle of exploration, development and operations. Ben has extensive experience capturing and implementing projects in the international arena. He holds a Bachelor of Science (Honours) degree in Geology and is an associate of the Institute of Chartered Accountants of England and Wales. Peter Nicholls – Exploration Manager Mr. Nicholls is a professional geophysicist with over thirty years’ experience in oil and gas exploration and development projects with a number of companies including BHP Billiton Petroleum, Nexus Energy, Antares, Oil Search and BP Australia. Throughout his career Peter has undertaken a wide range of management and technical roles and has a proven track record of identifying prospective areas, working up prospects, and finding commercial fields. He has previously managed exploration teams operating offshore permits and wells. Peter brings extensive exploration experience in a wide variety of geological settings to FAR Limited.

4 FAR company website

FAR (FAR.AX / FAR AU) 26 20 April 2016

Gordon Ramsay – EGM, Business Development Mr Ramsay joined FAR in February 2015. He has over 30 years commercial and technical experience in oil and gas. This includes leading and advising on a wide range of corporate finance (debt and equity) and advisory roles in the oil & gas industry, as well as playing a key role in the discovery and development of oil and gas assets. Prior to joining FAR, Gordon was the Senior Energy Advisor, Investment Banking and Managing Director, Head of Energy Research at UBS. Gordon rated as Australia’s No. 1 energy equity research analyst at both UBS and Salomon Smith Barney (CitiGroup). He also has experience in limited recourse project finance at First National Bank (National Australia Ltd), including the refinancing of Woodside’s US$1.4bn North West Shelf project loan. Gordon is a professional geophysicist, starting his career with Gulf Canada Resources where he was responsible for several oil and gas field discoveries. Independent Non-Executive Directors

■ Reginald Nelson

■ Albert Brindal

FAR (FAR.AX / FAR AU) 27 20 April 2016

PEERS

Figure 33: PEERS – FAR

Source: Credit Suisse

FAR (FAR.AX / FAR AU) 28 20 April 2016

Key data summary

Figure 34: FAR – Key Summary Key assumptions Units FY15 FY16F FY17F FY18F FY19F FY20F FY21F FY22F FY23F FY24F FY25F AUD:USD $ 0.75 0.71 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 0.70 Oil - WTI US$/bbl 48.8 38.7 54.3 50.3 65.0 67.5 69.2 70.9 72.7 72.7 72.7 Oil - Brent US$/bbl 52.3 37.8 54.3 67.5 67.5 70.0 71.8 73.5 75.4 77.3 79.2

Production by type and area FY15 FY16F FY17F FY18F FY19F FY20F FY21F FY22F FY23F FY24F FY25F Domgas mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 LNG mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Condensate mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Oil mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 3.3 4.2 4.2 Total mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 3.3 4.2 4.2

Senegal mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 3.3 4.2 4.2 Total mmboe 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.8 3.3 4.2 4.2

Consolidated P&L FY15 FY16F FY17F FY18F FY19F FY20F FY21F FY22F FY23F FY24F FY25F Sale of Oil & condensate A$mn 0 0 0 0 0 0 0 82 327 422 433 Sale of Gas and refined products A$mn 0 0 0 0 0 0 0 0 0 0 0 Other A$mn 0 0 0 0 0 0 0 0 0 0 0 Total sales income A$mn 0 0 0 0 0 0 0 82 327 422 433 Other income (unallocated) A$mn 0 0 0 0 0 0 0 0 0 0 0 Total revenue A$mn 0 0 0 0 0 0 0 82 327 422 433 Field costs A$mn 0 0 0 0 0 0 0 12 49 64 65 Net corporate costs A$mn 4 4 4 4 4 4 4 4 4 4 4 Royalties A$mn 0 0 0 0 0 0 0 0 0 0 0 Other expenses A$mn -1 0 0 0 0 0 0 0 0 0 0 Total expenses A$mn -3 -4 -4 -4 -4 -4 -4 -16 -53 -68 -69 EBITDAX A$mn -3 -4 -4 -4 -4 -4 -4 66 274 355 364 Exploration and evaluation expensed A$mn 17 20 15 15 0 0 0 0 0 0 0 EBITDA A$mn -20 -24 -19 -19 -4 -4 -4 66 274 355 364 D&A A$mn 0 0 0 0 0 0 0 12 64 92 99 EBIT A$mn -20 -24 -19 -19 -4 -4 -4 54 210 262 264 Interest income A$mn 0 1 1 1 8 13 10 6 1 0 2 Interest charges A$mn 0 0 0 -2 -48 -63 -63 -63 -63 -63 -63 Profit before tax A$mn -20 -23 -18 -20 -44 -53 -56 -3 148 200 204 Income tax expense A$mn 0 0 0 0 0 0 0 0 -45 -60 -61 OEI A$mn 0 0 0 0 0 0 0 0 0 0 0 NPAT underlying, ex. Exceptionals A$mn -20 -23 -18 -20 -44 -53 -56 -3 104 140 143 Exceptional items A$mn 3 0 0 0 0 0 0 0 0 0 0 Reported NPAT A$mn -16 -23 -18 -20 -44 -53 -56 -3 104 140 143 Normalised cash NPAT A$mn -20 -23 -18 -20 -44 -53 -56 6 149 205 212

Key financials FY15 FY16F FY17F FY18F FY19F FY20F FY21F FY22F FY23F FY24F FY25F Reported EPS (basic) cps -0.5 -0.6 -0.4 -0.5 -1.0 -1.2 -1.3 -0.1 2.4 3.2 3.2 Underlying EPS (basic) cps -0.6 -0.6 -0.4 -0.5 -1.0 -1.2 -1.3 -0.1 2.4 3.2 3.2 Underlying EPS (diluted) cps -0.6 -0.6 -0.4 -0.5 -1.0 -1.2 -1.3 -0.1 2.3 3.2 3.2 Cash EPS (diluted) cps -0.6 -0.6 -0.4 -0.5 -1.0 -1.2 -1.3 0.1 3.4 4.6 4.8 EPS growth % 122% 0% -28% 11% 118% 21% 5% -95% -3520% 35% 2% Average shares on issue (basic) m 3,431 4,054 4,414 4,414 4,414 4,414 4,414 4,414 4,414 4,414 4,414 P/E x -12.0x -12.1x -16.7x -15.0x -6.9x -5.7x -5.4x -99.8x 2.9x 2.2x 2.1x P/E (cash) x -12.0x -12.1x -16.7x -15.0x -6.9x -5.7x -5.4x 55.0x 2.0x 1.5x 1.4x P / BV x 2.5x 2.2x 2.5x 3.0x 5.3x 82.6x -5.8x -5.4x 6.3x 1.6x 0.9x EV/EBITDAX x -2527.0x -2009.6x -2018.1x -2027.0x -2055.7x -2104.3x -2188.6x 140.4x 34.1x 26.1x 25.0x EV/EBITDA x -405.6x -334.9x -424.9x -426.7x -2055.7x -2104.3x -2188.6x 140.4x 34.1x 26.1x 25.0x DPS A$ cps 0 0 0 0 0 0 0 0 0 0 0 Payout ratio % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Dividend yield (net) % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Franking % 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Dividend yield (gross) % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Source: Company data, Credit Suisse estimates

FAR (FAR.AX / FAR AU) 29 20 April 2016

Companies Mentioned (Price as of 20-Apr-2016) AWE Limited (AWE.AX, A$0.63) Beach Energy (BPT.AX, A$0.65) Cairn Energy (CNE.L, 202.1p) Caltex Australia (CTX.AX, A$32.71) ConocoPhillips (COP.N, $47.06) FAR Limited (FAR.AX, A$0.09, OUTPERFORM[V], TP A$0.12) InterOil Corporation (IOC.N, $34.09) Kosmos Energy Ltd (KOS.N, $6.14) Oil Search (OSH.AX, A$6.85) Ophir Energy plc (OPHR.L, 77.25p) Origin Energy (ORG.AX, A$5.1) Santos Ltd (STO.AX, A$4.21) Senex Energy Limited (SXY.AX, A$0.26) Tullow Oil (TLW.L, 224.0p) Woodside Petroleum (WPL.AX, A$26.4) WorleyParsons (WOR.AX, A$6.44)

Disclosure Appendix Important Global Disclosures Sam Webb and Mark Samter each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward. Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors. Credit Suisse's distribution of stock ratings (and banking clients) is:

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FAR (FAR.AX / FAR AU) 30 20 April 2016

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Target Price and Rating Valuation Methodology and Risks: (12 months) for FAR Limited (FAR.AX) Method: We set our Target Price of $0.12/sh in line with our NPV. Our NPV uses a cash flow model, risk-weighted at 50%, to value the SNE field and development opportunity (first oil in CY22). This opportunity accounts for the majority of our NPV. We apply risk-weights to the SNE field prospective upside and to the FAN prospect as well (in total attribute 4cps to our NPV). Corporate costs NPV and net cash are the remaining contributors to our NPV. Our Outperform rating is set using Credit Suisse's rating system. In our view, using our NPV analysis as a basis, we think the market is too heavily discounting the risks attributed to the SNE/FAN discoveries. We acknowledge the long-dated time frame until prospective first cash flows from the project, and the risks will early stage, offshore and frontier drilling, but feel we adequately capture these risks via our NPV and then the additional risk-weightings we apply. Risk: Key risks to our $0.12/share Target Price and Outperform rating are, by not limited to; exploration, geological and field risk (exploration and appraisal drilling, well testing etc may not ultimately conclude the field is commercial), commodity price/fx risk (oil), operational risk, funding risk, equity dilution risk (as FAR looks to fund it's share of exploration and in time, development costs), regulatory/country risk (Senegal).

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FAR (FAR.AX / FAR AU) 31 20 April 2016

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683.

FAR (FAR.AX / FAR AU) 32 20 April 2016

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FAR (FAR.AX / FAR AU) 33