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FAR Extends Exploration & Production Contract in Senegal

11-27-2008

FAR has received advice from the Minister of Energy for the Republic of Senegal, dated November 20, 2008, 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.

Following the grant of the extension, FAR intends, subject to approval by Petrosen (Senegal's National Oil Company), to increase its working interest to 90 percent and assume Operatorship of the three offshore blocks.

The increased interest in the blocks will place FAR in a strong position with the continuing farm-out process, briefly interrupted to obtain the extension. Written offers to participate in the drilling of a well have been received from two large international exploration and production companies, with a third offer, from a major, pending.

To enable these offers to be fully considered and a farm-in partner or partners secured to enable the drilling of an exploration well, the co-venturers including FAR and Petrosen, requested the current contractual period of the license be extended by one year.

The successful application for the extension had been based on the following:

• farm-in offers have been obtained 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 US $17 million being twice 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;
• the work has been accomplished as rapidly as possible but with due care and attention to detail thus resulting in the several offers received.