FAR Limited (FAR) Earnings Call Transcript & Summary

Good afternoon. My name is Patrick O'Connor, the company's Chair, and it's my pleasure to welcome you to this Annual General Meeting of FAR Limited. This meeting is being held virtually. Those virtually attending may experience some time lag, and this could cause some delay in your questions or comments coming to our attention. At this meeting today, shareholders are able to participate, ask questions and cast direct votes at the appropriate time whilst the meeting is in progress. The Company Secretary has advised that a quorum is present. As the time is now 12:00 p.m., I declare the meeting open. I'm joined today through this webcast by my fellow Directors, Mr. Rob Kaye SC, a Nonexecutive Director; and Mr. Andrew Lilley, a Nonexecutive Director. I would also like to welcome our Company Secretary and Chief Financial Officer, Claire Newstead-Sinclair; and Andrew Johnson, a representative of the company's auditors, Moore Australia. Our share registry representatives are also in attendance. The Notice of Meeting has been given in accordance with the company's constitution, and copies are available for you on the company's website, the share registry's online voting site and on the ASX market announcements platform. I take the Notice of Meeting and Explanatory Statement as read. As previously advised, this is a virtual meeting, and shareholders are able to participate and view a live webcast of the meeting, ask questions and cast direct votes at the appropriate time while the meeting is in progress. The format of today's meeting will be a Chair's presentation; consideration of formal business on today's agenda, with questions to be asked as and when resolutions are considered; and then proceed to a final Q&A session on general operations and items of the business, following which shareholders will be provided an additional minute to vote on the resolutions. Claire Newstead-Sinclair, our Company Secretary, will now outline the procedures for today's meeting.

Thank you, Patrick. Shareholders will be able to participate, ask questions and cast direct votes at the appropriate times whilst the meeting is in progress. All shareholders, proxyholders and authorized corporate representatives and attorneys of shareholders who are entitled to vote will be able to do so via the web link shown on your screen. It is important to note that if you have lodged a proxy form and voted prior to the meeting, you do not need to vote again at this meeting unless you wish to change your proxy instruction. Visitors and media are reminded that whilst we welcome you at this meeting, it is a shareholder meeting, and you may not make comments or ask questions. We may experience some time lag, and this may cause some delay in your written questions or comments coming to our attention. We encourage you to lodge them as early as you can. Whilst the poll is open, select the vote icon, and voting options will appear on your screen. To vote, select your voting direction. A tick will appear to confirm receipt of your vote. To change your vote, select Click Here to change your vote and press a different option to override. I would ask that only questions relevant to the specific resolutions be asked. With regard to proxies, we have engaged the services of our share registry, Computershare, to compile and report on the proxy voting. Computershare has provided its formal report disclosing the proxies received. Those votes will be displayed on the screen. As advised in the Notice of Meeting where proxies have been properly nominated to be at the Chair's discretion, those proxy votes will be cast in favor of today's resolutions. Please note that once the poll results have been tallied by Computershare, we will later today announce the results on the ASX market platform. Thank you, Patrick.

Thank you, Claire. I'll now provide the Chair's address on the operations of the business. 2023 saw the company continue to execute its strategy of delivering value to our shareholders through a combination of cost reduction and capital returns. Key activities during the year included, with respect to Gambia blocks A2 and A5, the company successfully negotiated with the Gambian government for an extension to the permit term of blocks A2 and A5 for an additional 12 months, a substantial reduction in the permit statutory costs, and no obligation for expenditure on the licenses for a 12-month period commencing 1 April 2023. The company undertook a remarketing of blocks A2 and A5, with the substantially lower fixed permit statutory cost. The marketing efforts were unsuccessful, and after year-end, the company surrendered blocks A2 and A5 and closed its office in the Gambia. The company continued to focus on the rationalization of corporate overheads as it successfully transitioned to a contract-service provider model. After year-end, the company closed its Melbourne office and is finalizing the termination of the office lease. During 2023, the company bought back 5,785,466 shares acquired an average price of $0.70445 per share, and a capital return of $0.40 per share was paid on August 31, 2023. An ATO class ruling in relation to the capital return was received and published on the ASX announcements platform on 20 September 2023. The total capital returned in 2023 through share buybacks and capital distribution was USD 26.434 million. Turning to the Woodside Contingent Payment. Woodside indicated, in their first quarter 2024 report, that the Sangomar Field Development Phase 1 was on target for first oil production in mid-2024. Based on the Woodside update, annual payments under the Contingent Payment are likely to commence in early 2025. And based on current oil prices, the Board expects the full $55 million will be received with respect to production prior to the long stop date of 31 December 2027. Gneiss Energy Limited, a U.K. energy corporate financial advisory firm, has been appointed as corporate financial adviser in connection with the preparation for marketing and potential sale of the Contingent Payment. The Contingent Payment near to the commencement -- sorry, the intention of the Board will be to seek to sell the Woodside Contingent Payment nearer the commencement of first production from Sangomar field in mid-2024, which is expected imminently. Whilst there will be no guarantee that a successful transaction will be completed, if there was a sale, the Board would consider returning capital to shareholders subject to necessary shareholders' approvals being sought. With respect to Board changes. In January 2023, Alan Stein resigned as a Director, and Garth Campbell-Cowan was appointed as a Director in addition to his role as Chief Financial Officer. In April 2024, Garth Campbell-Cowan resigned as a Director, and Andrew Lilley was appointed as a Nonexecutive Director. Our Company Secretary, Claire Newstead-Sinclair has assumed the role of Chief Financial Officer. Both Robert Kaye SC and Andrew Lilley are seeking reelection at today's Annual General Meeting, and I urge shareholders to support their reelection as Nonexecutive Directors. I thank shareholders for their support and patience as we progress to the realization of value from the Woodside Contingent Payment and returning value to shareholders. We now turn to the business of the meeting. Before opening the poll, I wish to inform shareholders that the poll will remain open for a few minutes after the proposed resolutions have been addressed. I now declare the poll open. I would like to remind shareholders who are attending the meeting virtually can submit written questions at any time in relation to the proposed resolutions, and these will be addressed at the appropriate time during this meeting. For shareholders who prefer to speak, you will have an opportunity to do so when we reach the Q&A session for the formal part of the meeting. I now move to the first item of business. If you have a question on this item, please follow the question process, which was outlined previously by the Company Secretary. We will address your questions at the appropriate resolution. The first item of business pertains to the receipt and consideration of the financial report of the company and the related reports of Directors and the auditor for the year ended 31 December 2023. These items are contained in the annual report, so I'll ask to be taken as read. The annual report is available on the ASX announcement platform or on the company's website. The Corporations Act requires the accounts and report to be laid before shareholders at the Annual General Meeting. However, except as set out in resolution 1 to be considered later, there is no requirement for a vote of members to be taken. No written questions to the auditor were received by the cutoff date, 5 business days before the meeting. Questions may be directed through myself to our auditor in relation to the conduct of the audit, the audit report, the company's accounting policies or the independence of the auditor. Claire, do we have any questions?

We have received a question under this particular topic. And it's, how much are we currently paying for ASX listing fees? And what is a realistic timetable for the company to be wound up and delisted? Would it make sense for Woodside to buy out the company to expediate this process? And have we had any discussion with Woodside about making a takeover offer?

So the -- it's the standard listing fees, and the company has sufficient money to meet its ongoing overheads as they fall due. We have said closer to the time of commercial production, we will undertake a sale process. And other than the ordinary contact business with Woodside, there have been no discussions in relation to a takeover of the company on that basis. So it's a small company and probably not a matter that Woodside would consider. So the process of selling the contingent may or may not occur, and we are taking steps to minimize the costs going forward.

There are no other questions under this topic.

Thank you, Claire. As this matter does not require a vote, we will now move on to the first resolution. I turn to resolution 1 in today's Notice of Meeting, which pertains to the adoption of the remuneration report. I now propose that shareholders consider and, if thought fit, pass resolution 1 as set out in Notice of Meeting and as displayed on your screen. In respect of this item of business, the following proxies have been received, as outlined in the presentation, and they are shown on the screen. Claire, have we received any questions on this resolution?

Yes, we have. When disclosing the outcome of voting on all resolutions today, including this remuneration report vote, could we please advise the ASX how many shareholders voted for and against each items, similar with what happens with the scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions and was a voluntary disclosure initiative adopted by the likes of Metcash, LTM, AUI, Dexus, Webjet, Tabcorp and Myer over the past 3 years. If -- and I guess that's something to discuss with the registry in terms of how the information is recorded and captured.

Thank you. So after today's meeting when the votes are tallied, there will be a release to the stock exchange and will be done in the standard report that shows the number of shares and the percentages and whether the resolution is carried or not carried. We will reflect on the number of shares, but it's usually the shares voted and voted for, against or abstain is the disclosure that is normally adopted. Claire, are there any further questions?

Not on this resolution.

Thank you. I move that shareholders consider and, if thought fit, pass this matter as an ordinary resolution. Moving -- I now turn to resolution 2 in today's Notice of Meeting, which pertains to the election of Mr. Andrew Lilley as a Director of the company. I now propose that shareholders consider and, if thought fit, pass resolution 2 as set out in the Notice of Meeting and as displayed on your screen. In respect to this item of business, the following proxies have been received, as outlined in the presentation. Claire, have we received any questions on this resolution?

No questions on this resolution, Patrick.

Thank you. As there are no questions, I move that shareholders consider and, if thought fit, pass the ordinary resolution. I now turn to resolution 3 in today's Notice of Meeting, which pertains to the reelection of Mr. Robert Kaye SC as a Director of the company. I now propose that shareholders consider and, if thought fit, pass resolution 3 as set out in the Notice of Meeting, as displayed on your screen. In respect to this item of business, the following proxies have been received, as outlined in the presentation. Claire, have we received any questions on this resolution?

Yes, we have, Patrick. We just have a question on why Robert is offering himself for another 3-year term when the company is in wind-down mode.