A great deal of expectation was placed on the disappointing Beibu Gulf project in China with three wells being drilled by the joint venture. The company has since elected to write off the drilling costs notwithstanding that the Wei 12-8 East field is currently undergoing studies which may lead to its ultimate development.

Total exploration write downs during the half totalled $2,969,068 compared to $2,511,267 in the corresponding six month period. Additionally sales revenues of $1,374,410 from oil and gas represented a decrease of 4% compared to the previous corresponding period.

One bright light on the company sheet was an 11% increase in gas sales from 73,900 thousand cubic feet to 82,000 thousand cubic feet while oil sales increased by 11.8% from 13,062 barrels to 14,608 barrels. Volume changes reflected slight increases following the Rainosek drilling offset by normal decline associated with production from existing wells.

Looking forward the company will focus on additional drilling activity in the US and modelling studies on its Beibu Gulf Block discovery, offshore China.

The company also announced yesterday that it has agreed to increase its participation in

the Bay Courant Project in the US from 15% to 20%, with indications that a barge rig may be available as soon as October which would place the spud date close on the heels of FAR’s current Lake Long Deep well.