Winnebago Industries, Inc. Annual Report 2019

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FY2019 Annual Report · Winnebago Industries, Inc.

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2019

Warrego Energy Limited
Annual Report

Contents

Highlights

From our Chairman

The Warrego Story

CEO’s Report

Sustainability

Health, Safety & Environment

Board of Directors

FY19 Financial Report

5,100m

West Erregulla-2 drilled
to a depth of 5.1km, a
new Australian record.

West Erregulla-2
flow test confirms
world class resource.

69MMscf/d

RTO of Petrel Energy
completed in March 2019, ASX listing
changed to WGO.

3 significant
conventional
discoveries^
at West Erregulla-2
including a world class
reservoir in the Kingia
sandstone.

2 primary areas of focus:
Perth Basin, Australia,
and Cadiz region, Spain.

^ Post FY19 year end

warregoenergy.com

Warrego Energy Annual Report 2019From our Chairman
Greg Columbus

“Whilst we have seen significant short-term
shareholder value creation, the journey for
the true underlying value of our total asset
portfolio has only just begun.”

Fellow shareholders, FY19 has been an exciting year
of evolution, discovery and growth for your company.
We have made substantial and positive changes to our
corporate, financial and operating structures and we
are now beginning to realise the significant potential of
our high-graded asset portfolio.

gas will be increasingly utilised as an
important part of the climate solution
mix. Natural gas is the cleanest burning
hydrocarbon source. LNG terminals are
being constructed globally and gas will
be increasingly seen as transportable
and thus competitive with oil and other
energy sources.

The highlight of 2019 has
undoubtedly been the world class
gas discoveries at West Erregulla,
onshore Perth Basin Western
Australia. Conventional reservoirs
in the Basal Wagina, Kingia and
High Cliff sandstones.

Although these discoveries were
announced subsequent to the financial
year end, they represented the
culmination of many years of hard work
across multiple countries and timezones.
Appraisal success had been somewhat
reflected in the company’s share price,
but there remains considerable potential
at West Erregulla as well as in our other
assets in the Perth Basin and Spain.

In March 2019, shareholders of Petrel
Energy Limited approved the completion
of the merger with Warrego Energy UK

Ltd via a Reverse Takeover. The company
was renamed Warrego Energy Limited
and remained listed on the ASX (listing
code: WGO).

The merger was a catalyst for a series
of important changes which have
repositioned the company. Renewal
at Board and Executive level added
considerable technical, financial, industry
and geographic operating experience
whilst remaining consistent with our lean
and efficient ethos. This has proved to
be particularly effective in progressing
the appraisal of the West Erregulla field,
onshore Perth Basin Western Australia,
and the Tesorillo Project in the Cadiz
region of Spain.

Warrego is in accord with a widely held
view that natural gas is the partner
fuel to enable future renewable energy
solutions. We believe that natural

With a significant readily accessible
unencumbered WA conventional gas
resource Warrego intends to play its part
in that solution. In Western Australia
block EP469 sits some 20 km from the
nearest pipeline and in Spain our Tesorillo
gas assets sit 2.6 km from one of the
biggest pipeline infrastructures in Europe.

We believe the key to guaranteeing that
gas can play this important role in the
energy mix is to ensure that we will:

Consult locally

• Manage risk effectively
•
• Act safely & transparently
• Adhere to industry best practice and

government policy

Because of Warrego’s involvement in
two continents Australia, and Europe
we believe that we can fast track
key learning and introduce enabling
technologies between each location.

The Warrego
share price
has risen 220%
since the RTO.

(As at Oct 15th 2019 - S&P / ASX 200 for same period 7.9%)

This approach is in line with our strategic
thinking for the company.

Share Price Performance vs S&P / ASX 200

Global political and economic conditions
have deteriorated over the past 12
months and Warrego has responded
by narrowing its strategic focus to
concentrate on high-grade assets with
above average geological and geophysical
features; excellent proximity to pipelines,
infrastructure and markets; and low-cost
development potential. Accordingly, we
have prioritised the appraisal of West
Erregulla and Tesorillo while continuing
to work on the prospective EPA-0127
onshore exploration permit in the Perth
Basin. Exploration and appraisal in
Uruguay was discontinued during the year.

From a financial perspective, we have
ended the financial year in a sound
position thanks to the support of our
shareholders. Exploration and appraisal
activities consume capital and on behalf
of the Board, I would like to thank the
shareholders that participated in the
various capital raising activities during
the year which enabled the outstanding
success of the West Erregulla-2 well.
Looking to the year ahead, FY20 could
perhaps be even more exciting than FY19.
We are involved in preparing for new
seismic and planning new wells with our
joint venture partner at West Erregulla,

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May-19

Jul-19

Sep-19

Warrego Share Price (A$/share) S&P / ASX 200

and on the other side of the world we
are advancing preparations for a new
appraisal well at Tesorillo. Success at these
locations will allow us to define reserves
and contingent resources which is a
critical step on the road to development.

In conclusion, I would like to acknowledge
the hard work and dedication of our
board, management team and staff who,
together with our shareholders, have
helped us achieve this great success in the
Perth Basin.

We look forward to unlocking the full
potential of our quality portfolio and
remain committed to generating wealth
for shareholders.

Yours sincerely,

Greg Columbus
Chairman

warregoenergy.com

Warrego Energy Annual Report 2019
The Warrego Story

Warrego Energy is a next generation
oil and gas company focused on
creating maximum stakeholder value.

We apply deep management skills, technology
transfer and international know-how to manage
risk across our assets, attract the best people and
access the best international funding sources
whilst remaining lean and focused at all times.

Warrego History

Our Founders

Robert Gordon University graduate, Dennis Donald spent over
25 years with Shell where he was latterly instrumental in the
introduction of new technology into the Brent Fields.

Aberdeen University graduate Duncan MacNiven began his
career as a corporate/oil & gas lawyer with Aberdeen firm
Peterkins before pursuing interests in the oil sector with Dennis.

Australia, Only 1/3 of
EP469 has been covered
with 3D seismic. Significant
potential exists in the
remaining 2/3 of the block.

Spain, Tesorillo project
preparation in final stages
working with government
to gain approvals.

Australia

Spain

The Perth Basin continues to emerge as a leading play with Beach Energy
drilling their Beharra Springs Deep well at the moment. Several pundits
have pointed out the potential for a world class Perth Basin hydrocarbon
deposition in the triangle between Waitsia, West Erregulla-2 and Beharra
Springs. If this were proven then the potential for this gas resource
would gain international interest. Warrego is currently reviewing its
strategic options and is committed to ensuring that it maximises the
value of the significant unencumbered resource that it has in EP469.

Our Spanish project is nearing conclusion of its field
study phase. Key seismic and magnetic data have
been synthesised to gain a comprehensive overview
to inform the drilling of our Tesorillo appraisal well.
Government approvals are being actively sought
and once secured all efforts will be directed to the
drilling of Tesorillo. Other synergistic opportunities in
Spain are also being evaluated.

Timeline

1998

Donald and MacNiven
established Leading Edge
Advantage, an independent
global drilling engineering
consultancy specialising in
the application of advanced
drilling techniques such as
coiled tubing, underbalanced
and managed pressure
drilling. LEA planned and
executed the first coil tubing
drilled well from a floating
platform in the North Sea.

2007

2008

2014

2016

2018

2019

The pair create Warrego
Energy to apply their
technology, drilling and
execution skills to unlock
stranded onshore gas
resources and address a
forecast Western Australian
domestic gas shortfall.

The Western Australian
Government released the
West Erregulla concession to
competitive tender. Warrego
submitted a comprehensive,
ambitious and ultimately
successful bid for the permit.

The duo worked through the unexpected
global financial collapse by investing their
life savings and selling assets such as
Leading Edge to protect and build value in
the asset.

Groundwork for EP469 required extensive
negotiations with the Amangu people who
had claimed native title rights. The Warrego
team saw the Amangu as partners, and
took a personal approach to the dialogue,
rather than the traditional industry
practice of utilising 3rd parties. Building
a close relationship with people living
9000 miles away was risky but paid off and
negotiations were completed in two years.

Following several
years of financial
hardship, Warrego
secured capital to
progress the pre-
appraisal seismic
programme by way
of a A$40 million
farm out to Dutch
Oil Companies Dyas
BV and Mazarine
Energy BV.

Warrego recovered
100% interest in
EP469 after Dyas
and Mazarine
withdrew from
Western Australia
because of the oil
price collapse.

Farmed out 50% and operatorship of
EP469 in June 2018 to Strike Energy in
return for an A$11 million “Carry” on
the West Erregulla-2 well to finally realise
the massive potential of the field.

Signed a share purchase agreement in
December 2018 whereby, subject to
conditions, Warrego would acquire Petrel
Energy Limited (ASX:PRL) by reverse
takeover (RTO).

Subsequent seismic reprocessing saw the
resource estimates revised upwards as
WE-2 became one of the most eagerly
awaited wells in recent Australian history.

On completing the RTO of Petrel, Warrego acquired 77% of the
enlarged organisation. ASX ticker code changed to (ASX:WGO).

West Erregulla-2 was spudded in June and was drilled to a total
depth of 5100m, the deepest well drilled onshore in Australia.
It has become a world class asset with three major commercial
plays the Basal Wagina, Kingia and High Cliff sandstones which
confirmed expected reservoir similarities with the nearby Waitsia
field.

Flow tests conducted on the well achieved a maximum flow rate
of 69 million standard cubic feet of gas per day on a 2” choke
at ~700 psig wellhead pressure over a 1-hour period.

warregoenergy.com

Warrego Energy Annual Report 2019

CEO’s Report
Dennis Donald

“The major discoveries at West Erregulla will
help us consolidate our position in 2020
as a key player in the Perth Basin. At the
same time, we will pursue our international
ambitions and progress the highly
prospective Tesorillo project in Spain.”

Greg Columbus
Warrego Energy

FY19 was a seminal year for Warrego
Energy, laying the platform for exploration
and appraisal success in Western Australia
and positioning the company for further
growth in Australia and Spain.

Although Warrego only
listed on the ASX in March
2019, via Reverse Takeover
(RTO) with Petrel Energy, the
company has operated in
Australia for almost fourteen
years. It has weathered the
global financial crisis and the
worst oil price crash since
the 1970s, and has arrived at
its current position through
foresight, dedication and
perseverance.

The successful RTO enlarged
the Warrego asset base with
the addition of an additional
block in Western Australia (EPA-
0127) and international projects
in Spain and Uruguay. A post-
merger review and evaluation of
assets resulted in the company
focusing on Western Australia
and Spain and a decision to
discontinue investment and
activities in Uruguay.

However, the highlight of the
year was undoubtedly the
exploration success at West
Erregulla in EP469, onshore
Perth Basin Western Australia,
which resulted in three
significant gas discoveries.

Operational Highlights
The West Erregulla-2
exploration well in EP469
was spudded in June 2019
and successfully drilled to
total depth of 5,100 m, an
Australian record for an
onshore well. The prospect
targeted three formations in
the Wagina, Kingia and High
Cliff Sandstones which yielded
three significant conventional
gas discoveries. The Kingia
Sandstone, with net pay of 58
metres and low levels of inerts,
significantly exceeded pre-drill
expectations.

Log and drilling data
combined with side wall
coring of the well will be
assimilated with the results of
the well testing to inform the
reserves estimate.

The Joint Venture will engage
an independent certifier to
gain appropriate assessment
of the gas reserves and
contingent resources in the
block. Once this independent
estimate is confirmed, EP469,
with excellent proximity
to infrastructure, pipelines
and markets - can truly be
classified as a word-class
asset.

Spain
We have continued to make
progress in Spain, although the
current political situation has
slowed the approval process.
The Tesorillo project is adjacent
(4 kilometres) to the largest
gas interconnector in Europe
providing ready access to an
extensive market. Success
at Tesorillo, where we have
identified a lightly explored
prospect of potentially similar
magnitude to West Erregulla,

will allow swift development
of our Spanish assets to a
receptive and accessible market.

Financial Performance
At year end, the company was
in a secure position having
raised sufficient capital to
undertake the RTO, WE-2
drilling operations, and
prepare for the next phase of
activity in Western Australia
and Spain. During the year,
Warrego Energy completed
two rounds of fund raising
totalling A$11.8 million
(before costs) comprising
the issue of A$5.2 million of
convertible loan notes [Note 1]
pre-RTO in March 2019; and a
placement and SPP for A$6.6
million in June 2019 [Note 2].

The farm-out agreement for
EP469 required Strike Energy
to bear the first A$11 million
of expenditure on the West
Erregulla-2 well. Additional
well costs are to be funded on
a 50:50 basis. Warrego’s first
cash call for A$2.75 million
was received in June 2019
(paid on 1 July 2019).

warregoenergy.com

EP469 Perth Basin
A world class asset with three
significant gas discoveries.

A$23.5M

Raised through Placements,
SPPs and Convertible Notes.
[FY19:A$11M / QTR1:A$12.5M]

“The highlight of the year was
undoubtedly the appraisal success at
West Erregulla which resulted in three
significant gas discoveries.”

During the year Warrego
has worked hard to manage
its costs and joint venture
expenditure very carefully.
Being a company with
operations on 2 continents
necessitates that rigorous
cost control policies and
procedures are in place
and that these are closely
monitored by myself.

Net cash flows out from
operating activities, including
the costs of the RTO, were
A$3.27 million. Exploration
activities, including analysing
the position in Uruguay,
expenditure to further the
Tesorillo project in Spain and
preparatory work on EPA-
0127, were A$244,559.

Overall, we entered into
the new financial year in
a strong overall position
with A$7.3 million in cash

and cash equivalents. The
company raised a further
A$12 million in September
2019 (after the balance sheet
date) following the successful
drilling of West Erregulla-2
and the subsequent major
gas discoveries. We are well
positioned to fund the initial
preparatory works for next
year’s programme, which is
yet to be finalised but may
include seismic surveys and
additional delineation wells at
EP469 and an appraisal well
at Tesorillo.

HSE and Sustainability
Our approach to Sustainability
is embedded within the
company’s culture. Health,
Safety and Environment is
an essential part of our
business. We strive to ensure
that we comply with the
highest standards whether as
operators or partners.

Careful planning, after action
reviews, and safety audits are
incorporated with industry
best practice across our
operations. Pleasingly, there
were no significant safety or
environmental incidents to
report.

We ‘tread lightly on the land’
as we seek to engage with
neighbours, communities
and stakeholders concerning
our operations in Western
Australia and Spain.

EP469
The Perth Basin extends
some 100,000 km2 south
from the Carnarvon Basin
to the Yilgarn Craton in the
east and to the continental
shelf in the west. Historically
the first well, Warren River,
was drilled in 1902. The first
discovery was the Yardino
well in 1964. Arguably the
most significant well to be
drilled in the Basin was AWE’s
Senicio 3 which discovered
the Waitsia Field in September
2014. The successful drilling
of West Erregulla-2 in EP469

has confirmed that accessible
Waitsia conventional sands
extend into the block.
Flow tests conducted on the
well achieved a maximum
flow rate of 69 million
standard cubic feet of gas per
day on a 2” choke at ~700
psig wellhead pressure over a
1-hour period from the Kingia
Sandstone confirming we
have excellent conventional
reservoir quality, well
deliverability, and production
potential.

With 2/3 of EP469 still to be
appraised, Warrego expects
to increase it’s world class
resource.

Notes

[1] All convertible Notes have now
been redeemed.

[2] Completion 4 July 2019.

Warrego Energy Annual Report 2019
Our Tesorillo and Ruedalabola
licences are located in the Cadiz
Province of Southern Spain and
cover 380 km2.

Maghreb-Europe
Gas Pipeline (48”)

AMT Acquisition
Area highlighted

Maghreb-Europe Gas Pipeline (48”)

Tesorillo Permit

Operating through our Spanish vehicle
Tarba Energia SRL (Warrego holds 85%)
Warrego is progressing the Tesorillo
prospect with our partners Prospex Oil &
Gas PLC (who hold 15% of Tarba).

Puerto de Ojen-1

Refinery

Tarifa 2

Tarifa 1

Ruedalabola
Permit

El Almarchal-1

Tesorillo
Permit

AMT Stations

Licence Outline

Existing Well

Seismic Line

Gas/Oil Pipeline

Maghreb-Europe Gas Pipeline (48”)

Tesorillo Permit

Going Forward

Gibraltar

Ruedalabola Permit

Gibraltar

El Almarchal-1

Tarifa 1 & 2

Puerto de Ojen-1

Refinery

SPAIN

Licence Outline

Existing Well

Seismic Line

Gas/Oil Pipeline

CEO’s Report

The Coolcalalaya Basin is a
forgotten frontier between the
Perth and Carnarvon Basins.

“Warrego is in the final stages of agreeing
native title and once concluded will be
engaging with parties that have expressed
an interest in farming-in. Warrego sees
EPA-0127 as a natural extension to its
world class Perth Basin asset.”

EPA-0127 North Perth Basin
Located in the Coolcalalaya sub-basin Warrego’s block EPA-0127
extends a massive 2.2 million acres (8,700 km2 ). The block is
bisected by the Dampier to Bunbury pipeline and is immediately
north of the Midwest Pipeline guaranteeing ready access to any
available commercial hydrocarbons in the block.

Recent geological work undertaken by Warrego has identified
a number of hydrocarbon targets of interest. Based on surface
geology and gravity data a number of Waitsia-like picks have,
been identified for further investigation.

The Coolcalalaya Basin in summary:
•
•
•
•

Essentially unexplored
Prime situation between the Perth and Carnarvon Basins
Recognised as a deep and ancient basin
Identified structuring, known reservoir quality, potential
source rocks in a deep kitchen.

Warrego is in the final stages of agreeing native title and once
concluded will be engaging with parties that have expressed
an interest in a farm-in. Warrego sees EPA-0127 as a natural
extension to its world class Perth Basin asset.

Maghreb-Europe
Gas Pipeline (48”)

AMT Acquisition
Area highlighted

El Almarchal-1

Tesorillo
Permit

AMT Stations

Licence Outline

Existing Well

Seismic Line

Gas/Oil Pipeline

Puerto de Ojen-1

Refinery

Tarifa 2

Tarifa 1

Ruedalabola
Permit

El Almarchal-1

Puerto de Ojen-1

Refinery

Tarifa 1 & 2

Gibraltar

Ruedalabola Permit

Gibraltar

SPAIN

Licence Outline

Existing Well

Seismic Line

Gas/Oil Pipeline

Spain
The Almarchal-1 gas discovery
is located in our Tesorillo
licence. This well intersected
a thick section of possible gas
pay when drilled in 1956 and
gas flowed to surface.

The Ruedalabola Permit
contains the Puerto de Ojen
well drilled in 1957 which
displayed similar gas shows
to Almarchal-1 but could
not be tested due to
mechanical reasons.

In 2019 integration of key
geological data i.e. surface
structural and geological
mapping reprocessing of
legacy 2D seismic and AMT

reprocessing yielded important
information that will inform
the drilling of our Tesorillo
well. Proving this resource
through successful drilling will
be a key focus in 2020.

Spain has an extensive
pipeline grid operated by
ENAGAS. Natural gas is the
main source of energy and
99.9% of fossil fuels are
imported from Africa and the
Middle East. Gas is seen as the
preferred transition fuel within
Spain and indeed Europe. The
Maghreb gas pipeline comes
ashore in, and runs through
the permit. This pipeline will
provide access to high priced
European gas markets.

We started the year
with great success
in the Perth Basin
and the company is
currently evaluating
strategies to create and
maximise value for its
shareholders.

We are intending to shoot
further 3D seismic to better
define EP469 and improve
mapping of the block. To date
only 1/3 of EP469 has been
shot which has identified
significant gas reserves to
be confirmed by the flow
test. In addition, a further
two appraisal wells are being
planned in 2020 to delineate
the West Erregulla resource.

In Spain we will complete the
assimilation of the magnetic
and acquired 2D seismic data.
Warrego will endeavour to
facilitate the approval of the
drilling of our first well in
Spain in 2020.

We will continue to
maintain a lean and focused
organisation throughout
the coming year. Access to
European capital markets, a
strong management team,
and access to cutting edge
technologies and techniques
will play a key role in our
plans.

Without the commitment
and the hard work of our
people, Warrego would not
have enjoyed the successful
and safe operations that we
experienced in 2019. I would
like to thank all of our teams,
contractors, service personnel
and stakeholders for their
efforts and our shareholders
for their ongoing support.

Dennis Donald
Group CEO & Managing
Director

warregoenergy.com

Warrego Energy Annual Report 2019Sustainability

Health, Safety
& Environment

Warrego believes that sustainable development
means meeting the needs of the present without
compromising the ability of future generations to
meet their own needs.

Warrego Energy is committed to operating
in a manner that protects people from harm
and which complies with all applicable health,
safety and welfare legislation.

Warrego has worked in Western
Australia for over twelve years and at all
times has striven to be respectful of the
law, the people and the land.

“Sustainability
is part of our
corporate culture
and is embedded
in all aspects of
the business.”

We have at all times
ensured that we “tread
lightly on the land”.

The founders of the company
in the course of their business
have worked in the field
and have come to know
the local stakeholders and
community. We strive to
ensure that we harmonise
with the government’s
sustainability aims and respect
local and national stakeholder
sustainability issues.

THE THORNY DEVIL, ALSO KNOWN COMMONLY AS THE MOUNTAIN DEVIL

Warrego Energy, through
commitment from the
highest level in the
organisation, has enjoyed
great success with all
its Health, Safety and
Environment objectives
during the FY19.

We will not become complacent. Targets
for the next year and beyond will see us
striving to maintain and improve on our
performance.

Zero harm to a person’s health
Through effective planning and
communication no direct or indirect
employees, neighbours or members of
the public have been harmed by any of
our activities.

While maintaining our focus to ensure
we do not harm a person’s physical
health, we will develop strategies to
measure and manage situations that
may give rise to mental stress.

Minimise environmental impact
Warrego works with our partners, striving
to positively influence and minimise
any environmental impact across our
operations in Australia and Spain.

With the global nature of our organisation,
air travel is a significant direct
environmental impact. Warrego has
minimised this by avoiding unnecessary
air travel and by using technology to
bring teams together whenever possible.

Respect for our neighbours,
communities and stakeholders
Even though our JV partners are the
‘Operators’, we continue to strengthen
our relationship with neighbours,
communities and stakeholders in Western
Australia and Spain.

Comply with legislation
Our experienced team, aided by
our partners, has ensured we are
knowledgeable and compliant with the
prevailing legislation in all the regions
where we conduct business.

Continuous review and true
improvement
The RTO of Petrel Energy has brought
about re-evaluation of our existing
HSE management systems. A review
identified critical areas needing
immediate improvement which has been
implemented. Definition and development
of a scalable system has started and will
continue during the next financial year.

Realisation of our operating
philosophy “Tread lightly on
the land”
While it is not possible to undertake
energy projects without some impact
on the land, through planning and
the use of leading-edge technologies
and practices Warrego has kept its
operational footprint small.

With our partners, we have plans to
further reduce that footprint through the
rehabilitation of any land impacted by
our activities.

warregoenergy.com

Warrego Energy Annual Report 2019Board of Directors

Financial Report

Greg Columbus
Non-executive Chairman,
Chair of Remuneration
Committee & Member of
the Audit Committee

Dennis Donald
Group CEO &
Managing Director

Duncan MacNiven
Executive Director - Approvals,

HS&E

Directors’ Report

Auditors’ Independence Declaration

Consolidated Statement of Profit or Loss
and Other Comprehensive Income

Consolidated Statement of Financial
Position

Consolidated Statement of Changes
in Equity

Consolidated Statement of Cash Flow

Notes to the Financial Statements

Directors’ Declaration

Auditors’ Report

Additional Information

Corporate Directory

Owain Franks
Executive Director - Finance,
Strategy & Delivery

Mark Routh
Non-executive Director,
Member of the Remuneration
Committee & Member of the
Audit Committee

David Biggs
Non-executive Director, Member
of the Remuneration Committee
& Chair of the Audit Committee

warregoenergy.com

Directors’ Report

The directors present their report, together with the financial statements, on the Group (referred to hereafter as the ‘Group’ or ‘the Group’)
consisting of Warrego Energy Limited (referred to hereafter as ‘the Company’ or ‘Parent Entity’) and the entities it controlled for the financial year
ended 30 June 2019.

DIRECTORS

The directors in office at any time during the financial year and up to the date of this report are:

Greg Columbus

Non-executive Chairman

appointed 22 October 2018

Dennis Donald

Managing Director, Group Chief Executive Officer

appointed 21 March 2019

Duncan MacNiven

Executive Director - Approvals, HS&E

appointed 21 March 2019

Owain Franks

Executive Director - Finance, Strategy & Delivery

appointed 21 March 2019

Mark Routh

Non-executive Director

David Biggs

Non-executive Director

Alexander Sundich

Non-executive Chairman

David Casey

Managing Director

Russell Porter

Non-executive Director

Andrew Williams

Non-executive Director

PRINCIPAL ACTIVITY

appointed 21 March 2019

resigned 21 March 2019

resigned 22 March 2019

resigned 29 November 2018

The principal activity of the Group during the year was the exploration for and development of oil and gas resources. Its objective is to generate
shareholder wealth. The recently completed reverse acquisition by WEUK will allow the Company to fully exploit the potential of its projects in the
Perth Basin, Western Australia and the Tesorillo project in Southern Spain.

OPERATING RESULTS

The Group’s net loss after tax from operations for the year was A$7,532,858 (2018: loss of A$257,568). Impairment costs arising during the period
were A$3,457,484 (2018: nil)

FINANCIAL POSITION

The Group’s total assets increased to A$16,561,633 (2018: A$415,360), mainly as a result of capital raisings totalling A$5,404,159 (2018: nil) and
recognition of goodwill from reverse acquisition of A$7,045,872. Total liabilities increased to A$2,914,890 (2018: A$131,525) predominantly from
the convertible notes issue of A$1,115,396.

REVIEW OF OPERATIONS

During the period the Group undertook the following activities:

Reverse acquisition and Change of Company Name

• On 21 December 2018 the Company announced the signing of a Share Purchase Agreement (the “SPA”) with Warrego Energy Limited

(subsequently renamed Warrego Energy UK Ltd and referred to here as “WEUK”), a private UK company, agreeing the merger of the two groups
via a reverse acquisition (the “RTO”). The SPA fully defined the RTO which was subsequently effected by the acquisition by the Company of all
the shares of WEUK. As consideration for the RTO, WEUK shareholders received fully paid ordinary shares in the Company, which represented
approximately 77% of the issued share capital of the Company.

• On 15 March 2019 at an Extraordinary General Meeting, shareholders approved the completion of the RTO and issue of consideration shares to

Warrego shareholders. The meeting also approved a consolidation of share capital on a 20:1 basis, change of Company name to Warrego Energy
Limited, and the appointment of five new directors.

EP469

• On completion of the RTO the Company held WEUK’s primary asset, the highly prospective Exploration Permit 469 in the onshore Perth Basin in

Western Australia. A 50% interest in EP469 had been farmed out to Strike Energy Limited (“Strike”) via a joint venture arrangement in June 2018.
As part of this agreement, Strike committed to fund the first A$11,000,000 of the cost of drilling and completing one exploration well within the
permit (the West Erregulla-2 well) and carrying out related geological and geophysical studies including general and administrative expenses costs,
within 24 months of commencement of the joint venture.

• West Erregulla-2 (WE-2) was spudded in early June 2019 using Easternwell’s Rig 106 and achieved a total depth of 5,100m in September

2019. The well made three significant gas discoveries in the Basal Wagina, Kingia and High Cliff sands following year end which are outlined in
subsequent events below.

DIRECTORS’ REPORT

Spain

• The 2018 field programme was focused on three strands. The first strand consisted of general field studies to provide information that is required
to populate the Environmental and Social Impact Assessment ('ESIA') report. It is estimated that 70% of the overall fieldwork required for the ESIA
is complete. The final steps, e.g. hydrogeology, are well location dependent. These will be completed once the new drilling location is decided.

• The second strand was a detailed surface structural geology mapping exercise by a leading structural geologist from Granada University. The new
map and related cross-sections show that the structural subsurface geometry of the exploration target (the Aljibe sandstone in the Lowermost
Miocene) is formed by possibly several folds and thrust ramps of 3 to 5 km length which are inferred to be potential gas traps. The results have
been formally presented to the Energy Resources Section of the Spanish Geological Survey (IGME), during a recent meeting in Madrid.

• The third strand, an Audio Magneto Telluric survey, was hampered and delayed by poor access to the study areas after the summer. The appointed
contractors have completed multiple tests over important areas and the raw field data have been processed together with recently obtained historic
2D seismic lines. Work is underway to integrate these data sets with the surface geological model previously developed. Tarba Energia SRL, the
local subsidiary which is 85% owned by the Company, will seek to complete the full programme in 2019 and in any event, as soon as possible.

Onshore Perth Basin

• The Company exercised its call option over Palatine Energy Pty Ltd (Palatine) and acquired all of Palatine’s issued share capital. Palatine holds

the STP-EPA-0127 application over 2.2 million acres in the onshore Perth Basin. The substantive terms of the three Native Title Agreements are
progressing which is the final step before the Exploration Permit can be issued by the Department of Mines, Industry Regulation and Safety.

Uruguay

• The Company holds a 41% interest in Schuepbach Energy International LLC (SEI) which was the subject of a strategic review in the June Quarter.

SEI holds 100% of the Piedra Sola concession in Uruguay. As a result of the review the Company decided not to allocate additional working capital
to SEI and the carrying value of the SEI investment in an associate of A$3,415,000 was written down to nil. The inability to arrange partner funding
to progress exploration in Piedra Sola, limited chance of financial return and Warrego’s minority equity position in SEI (and its consequential limited
ability to influence matters in relation to the asset) were the principal reasons for the write down.

Corporate

• On 22 October 2018 Mr Greg Columbus was appointed to the Board as a Non-Executive Director. Mr Columbus was then appointed Chairman of

the Company and Remuneration Committee at the 2018 AGM.

• A share placement on 4 July 2018 raised a total of A$735,000 at a price of 0.21 cents per share. An associated Share Purchase Plan which closed

on 7 August raised a further A$326,000 bringing the total funds raised to A$1,061,000.

• On 15 March 2019 an Extraordinary General Meeting of shareholders approved the completion of the RTO and also approved a consolidation of

share capital on a 20:1 basis. The number of ordinary shares was reduced from 2,399,437,494 to 119,971,875 immediately after the RTO.

• On 31 May 2019 Warrego completed a Placement raising a total of A$6,100,000 at a price of 9.5 cents per share.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR

No matter has arisen in the interval since 30 June 2019 and up to the date of this report that in the opinion of the directors has significantly affected
or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in future financial periods
other than the following:

• The West Erregulla-2 (WE-2) exploration well which was spudded in early June 2019 made three significant conventional gas discoveries which

were announced after 30 June 2019:

» On 1 August 2019 the Basal Wagina Sandstone was intersected with 10.2 metres of net pay in a total gas column to 79 metres. The discovery

appears analogous to Beharra Springs.

» On 27 August 2019 a significant gas discovery in the Kingia Sandstone was made with 58 metres of net pay in a gross Kingia gas column of

220 metres which was substantially thicker than Waitsia analogues.

» On 6 September 2019 a further major gas discovery was made in the High Cliff Sands with 10 metres of net pay in a gross gas column of 22

metres.

• On 4 July 2019 Warrego completed a Share Purchase Plan (“SPP”) raising a total of A$510,000 at a price of 9.5 cents per share.

• On 25 July 2019 half of the outstanding A$1,250,000 Convertible Notes were converted for 6,706,009 ordinary shares. The remaining Convertible

Notes were converted on 29 August 2019 for 3,245,067 ordinary shares. All pre RTO Warrego Convertible Notes have now been converted.

• On 16 September 2019 Warrego completed a A$12m share placement, primarily to institutions, at an issue price of 29 cents per share.

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Warrego Energy Annual Report 2019DIRECTORS’ REPORT

DIRECTORS’ REPORT

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

ENVIRONMENTAL REGULATIONS

The RTO approved by shareholders on 15 March 2019 at an Extraordinary General Meeting and completed shortly thereafter has seen the Company
shift its current focus to onshore Australia with the EP469 tenement being added to the STP-EPA-0127 application in the onshore Perth Basin. Recent
activities and funding have been focused on drilling the very successful West Erregulla-2 well in the EP469. The Company will be continuing its
exploration activities on its Tesorillo project in Spain.

The Group’s operations are subject to significant environmental and other regulations. The Group has a policy of engaging appropriately experienced
contractors and consultants to advise on and ensure compliance with environmental regulations in respect of its exploration and production activities.
There have been no breaches of environmental regulations resulting in damage to the environment in the financial period and at the date of this
report.

DIVIDENDS

No dividends have been paid or declared during or since the end of the financial year.

LIKELY DEVELOPMENT AND EXPECTED RESULTS OF OPERATIONS

The Group intends to continue its exploration, development and production activities on its Tesorillo Spain project and onshore Perth Basin Western
Australia project. The outcome of these developments is dependent on successful exploration and evaluation activities.

BUSINESS RISKS

The Group’s focus is on early stage oil and gas exploration. Any profitability in the future from the Group’s business will be dependent upon
successful exploration, development, production and marketing of hydrocarbons from the petroleum exploration licences. The following exposures to
business risk may affect the Group’s ability to achieve the above prospects.

Exploration and Production

The business of exploration and project development involves a degree of risk. To prosper, the Group depends on factors that include: successful
acquisition of appropriate exploration licences; successful exploration and the establishment of gas resources and reserves; design, construction
and operation of efficient production infrastructure; managerial performance and efficient marketing of the products. Exploration is a speculative
endeavour. Exploration and development operations can be hampered by force majeure circumstances and cost overruns for unforeseen events,
including unexpected variations in location and quality of the petroleum and equipment and plant malfunction.

Funding Risk

The transfer of the Group’s exploration focus from the Uruguay and Tesorillo, Spain projects to the onshore Perth Basin has reduced project-funding
risk with the key assets being of greater scale and better understood by Australian investors. However, additional capital may be required to fully
realise the full potential of all the Group’s assets and there is no certainty that the Group will be able to raise additional capital, or that it will be able
to do so on favourable terms.

If the Group cannot raise additional capital through the issue of additional shares, it may be forced to dispose of some or all of its interest in one or
more of its assets. If the Group is required to dispose of assets in those circumstances to a third party, it is possible that such disposal will not be on
favourable terms, including disposal price.

Risk of Foreign Operations

The Group operates and invests in Australia and Spain where there may be a number of associated risks over which it will have no or limited
control. These may include economic, social, or political instability or change, nationalisation, expropriation of property without fair compensation,
cancellation or modification of contract rights, hyperinflation, currency non-convertibility or instability, and changes of laws affecting foreign
ownership, government participation, royalties, taxation, working conditions, foreign nationals work permits, rates of exchange, exchange control,
exploration licensing, minerals export licensing, export duties, government control over product pricing, and other risks arising out of foreign
governmental sovereignty over the areas in which the Group’s operations are conducted, as well as risks of loss due to civil strife, acts of war,
terrorism, guerrilla activities and insurrections.

The Group’s operations may also be adversely affected by laws and policies of Australia affecting foreign trade, taxation and investment. In the event
of a dispute arising in connection with its operations the Group may be subject to the exclusive jurisdiction of foreign courts or may not be successful
in subjecting foreign persons to the jurisdiction of courts in Australia or enforcing Australian judgements in foreign jurisdictions.

Environmental Impact Constraints

INFORMATION ON DIRECTORS

Greg Columbus
NON-EXECUTIVE CHAIRMAN – APPOINTED 22 OCTOBER 2018

Mr Columbus has 15 years’ experience as Managing Director and main board Director for Clarke Energy Limited, being a privately-owned
multinational company in the sale, engineering, installation and maintenance of power plants that utilise gas compressors and gas engines. Clarke
Energy is a wholly owned company of the Kohler Group and operates on over 28 countries today.

Greg joined Clarke Energy after previously holding executive General Manager role for AMEC Plc in Australia & New Zealand for 12 years where he
was principally involved in bringing UK expertise and technology from Aberdeen, to significantly impact Floating Platform Storage and Offloading
Vessels [FPSO] industry along with significant work for Woodside in Western Australia. Having a unique combination of graduate diploma of Electrical
and Mechanical engineering, Greg then completed his MBA with University of South Australia conferred in 2003.

Greg has over 30 years business experience in delivering large complex Oil & Gas projects and has along the course of his career also carved out
strong strategic vision and been involved in numerous M&A activities.

Special responsibilities: Non-executive Chairman, Chairman of the Remuneration and Nomination Committee and Member of the Audit Committee.

Dennis Donald
MANAGING DIRECTOR, CHIEF EXECUTIVE OFFICER – APPOINTED 22 MARCH 2019

Mr Donald left the armed forces in the early 70s to pursue a career in the North Sea oil and gas industry with Shell.

Beginning his career on the drill floor he was latterly instrumental in the introduction of new technology into the Brent Fields, including the first
platform Coiled Tubing Drilling project. He left Shell in 1998 having anticipated a growing need in the oil sector for advanced drilling engineering
capability.

He set up a specialist drilling consultancy, Leading Edge Advantage in 1998 with Duncan MacNiven as legal counsel growing it into a global brand
within 10 years.

Duncan MacNiven
EXECUTIVE DIRECTOR - APPROVALS, HS&E – APPOINTED 22 MARCH 2019

Aberdeen University graduate Mr MacNiven began his career as a corporate/oil & gas lawyer with Aberdeen firm Peterkins. Between 1990 and 2000,
Duncan worked as outsourced oil and gas counsel for Pentex Energy plc and Sibir Energy plc. He ‘retired’ from the legal world to pursue interests in
the oil sector.

In addition to Leading Edge Advantage, which they sold in 2008 Duncan’s business partnership with Dennis has overseen the successful sales of Alba
Resources (holding an interest in the UKCS Mariner Field) to Nautical Petroleum plc. They also sold a design and manufacturing company established
in 1999 to bring downhole polymer products to the oil field.

Owain Franks
EXECUTIVE DIRECTOR - FINANCE, STRATEGY & DELIVERY – APPOINTED 22 MARCH 2019

Mr Franks has been a director of Warrego since 2011. He was acting CFO from June 2018 until the RTO. Mr Franks was until recently also
Commercial Director of Independent Resources Group plc (now Echo Energy plc).

Mr Franks was previously a senior partner in PwC in the UK for 21 years. He specialised initially in tax, then built its Human Resource Consulting
Practice into a world leading business.

The Group’s operations are subject to the environmental risks inherent in the oil and gas industry. The Group’s exploration and development
programmes are, in general, subject to approval by government authorities before it can undertake activities which are likely to impact the
environment. Failure to obtain such approvals will prevent the Group from undertaking the desired activities.

Outside the business world Mr Franks was the Deputy Chairman of the Royal Yachting Association (the RYA) from 2011 to 2015 when his term
finished. The RYA is the governing body of British Sailing. Mr Franks served a three-year term as a Flag Officer of the Royal Thames Yacht Club (Rear
Commodore House and Finance). RTYC is the world’s oldest continuously existing yacht club.

Exploration and development of any of the Group’s properties is also dependent on meeting planning and environmental laws and guidelines.

The Group is unable to predict the effect of additional environmental laws and regulations which may be adopted in the future, including whether
any such laws or regulations would materially increase the Group’s cost of doing business or affect its operations in any area. However, there can
be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Group to incur
significant expenses and undertake significant investments in such respect which could have a material adverse effect on the Group’s business,
financial condition and results of production operations.

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Warrego Energy Annual Report 2019DIRECTORS’ REPORT

DIRECTORS’ REPORT

Mark Routh
NON-EXECUTIVE DIRECTOR – APPOINTED 22 MARCH 2019

Mr Routh served as the Chief Executive Officer of AIM listed Independent Oil and Gas Plc from August 2011 until February 2018 and served as its
Chairman from February 2018 until December 2018.

Mark was the Founder and Managing Director of CH4 Energy Ltd from 2002 until 2006, when it was acquired by Venture Production plc. He served
10 years with Hess in the UK, 6 years with BP in the UK and 5 years with Schlumberger in South East Asia and the UK. His last role at Amerada Hess
was SNS / Gas Area Business Manager, responsible for the exploration, appraisal, development and production of all assets in the Southern North Sea
and gas assets in the Central North Sea.

Mark was Chairman of the Board of Warrego Energy Ltd UK from October 2010 and moved to be a Non-executive Director upon the RTO with Petrel
Energy. He has over 35 years of experience in the Oil & Gas Industry, covering commercial/asset management and area management. He has a MSc
in Petroleum Engineering from Imperial College.

Special responsibilities: Member of the Audit Committee and the Remuneration and Nomination Committee.

David Biggs
NON-EXECUTIVE DIRECTOR – APPOINTED 22 MARCH 2019

Mr Biggs has over 35 years of experience in the upstream oil and gas sector. He has worked extensively throughout Australia, New Zealand,
Indonesia and the Americas with both large multi-national and smaller organisations.

Until recently Mr Biggs was CEO and Managing Director of AWE Limited (ASX: AWE). AWE accepted a A$602 million takeover bid from Japanese
firm Mitsui in February 2018 after rejecting two other bids in the preceding months. The principal asset being purchased by Mitsui was the Waitsia
field 16km west of Petrel/Warrego’s West Erregulla-2 well. The Waitsia-4 well which recorded a maximum flow rate of 90 MMscf/d, the highest ever
recorded onshore Australia. Prior to AWE, Mr Biggs spent 3 years as CEO of Cue Energy Limited, and before that, almost 20 years with BHP Billiton
Petroleum, rising to the positions of Vice President, Commercial and Vice President, Land and Upstream Agreements, based in Houston. Part of these
responsibilities included membership of the exploration leadership team. Prior to BHP Billiton Petroleum, he worked with the Natural Gas Corporation
and the Petroleum Corporation of New Zealand. Mr Biggs brings extensive experience in leadership, strategy and planning, business improvement,
and commercial transactions, particularly M&A and gas marketing. He holds a tertiary qualification in law from Victoria University in Wellington.

Special responsibilities: Chairman of the Audit Committee and Member of the Remuneration and Nomination Committee.

Alexander Sundich
NON-EXECUTIVE CHAIRMAN – RESIGNED 22 MARCH 2019

Alex has over 25 years’ experience in the financial services industry and is a Fellow of the Financial Services Institute of Australasia, a Member of the
Institute of Chartered Accountants in Australia and New Zealand and a Member of the Australian Institute of Company Directors. Since 2008, Alex
has been an independent corporate advisor and company director. He is the Executive Director of Bridge Street Capital Partners, a corporate advisory
and principal investment firm.

INTEREST IN SHARES AND OPTIONS OF THE COMPANY AND RELATED BODIES CORPORATE

As at 30 June 2019, the interest of directors in the shares and options of the Company were:

DIRECTORS

Greg Columbus

Dennis Donald

Duncan MacNiven

Owain Franks

Mark Routh

David Biggs

Alexander Sundich^

David Casey^

Russell Porter^

Andrew Williams^

NUMBER OF ORDINARY SHARES

SPA CONSIDERATION SHARES
NOT ISSUED AT 30 JUNE 2019

23,558,856*

29,973,899

121,867,879

18,510,558

14,114,064

445,335

3,193,696

7,751,549

685,363

778,881

^Interests as at date of resignation adjusted for 20:1 consolidation of share capital in March 2019.
*Dennis Donald and Duncan MacNiven are each entitled to receive 145,176,736 consideration shares each under the Share Purchase Agreement (SPA) approved
at the EGM on 15 March 2019. At 30 June 2019 they had received 121,867,879 shares each. Since 30 June 2019 they have received 19,750,000 shares each. The
outstanding 3,808,857 shares each will be issued in tranches to ensure that voting power does not exceed 20% of shares on issue at any one time.

INFORMATION ON COMPANY SECRETARY

Ian Kirkham

Ian has over 20 years’ experience in project evaluation and construction, equity and debt markets, statutory reporting, treasury, taxation and
corporate governance. Prior to becoming CFO at Warrego Energy Limited, he was Chief Financial Officer and Company Secretary for Eastern Star
Gas Limited, the subject of a A$924 million takeover by Santos Limited. Previous executive experience includes similar posts for ASX listed companies
including Hillgrove Resources Limited, Allstate Explorations N.L. and Otter Gold Mines Limited. In all these roles he worked closely with CEOs, Boards,
Audit and Risk Committees etc. to evaluate, finance and construct resource projects. Ian’s early career involved audit positions with Coopers &
Lybrand in Sydney and Toronto. He holds a Bachelor’s Degree in Economics and is a member of the Institute of Chartered Accountants Australia and
New Zealand and AUSIMM.

Special responsibilities prior to resignation: Non-executive Chairman, Chairman of the Audit Committee and Member of the Remuneration and
Nomination Committee.

MEETINGS OF DIRECTORS

David Casey
MANAGING DIRECTOR – RESIGNED 22 MARCH 2019

David Casey graduated with an Honours degree in Geology from the University of Sydney in 1991 and in the same year joined specialist coal seam
gas (coalbed methane) company Insitu (Australia) Pty Ltd. In 1996, he formed his own unconventional energy consultancy business. David has over
20 years' experience in the management and evaluation of all aspects of unconventional oil & gas exploration and appraisal, from initial reservoir
characterisation and fairway identification through to drilling, testing and production operations. David’s most recent executive role was Managing
Director of Petrel Energy Limited.

Russell Porter
NON-EXECUTIVE DIRECTOR – RESIGNED 29 NOVEMBER 2018

Russell recently retired after serving 14 years as President and Chief Executive Officer of Gastar Exploration Inc. a publicly listed oil and gas
exploration and production company. He is currently a private investor and industry consultant.

Special responsibilities prior to resignation: Chairman of the Remuneration and Nomination Committee and Member of the Audit Committee.

Andrew Williams
NON-EXECUTIVE DIRECTOR – RESIGNED 29 NOVEMBER 2018

Andrew holds a Masters’ Degree in Applied Geology and Grad Dip (Finance) from RMIT University, and over a 30-year career has developed a strong
technical and commercial background in the oil industry. Early in his career Andrew gained significant hands-on oil industry experience as a geologist
with Mobil Minerals, Woodside and Schlumberger working on projects across a range of Australian onshore (dominantly Cooper, Otway and
Canning basins) and offshore (Carnarvon and Gippsland basins) projects.

warregoenergy.com

The following table sets out the number of meetings held by the directors of the Company during the financial year ended 30 June 2019 and the
number of meetings attended by each director:

PERIOD 1 JULY 2018 TO 15 MARCH 2019

DIRECTORS

Greg Columbus

Alexander Sundich*

David Casey*

Russell Porter^

Andrew Williams^

* Director – resigned 22 March 2019
^ Director – resigned 29 November 2018

NO. OF MEETINGS ATTENDED

NO. OF MEETINGS HELD WHILE IN OFFICE

Warrego Energy Annual Report 2019DIRECTORS’ REPORT

DIRECTORS’ REPORT

PERIOD 15 MARCH TO 30 JUNE 2019

Alignment with shareholders' interests:

DIRECTORS

Greg Columbus

Dennis Donald

Duncan MacNiven

Owain Franks

Mark Routh

David Biggs

NO. OF MEETINGS ATTENDED

NO. OF MEETINGS HELD WHILE IN OFFICE

• focuses on sustained growth in shareholder wealth, consisting of growth in share price, and delivering increasing return on assets as well as

focusing the executive on key non-financial drivers of value such as oil and gas production, reserves, health, safety and environment

• attracts and retains high calibre executives

Alignment of program to participants' interests:

• rewards capability and experience

• reflects competitive reward for contribution to growth in shareholder wealth

• provides a clear structure for earning rewards

In accordance with best practice corporate governance, the structure of non-executive directors’ and executives’ remuneration are separate.

During the financial year ended 30 June 2019 the Audit Committee under the Chairmanship of Alexander Sundich met twice prior to his resignation.

During the year, the Group has not engaged any remuneration consultants to review its remuneration policies.

DIRECTORS

Alexander Sundich

Russell Porter

NO. OF MEETINGS ATTENDED

NO. OF MEETINGS HELD WHILE IN OFFICE

During the financial year ended 30 June 2019 the Remuneration and Nomination Committee under the Chairmanship of Russell Porter met once
prior to his resignation and met 3 times under the Chairmanship of Greg Columbus.

NON-EXECUTIVE DIRECTORS

The Board’s policy is to remunerate non-executive directors at market rates for comparable companies for time, commitment and responsibilities as
well as capability and experience. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on
market practices.

Effective from 15 March 2019 the base fee (inclusive of the 9.5% superannuation guarantee contributions) of each non-executive for all Board
activities was increased from A$56,500 per annum to a rate of A$55,000 (Chairman: A$75,000) per annum plus an additional A$15,000 per annum
is paid for chairing a board committee and A$10,000 per annum is paid for being member of a board committee. The superannuation guarantee
contributions where applicable are paid to each non-executive director’s personal retirement plan.

NO. OF MEETINGS ATTENDED

NO. OF MEETINGS HELD WHILE IN OFFICE

EXECUTIVES

The Group aims to reward executives with a level and mix of both fixed and variable remuneration based on their position and responsibility. The
executive remuneration and reward framework has four components:

• base pay

• short-term performance incentives

• share-based payments

• other remuneration such as superannuation and long service leave

The combination of these comprises the executive's total remuneration.

Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the Nomination and
Remuneration Committee, based on individual and overall performance of the Group and comparable market remunerations.

The short-term incentives ('STI') program is designed to align the targets of the Group with those of the executives accountable for meeting those
targets. STI payments are granted to executives based on performance indicators including share price growth, reserve growth, production growth
and net profit targets.

Before the STIs can be paid out, the 21day VWAP of the Company’s shares must exceed specified targets set annually by the Nomination and
Remuneration Committee.

Consolidated entity performance and link to remuneration

During the year no remuneration was performance based. The Additional Information at the end of this remuneration report gives details of share
price and net profit over the last 5 years.

DIRECTORS

Greg Columbus

Mark Routh

David Biggs

Russell Porter

Andrew Williams

REMUNERATION REPORT (AUDITED)

The Remuneration Report, which has been audited, outlines the directors’ and executives’ remuneration arrangements for the Group and the
Company in accordance with the requirements of the Corporations Act 2001 and its Regulations.

The Remuneration Report is set out under the following headings:

a) Key Management Personnel

b) Remuneration Policy and Practices

c) Details of Remuneration

(a) Key Management Personnel

The key management personnel of the Group consisted of the directors of Warrego Energy Limited and the following executives:

David Casey - CEO - Australia & Asia-Pacific
Ian Kirkham - Company Secretary and Chief Financial Officer.

(b) Remuneration Policy and Practices

The objective of the Group's executive reward framework is to ensure reward for performance is competitive and appropriate for the results
delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders. The Board
of Directors ('the Board') ensures that executive reward satisfies the following key criteria for good reward governance practices:

• competitiveness and reasonableness

• acceptability and alignment with shareholders

• performance linkage / alignment of executive compensation

• transparency

The Nomination and Remuneration Committee is responsible for determining and reviewing remuneration arrangements for the directors and
executives. The performance of the Group depends on the quality of its directors and executives. The remuneration philosophy is to attract, motivate
and retain high performance and high-quality personnel.

The Nomination and Remuneration Committee, taking advice where necessary, has structured an executive remuneration framework that is market
competitive and complementary to the reward strategy of the Group.

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Warrego Energy Annual Report 2019DIRECTORS’ REPORT

DIRECTORS’ REPORT

Details of remuneration

As a result of the reverse acquisition, the remuneration report includes the Directors of Warrego Energy Limited and Petrel Energy Limited for current
year and Petrel Energy Limited for prior year for comparative.

1 JULY 2018 TO
30 JUNE 2019

Non-executive
directors

A. Sundich

G. Columbus

M. Routh

D. Biggs

R. Porter

A. Williams

Executive directors

D. Donald

D. MacNiven

O. Franks

D. Casey*

Other key
management

D Casey i

I. Kirkham ii

Total

SHORT TERM
SALARY,
FEES & LEAVE
A$

CONSULTANCY
PAYMENTS
A$

TERMINATION
BENEFITS
A$

SHARE BASED
PAYMENTS –
EQUITY SETTLED
A$

POST
EMPLOYMENT-
SUPERANNUATION
A$

OTHER
LONG TERM
BENEFITS
A$

TOTAL
A$

30,816

41,570

21,241

26,667

14,905

15,049

150,248

284,018

247,214

334,242

1,112,688

110,212

1,373,148

247,463

2,928

1,430

4,358

33,744

41,570

21,241

26,667

14,905

16,479

154,606

284,018

247,214

15,990

23,132

373,364

23,132 1,151,810

6,710

27,058

116,922

247,463

364,385

23,132 1,670,801

(i) Mr David Casey served as Managing Director and Chief Executive Officer up to the date of reverse acquisition. Other long terms benefits relate to contract

termination benefits. Thereafter, he was appointed as CEO - Australia & Asia-Pacific.

(ii) Mr Ian Kirkham continued in his position as Company Secretary and Chief Financial Officer after the reverse acquisition.

SHORT TERM
SALARY,
FEES & LEAVE
A$

CONSULTANCY
PAYMENTS
A$

TERMINATION
BENEFITS
A$

SHARE BASED
PAYMENTS –
EQUITY SETTLED
A$

POST
EMPLOYMENT-
SUPERANNUATION
A$

OTHER
LONG TERM
BENEFITS
A$

TOTAL
A$

1 JULY 2018 TO
30 JUNE 2019

Non-executive
directors
A. Sundich (ii) (iii)

R. Porter (i) (ii) (iii)

A. Williams (ii) (iii)

Total

Executive directors

D. Casey (ii) (iii)

Other key
management

I. Kirkham

8,600

9,174

8,600

26,374

145,892

52,512

47,083

45,163

47,083

139,329

347,781

155,567

642,677

817

1,634

6,250

56,500

54,337

56,500

167,337

19,223

519,146

19,223

519,146

208,079

7,884

19,223

894,562

Total

172,266

(i) No superannuation required for US citizens.
(ii) The Directors were paid A$155,375 in shares issued at A$0.011 each for the period July 2017 to September 2017 remuneration in accordance with shareholder

approval at the 23 November 2017 Annual General Meeting.

(iii) Included in remuneration is long service leave provision and the pay out of a portion of annual leave balance during the period.

Non-executive directors

G. Columbus

M. Routh

D. Biggs

A. Sundich

R. Porter

A. Williams

Executive directors

D. Donald

D. MacNiven

O. Franks

D. Casey

Other key management

I. Kirkham

FIXED REMUNERATION

AT RISK - STI

AT RISK - LTI

2019

2018

2019

2018

2019

2018

100%

There were no options granted over unissued shares during the financial year by the Group to key management personnel and eligible persons
as part of their remuneration. Since the end of the financial year no options have been granted to employees and eligible persons as part of their
remuneration.

No cash bonus payments determined on growth of share price, reserves, production and net profit have been paid for 2018 or 2019.

warregoenergy.com

Warrego Energy Annual Report 2019
DIRECTORS’ REPORT

DIRECTORS’ REPORT

Service Agreements

Additional information

Remuneration and other terms of employment for current key management personnel are formalised in service agreements.

The factors that affect cash bonus payments, for the last five years are summarised below:

There were no employment agreements for key management personnel other than the following:

Dennis Donald, Chief Executive Officer and Managing Director - TFR: A$490,000
Duncan MacNiven, Executive Director - Approvals, HS&E - TFR: A$400,000
Owain Franks, Executive Director - Finance, Strategy & Delivery - TFR: A$400,000
David Casey, Chief Executive Officer - Australia & Asia-Pacific - TFR: A$345,000

Common key management employment terms:

• Contracts commence 15 March 2019

• Salary Review: at earlier of material change in Company activities or 30th June 2020.

• Short Term Incentives (STI)

» STI – over the relevant 12 month period “at risk” STI up to a maximum of 50% of the Base Salary for the relevant fiscal year, with

• 20% payable in cash or shares if the 21day VWAP for listed shares exceeds A$0.25 per share and
• 30% payable in cash or shares if the 21day VWAP for listed shares exceeds A$.40 per share.

• Long Term Incentives (LTI)

• LTI – “At risk” LTI’s will be aligned with the Company’s overarching strategy

• Termination notice given by either party - Executive Directors 6 months and others 3 months.

Share-based compensation

There was no share-based compensation for the year (2018: A$331,735)

Share holdings

The number of shares in the Company held during the 2019 financial year by each director and other key management personnel of Warrego Energy
Limited, including their personally related parties, is set out below.

NAME

G. Columbus

D. Donald (i)

D. MacNiven (i)

O. Franks

M. Routh

D. Biggs

D. Casey

R. Porter

A. Sundich

A. Williams

I. Kirkham

BALANCE AT START
OF THE YEAR/OR
ON APPOINTMENT

PURCHASED
DURING
THE YEAR

SOLD
DURING
THE YEAR

RTO
CONSIDERATION
SECURITIES

SHARES
IN LIEU OF
FEES/SALARY

BALANCE AT THE END
OF THE YEAR/OR ON
VACATING OFFICE

10,821,424

19,152,474

3,527,190

216,970

445,335

2,725,303

1,461,905

310,488

1,437,396

510,107

121,867,879

18,510,558

14,114,064

4,224,359

468,393

1,758,929

29,973,898

121,867,879

18,510,558

14,114,064

445,335

7,751,549

685,363

4,655,601

778,881

3,706,432

Reserve growth

2019
A$

2018^
A$

2017^
A$

2016^
A$

2015^
A$

Profit (loss) after income tax attributable to parent

(7,532,858)

(19,815,033)

(2,056,516)

(1,818,718)

(5,775,939)

June volume-weighted average share price

Total shareholder return

9.4c

57%

6.0c

56c

30c

106c

(92.7)%

(153.8)%

(62.8)%

(74.2)%

^ periods relate to former Petrel Energy Limited as adjusted for 20:1 share consolidation.

This concludes the remuneration report, which has been audited.

There have been no options granted over unissued shares or interests of any controlled entity within the Group during or since the end of the
reporting period.

INDEMNIFICATION OF OFFICERS AND AUDITORS

The Group has entered into a Deed of Access, Indemnity and Insurance with each of the directors of the Group. Subject to the Corporations Act
2001, the deed provides an indemnity in respect of liability that each of the directors may incur in relation to the conduct of the business or affairs of
the Group, acts or omission of the directors in relation to the business or affairs of the Group or the performance, manner of performance or failure
to perform the director’s responsibilities in relation to the business or affairs of the Group, in each case in the period during which each director
(respectively) holds office.

The Group has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Group or any related entity
against a liability incurred by the auditor.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Group, or to
intervene in any proceedings to which the Group is a party for the purposes of taking responsibility on behalf of the Group for all or part of those
proceedings.

AUDITORS

BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001.

NON-AUDIT SERVICES

The Group may decide to employ the auditors on assignments additional to their statutory audit duties where the auditor’s expertise and experience
with the Group are important. There were no non audit services provided by BDO during the year.

Details of amounts paid or payable to the auditors, BDO East Coast Partnership, for the audit services provided during the year are set out below.

CONSOLIDATED

2019 A$

2018 A$

118,000 (ii)

54,000 (i)

19,038,771

21,569,821

276,360,380

7,388,467

324,357,439

BDO ECP – Audit and review of financial reports

(i) Dennis Donald and Duncan MacNiven are each entitled to receive 145,176,736 consideration shares each under the Share Purchase Agreement (SPA) approved at
the EGM on 15 March 2019. At 30 June 2019 they had received 121,867,879 shares each. Since 30 June 2019 they have received 19,750,000 shares each. The
outstanding 3,808,857 shares each will be issued in tranches to ensure that voting power does not exceed 20% of shares on issue at any one time.

Total

(i) The amount associated with former Petrel Energy Limited.
(ii) Includes the amount associated with former Petrel Energy Limited.

Audit services

warregoenergy.com

Warrego Energy Annual Report 2019DIRECTORS’ REPORT

Auditors’ Independence Declaration

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration required under section 307C of the Corporations Act 2001 is set out on the following page.

This report is made in accordance with a resolution of the directors, pursuant to section 298(2) of the Corporations Act 2001.

Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au

Level 11, 1 Margaret St
Sydney NSW 2000
Australia

On behalf of the directors

Dennis Donald
Managing Director and CEO
30 September 2019

DECLARATION OF INDEPENDENCE BY GARETH FEW TO THE DIRECTORS OF WARREGO ENERGY
LIMITED

As lead auditor of Warrego Energy Limited for the year ended 30 June 2019, I declare that, to the best
of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in

relation to the audit; and

2. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Warrego Energy Limited and the entities it controlled during the
period.

Gareth Few
Partner

BDO East Coast Partnership

Sydney, 30 September 2019

warregoenergy.com

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation.

Warrego Energy Annual Report 2019

Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 June 2019

Consolidated Statement of Financial Position
As at 30 June 2019

NOTE

2019 A$

2018 A$

NOTE

2019 A$

2018 A$

Interest income

Foreign exchange losses

Total loss

Directors’ fees

Employee benefit expenses

Professional and consulting fees

Auditor’s remuneration

Depreciation and amortisation

Lease of office (net)

Share registry fees

General insurance expenses

Corporate services

Donations

Travel expenses

Finance expenses

Impairment of investment in associate

Impairment of receivable in associate

Other operating expenses

Total expenses

Loss before income tax

Income tax expense

Loss after tax attributable to members of Warrego Energy Limited

Other comprehensive (loss)/income - Items that may be reclassified subsequently to profit or loss

Foreign currency translation

Other comprehensive (loss)/income for the year, net of tax

Total comprehensive loss for the year, net of tax

Loss for the year attributable to:

Non-controlling interests

Owners of Warrego Energy Limited

Total comprehensive loss for the year attributable to:

Non-controlling interests

Owners of Warrego Energy Limited

5,946

(144,863)

(138,917)

(67,180)

133

(21,259)

(21,126)

(1,169,077)

(108,890)

(450,106)

(27,080)

(98,500)

(5,899)

(92,020)

(38,533)

(39,163)

(48,729)

(5,000)

(168)

(62,612)

(4,186)

455

(463,840)

(12,017)

(1,186,557)

(3,330,634)

(126,850)

(276,853)

(16,944)

(7,393,941)

(236,442)

(7,532,858)

(257,568)

(7,532,858)

(257,568)

61,638

(39,533)

(7,471,220)

(297,101)

(7,532,858)

(257,568)

(7,532,858)

(257,568)

(7,471,220)

(297,101)

(7,471,220)

(297,101)

ASSETS

Current assets

Cash and cash equivalents

Other current assets

Restricted cash

Total current assets

Non-current assets

Exploration and evaluation expenditure

Plant and equipment

Goodwill

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Trade and other payables

Employee benefits

Convertible notes payable

Total current liabilities

Non-current liabilities

Employee benefits

Payable to associate

Total non-current liabilities

Total liabilities

NET ASSETS

EQUITY

Contributed equity

Reverse acquisition reserve

Foreign currency translation reserve

Accumulated losses

Equity attributable to owners of the Parent

Non-controlling interests

Total equity

22(a)

9,15

7,342,791

294,921

265,517

118,987

3,115

7,727,295

298,036

1,768,865

117,131

19,601

7,045,872

8,834,338

16,561,633

193

117,324

415,360

1,605,821

131,525

95,044

1,115,396

2,816,261

131,525

23,205

75,424

98,629

2,914,890

13,646,743

131,525

283,835

19 (a)

79,073,008

4,973,291

(53,288,653)

22,105

(39,533)

(12,182,781)

(4,649,923)

13,623,679

283,835

23,064

13,646,743

283,835

Loss per share from continuing operations attributable to the ordinary equity holders of the Company:

Basic loss per share (cents per share)

Diluted loss per share (cents per share)

26 (a)

26 (b)

0.61

0.07

The above Consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

The above Consolidated statement of financial position should be read in conjunction with the accompanying notes.

warregoenergy.com

Warrego Energy Annual Report 2019Consolidated Statement of Changes in Equity
For the year ended 30 June 2019

Consolidated Statement of Cash Flow
For the year ended 30 June 2019

ACCUMULATED
LOSSES A$

TOTAL
A$

(4,392,355)

508,785

(257,568)

(39,533)

(257,568)

(297,101)

72,151

(4,649,923)

283,835

(7,532,858)

61,638

NON-
CONTROLLING
INTERESTS
A$

TOTAL
EQUITY
A$

508,785

(257,568)

(39,533)

(297,101)

72,151

283,835

- (7,532,858)

61,638

(7,532,858)

(7,471,220)

9,957,351

FOREIGN
CURRENCY
TRANSLATION
RESERVE
A$

REVERSE
ACQUISITION
RESERVE
A$

ISSUED
CAPITAL
A$

Balance at 30 June 2017

4,901,140

Net profit for the year

Foreign currency movements

Total comprehensive loss for
the year

Transactions with owners in
their capacity as owners

Issue of share capital

Total transactions with
owners in their capacity as
owners

72,151

(39,533)

Balance at 30 June 2018

4,973,291

(39,533)

61,638

Net loss for the year

Foreign currency movements

Total comprehensive loss for
the year

Transactions with owners in
their capacity as owners

Transfer to acquisition reserve
on reverse acquisition

Recognition of legal parents
issued equity from reverse
acquisition

Fair value of consideration issued
on reverse acquisition

Issue of share capital

Transaction costs arising on
share issue

Total transactions with
owners in their capacity as
owners

(4,973,291)

58,239,038

9,980,257

11,271,701

(417,988)

74,099,717

Additional contribution of equity
by NCI

4,973,291

(48,281,687)

(9,980,257)

(53,288,653)

Cash flows from operating activities

Payments to suppliers and employees (inclusive of goods and services tax)

Interest received

NOTE

2019 A$

2018 A$

(3,275,675)

(160,898)

5,030

133

Net cash outflow from operating activities

(3,270,645)

(160,765)

Cash flows from investing activities

Payments for plant and equipment

Payments for exploration and evaluation expenditure

Proceeds from release of security deposits

Proceeds from recoup of exploration and evaluation expenditure from farmout

Payments for exploration and evaluation expenditure

Net cash outflow from investing activities

Cash Flows from financing activities

Proceeds from issue of shares (net of costs)

Proceeds from convertible notes

Proceeds from borrowings

Net cash inflow from financing activities

Net decrease in cash and cash equivalents

(19,282)

(522,189)

46,912

250,000

350,000

(8,700)

(244,559)

341,300

5,404,159

5,177,360

23,822

10,605,341

7,090,137

180,535

294,921

112,001

91,871

(134,138)

2,385

Cash and cash equivalents at beginning of the year

11,271,701

- 11,271,701

Cash and cash equivalents from reverse acquisition

(417,988)

Net foreign exchange difference

20,811,064

- 20,811,064

23,064

Cash and cash equivalents at end of the year

7,342,791

294,921

The above Consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Balance at 30 June 2019

79,073,008

22,105 (53,288,653)

(12,182,781)

13,623,679

23,064 13,646,743

The above Consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

warregoenergy.com

Warrego Energy Annual Report 2019
Notes to the Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The financial report covers Warrego Energy Limited as a Group consisting of Warrego Energy Limited and the entities it controlled. Warrego Energy
Limited is a listed public company limited by shares, incorporated and domiciled in Australia.

The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been consistently applied to
all years presented, unless otherwise stated.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board (‘AASB’) and the Corporations Act 2001, as appropriate for-profit oriented entities. These financial
statements also comply with the International Financial Reporting Standards (‘IFRS’) as issued by the International Accounting Standards Board
(‘IASB’). When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year. These financial statements have been prepared on an accruals basis.

The financial statements are presented in Australian dollars, which is Warrego Energy Limited’s functional and presentation currency.

On 15 March 2019 Warrego Energy Limited (previously named as Petrel Energy Limited) became the legal parent of Warrego Energy UK Ltd (WEUK)
(previously Warrego Energy Ltd) on completion of the reverse takeover. The comparative of financial statements to 30 June 2018 represents the
financial statements of the predecessor WEUK group prior to the reverse acquisition.

The accounting adopted by the Group applies the principles of AASB3 Business Combinations in identifying the accounting acquirer (legal subsidiary)
and the presentation of financial statements of the accounting acquiree (legal parent) as a continuation of accounting acquirer’s financial statements
which reflects the transaction as follows:

• The original shareholders of the legal subsidiary represent 76.92% of the legal parent capital issued post reverse acquisition.

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between (i) the
aggregate of the fair value of the consideration received and the fair value of any retained interest and (ii) the previous carrying amount of the assets
(including goodwill), and liabilities of the subsidiary and any non-controlling interests. All amounts previously recognised in other comprehensive
income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e.
reclassified to profit or loss or transferred to another category of equity as specified/permitted by applicable Accounting Standards). The fair value
of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent
accounting under AASB 9: Financial Instruments, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the
carrying amounts of goodwill.

Foreign currency transactions during the year are translated into Australian dollars at the rates of exchange applicable at the dates of the
transactions. Amounts receivable and payable in foreign currencies at reporting date are converted at the rates of exchange current at that date. The
gains and losses from translation of assets and liabilities, whether realised or unrealised, are included in profit or loss from ordinary activities as they
arise.

FOREIGN SUBSIDIARIES

The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and
expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximates the rate at the date of the
transaction, for the period. All resulting foreign exchange differences are recognised in the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

• The assets and liabilities of the accounting subsidiary are recognised and measured in the Group financial statements immediately prior to the

(d) New, revised or amended Accounting Standards and interpretations adopted

acquisition date at fair value.

• The retained earnings and other equity balances recognised in the Group financial statements reflect the retained earnings and other equity

balances in the legal subsidiary immediately prior to reverse acquisition and the profit or loss for the year immediately after reverse acquisition. In
reverse, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent.

HISTORICAL COST CONVENTION

These financial statements have been prepared under the historical cost convention.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment
in the process of applying the Group’s accounting policies. The areas involving a high degree of judgment or complexity, or areas where assumptions
and estimates are significant to the financial statements are disclosed in note 3.

PARENT ENTITY INFORMATION

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about
the Parent Entity is disclosed in note 27.

(b) Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Warrego Energy Limited ('Company' or 'Parent Entity')
as at 30 June 2019 and the results of all subsidiaries for the year then ended. Warrego Energy Limited and its subsidiaries together are referred to in
these financial statements as the 'Group'.

Subsidiaries are all those entities over which the Group has control. Warrego Energy Limited is the principal to its subsidiaries. The Group controls an
entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also
eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method if the acquisition is deemed to be a business combination. A change in
ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred
and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

The acquisition of subsidiaries that are deemed not to be carrying on a business, and do not meet the conditions of AASB 3 Business Combinations,
are recognised at cost and are treated as asset acquisitions depending on the nature of the assets acquired from the subsidiaries.

Non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and the statement of financial
position of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

The consolidated entity has adopted all of the new, revised or amending Accounting Standards and Interpretations issued by the Australian
Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period.

AASB 15 REVENUE FROM CONTRACTS WITH CUSTOMERS

The consolidated entity has adopted AASB 15 Revenue from Contracts with Customers from 1 July 2018, which replaced AASB 118 Revenue.

AASB 15 establishes a principles-based approach for revenue recognition whereby revenue is recognised when performance obligations are satisfied.
The standard applies a five-step approach to the timing of revenue recognition and is applicable to all contracts with customers, except those in the
scope of other standards. As a result, the consolidated entity has changed its accounting policy for revenue recognition.

The adoption of AASB 15 has not had a material impact on the consolidated entity’s financial statements.

AASB 9 FINANCIAL INSTRUMENTS

The consolidated entity has adopted AASB 9 Financial Instruments from 1 July 2018 which replaces AASB 139 Financial Instruments: Recognition and
Measurement.

As a result, the consolidated entity has changed its accounting policy for the recognition and measurement of receivables (see note 8). The adoption
of AASB 9 has not had a material impact on the consolidated entity’s financial statements.

(e) New Accounting Standards and Interpretations not yet mandatory or early adopted

Any new, revised or amending Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

AASB 16 LEASES

The consolidated entity will adopt AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications
of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease
liabilities are recognised in the statement of financial position. Straight- line operating lease expense recognition is replaced with a depreciation
charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In
the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB
117.

For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease
payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts
for leases. Management has completed an assessment by reviewing all leases. Based on the work performed to date the findings indicate that the
application of AASB 16 will not have a material impact on the consolidated entity’s financial statements.

warregoenergy.com

Warrego Energy Annual Report 20192. FINANCIAL RISK MANAGEMENT

2. FINANCIAL RISK MANAGEMENT (CONTINUED)

The Group’s financial instruments consist of cash balances, restricted cash, trade and other receivables, trade and other payables and convertible
notes payable.

The Group does not presently have any bills, preference shares or derivatives.

Foreign exchange risk

The Group’s cash / restricted cash holdings are exposed to changes in foreign exchange rates at reporting date.

2019

2018

USD

AUD EQUIVALENT

EUR

AUD EQUIVALENT

954,345

18,380

1,772,768

32,623

80,575

128,219

Credit risk and liquidity risk

The Group has no significant concentrations of credit risk.

Liquidity risk is the risk the Group will experience difficulty in meeting current financial demands. The Group manages liquidity risk through ensuring
it will maintain sufficient cash holdings to meet its liabilities as and when they fall due from day to day operations along with monitoring of cash flow
forecasts by management in order to anticipate future cash requirements.

LIQUIDITY RISK TABLE

2019

Financial liabilities

Payables

2018

Financial liabilities

Payables

NON-INTEREST
BEARING
A$

1 YEAR
OR LESS
A$

1 TO 5
YEARS
A$

MORE THAN
5 YEARS
A$

FLOATING
INTEREST RATE
A$

TOTAL
A$

WEIGHTED
AVERAGE
INTEREST RATE

1,605,821

131,525

1,605,821

131,525

Cash flow and fair value interest rate risk

The Group’s cash and restricted cash are exposed to deposit interest rate risk. This risk is managed by the use of fixed term deposits over periods
ranging from 30 to 180 days.

Interest rate risk

The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in the market
interest rates and the effective weighted average interest rates on those financial assets, is as follows:

2019

Financial assets

Cash and cash equivalents

Other current assets

Restricted cash

Total financial assets

Financial liabilities

Trade and other payables

Convertible notes payable

Total financial liabilities

2018

Financial assets

Cash and cash equivalents

Other current assets

Total financial assets

Financial liabilities

Trade and other payables

Total financial liabilities

WEIGHTED
AVERAGE
INTEREST RATE

FIXED INTEREST RATE
MATURITY LESS
THAN 1 YEAR
A$

NON-INTEREST
BEARING
A$

TOTAL
A$

0.15%

0.32%

25%

7,342,791

118,987

7,461,778

7,342,791

165,175

118,987

165,175

7,626,953

1,605,821

1,115,396

1,605,821

1,115,396

2,721,217

294,921

3,115

131,525

294,921

3,115

298,036

131,525

Financial instruments

(I) DERIVATIVE FINANCIAL INSTRUMENTS

As at the date of this report, the Group does not have any derivative financial instruments.

(II) TRADE AND OTHER PAYABLES

Trade and other payables are expected to be paid as follows:

Less than 6 months

(III) FAIR VALUE MEASUREMENT

2019 A$

2018 A$

1,605,821

131,525

The carrying amounts of cash and cash equivalents, restricted cash, other current assets and trade and other payables are assumed to approximate
their fair values due to their short-term nature.

For convertible notes payable, the fair values are not materially different to their carrying amounts, since the interest payable on the convertible notes
payable is close to current market rates and are of a current nature.

Sensitivity analysis

Interest rate risk and foreign currency risk

The Group has performed sensitivity analysis relating to its exposure to interest rate risk at reporting date. This sensitivity analysis demonstrates the
effect on the current year results and equity which could result from a change in these risks.

Interest rate sensitivity analysis

At 30 June 2019, the only item affected by a change in interest rate would be the cash on deposit.

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Warrego Energy Annual Report 2019
2. FINANCIAL RISK MANAGEMENT (CONTINUED)

Interest rate risk sensitivity analysis change in loss before tax & equity

Increase in interest rates by 0.25%

Decrease in interest rates by 0.25%

2019 A$

2018 A$

18,357

(18,357)

737

(737)

The above interest rate sensitivity analysis has been performed on the assumption that all other variables remain unchanged.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (CONTINUED)
Impairment of investment in SEI:

At each reporting period the Group reassesses the carrying amount of its underlying assets for indicators of impairment such as changes in future
prices, future costs and reserves.

Impairment of Goodwill:

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, in accordance with the accounting policy
stated in note 14.

Foreign currency sensitivity analysis

Impairment of other assets:

As indicated under foreign exchange risk, the group is primarily exposed to changes in GBP/AUD and EUR/AUD exchange rates. The sensitivity of
profit or loss to changes in the exchange rates arises mainly from GBP and EUR denominated assets (i.e.; cash and exploration and evaluation assets).

GBP/AUD exchange rate – increase 10%

GBP/AUD exchange rate – decrease 10%

EUR/AUD exchange rate – increase 10%

EUR/AUD exchange rate – decrease 10%

IMPACT ON TOTAL ASSETS

IMPACT ON OTHER COMPONENTS
OF EQUITY

2019

252,201

2018

3,612

(252,201)

(3,612)

2019

(187,898)

187,898

82,520

(82,520)

2018

(4,107)

4,107

Assets and other equity have not been significantly sensitive to movements in the Australian and GBP and EUR exchange rates as a result of GBP and
EUR increased by 1.8% and 2.7% respectively (2018: increased by 4.7% and 5.7% respectively)

Capital management

Management controls the capital of the Group in order to provide the shareholders with adequate returns and ensure that the Group can fund its
operations and continue as a going concern.

Due to the nature of the Group’s business, the Group’s capital is limited to ordinary share capital.

There are no externally imposed capital requirements.

Management effectively manages the Group’s capital by assessing the Group’s financial risks and adjusting its capital structure in response to changes
in these risks and in the market. These responses include the distributions to shareholders and share issues.

There have been no changes in the strategy adopted by management to control the capital of the Group since commencement of operations. Other
than convertible notes payable the Group does not presently have any borrowings.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

Estimates and judgments are continually evaluated by management and are based on historical experience and other factors, including expectations
of the future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related
actual results. Other than estimated impairment of assets, there are no other current estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Impairment of exploration and evaluation assets:

The Group assesses impairment of its exploration and evaluation expenditure at the end of each reporting period to ensure the carrying amount does
not exceed the recoverable amount in accordance with AASB 6 - Exploration for and Evaluation of Mineral Resources as follows:

a) the period for which the entity has the right to explore in the specific area has expired during the period or will expire in the near future, and

is not expected to be renewed;

b) substantive expenditure on further exploration for and evaluation of mineral resources in the specific area is neither budgeted nor planned;

c) exploration for and evaluation of mineral resources in the specific areas have not led to the discovery of commercially viable quantities of

mineral resources and the entity has decided to discontinue such activities in the specific area; or

d) sufficient data exist to indicate that, although a development in the specific area is likely to proceed, the carrying amount of the exploration

and evaluation assets is unlikely to be recovered in full from the successful development or by sale.

The Group assesses impairment at the end of each reporting period by evaluating the conditions and events specific to the Group that may be
indicative of impairment triggers. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs
to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to
the statement of profit or loss and other comprehensive income.

The Group tests at each reporting period whether assets have suffered any impairment.

4. SEGMENT INFORMATION

The Group has identified its operating segments based on the three geographical areas in which the Group operates. Australia and the United
Kingdom are the central locations, responsible for overseeing the Group’s strategic direction, development, performance and capital management. In
Cadiz Spain the Group has an 85% interest in the Tesorillo and Ruedalabola gas exploration licences.

Geographical information

2019

Revenue from external customers

Total expenses

Other income

Impairment expense

Segment loss before income tax

Non-current assets

Total assets

Total liabilities

2018

Revenue from external customers

Total expenses

Other income

Segment loss before income tax

Non-current assets

Total assets

Total liabilities

AUSTRALIA
A$

CANADA
A$

SPAIN
A$

(4,857,360)

(2,681,444)

(3,330,634)

(126,850)

(4,854,765)

(2,678,093)

TOTAL
A$

(7,538,804)

(3,457,484)

(7,532,858)

1,113,811

7,059,840

660,687

8,834,338

10,234,906

5,501,727

825,000

16,561,633

1,753,941

335,949

825,000

2,914,890

AUSTRALIA
A$

CANADA
A$

SPAIN
A$

(37,432)

(199,010)

(16,211)

(241,357)

117,131

193

379,247

36,113

54,352

77,173

TOTAL
A$

(236,442)

(257,568)

117,324

415,360

131,525

Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports
provided to Chief Operating Decision Makers (‘CODM’). The CODM is responsible for the allocation of resources to operating segments and assessing
their performance. 5. Employee benefit expenses

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Warrego Energy Annual Report 20195. EMPLOYEE BENEFIT EXPENSES

7. CASH AND CASH EQUIVALENTS

Superannuation defined contribution plan expense

6. INCOME TAX

(a) Numerical reconciliation of income tax expense to prima facie tax payable

Loss from continuing operations before income tax expense

Tax benefit at the Australian tax rate of 27.5% (2018: 27.5%)

Tax effect of non-deductible expenses

Tax effect of equity raising costs debited to equity

Tax losses and temporary differences not bought to account

Income tax expense

(b) Tax losses

Unused tax losses for which no deferred tax asset has been recognised

Potential tax benefit @ 27.5% (2018: 27.5%)

2019 A$

2018 A$

6,710

2019 A$

2018 A$

7,532,858

29,121,568

2,071,536

8,008,431

308,944

(7,519,294)

101,132

109,505

(2,481,612)

(598,642)

2019 A$

2018 A$

37,294,244

24,965,160

10,255,917

6,685,419

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for
each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and
liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or
liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for
certain temporary differences arising from the initial recognition of an asset or a liability.

No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business
combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will
be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred
tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the Group has a legally enforceable right to
offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

The tax benefits will only be obtained if:

a) The Group derives future assessable income of a nature and of an amount sufficient to enable the benefit from the deduction of the losses

to be realised.

b) The Group continues to comply with the conditions for deductibility imposed by law; and

c) No changes in tax legislation adversely affect the group in realising the benefits from the deductions for the loss.

Cash at bank and in hand

Deposits at call

Total cash balances

2019 A$

315,509

7,027,282

7,342,791

2018 A$

15,819

279,102

294,921

The deposits at call are bearing floating interest rates averaging 0.15% per annum (2018: nil).

For Statement of Cash Flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions
and other short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.

8. OTHER CURRENT ASSETS

Trade and sundry debtors

Prepayments

Interest receivable

Other current assets

2019 A$

2018 A$

3,382

100,342

1,117

160,676

265,517

3,115

None of the trade and sundry debtors above are past due date (2018: nil).

Trade debtors are recognised when the control of ownership of the underlying sales transactions have passed to the customer in the ordinary course
of business. Trade debtors are recognised initially at the amount of consideration that is unconditional unless they contain significant financing
components when they are recognised at fair value. The group holds the trade debtors with the objective of collecting the contractual cash flows and
therefore measures them subsequently at amortised cost using the effective interest method.

Other debtors arise principally from financial assets where the objective is to hold these assets in order to collect contractual cash flows and the
contractual cash flows are solely payments of principal and interest. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition on issue and are subsequently recognised at amortised cost using the effective interest rate method, less allowance
for expected credit losses.

The Group’s trade and other debtors at year end are assessed under AASB 9 which prescribes an expected credit loss (ECL) model to recognise an
allowance. The allowance is measured using a 12-month ECL model unless the credit risk on a financial asset has increased significantly since initial
recognition in which case the lifetime ECL method is adopted. The nature and effect of initially applying AASB 9 on the group’s financial statements
are disclosed in Note 1(d).

Revenues, expenses and assets are recognised net of the amount of associated GST or input VAT, unless the GST or input VAT incurred is not
recoverable from the taxation authority. In this case, it is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST or input VAT receivable or payable. The net amount of GST or input VAT
recoverable from, or payable to, the taxation authority is included with other receivables or payables in the statement of financial position.

warregoenergy.com

Warrego Energy Annual Report 2019

9. EXPLORATION AND EVALUATION EXPENDITURE

10. PLANT AND EQUIPMENT

Opening balance

Additions during the year at cost

Recouped costs from EP469 farmout

RTO fair value adjustment

STP-EPA-0127 acquisition at fair value

Closing balance

2019 A$

2018 A$

117,131

458,431

1,185,356

8,700

(250,000)

(350,000)

466,378

250,000

1,768,865

117,131

In November 2018, the Company received further A$250,000 (2018: A$350,000) as recoupment of costs from Strike West Pty Ltd in accordance
with the Farmin Agreement. These amounts were credited against the carrying amount of exploration and evaluation expenditure.

On 15 March 2019, the Company recognised A$466,378 as part of exploration and evaluation at fair value from the accounting acquiree on reverse
acquisition.

On 25 March 2019, the Company recognised A$250,000 at fair value as exploration and evaluation expenditure for the acquisition of Palatine
Energy Pty Ltd which holds the STP-EPA-0127 application in WA.

EP469 project

Warrego Energy EP469 Pty Ltd (WEEPL) was awarded EP469 tenement in March 2008. Warrego farmed out a 50% interest in EP469 and
operatorship to Strike West Pty Ltd (STW) via a joint venture arrangement in June 2018. As part of this agreement STW funded the first
A$11,000,000 of the cost of drilling and completing West Erregulla-2 well including G&A costs.

WEEPL recognised their 50% share of exploration and evaluation expenditure over and above the A$11,000,000 farm out amount from the joint
operation at the reporting date which is set out in the table below.

Share of EP469 project financial position

Exploration and evaluation expenditure

Current liabilities

Net assets

2019 A$

894,387

(894,387)

2018 A$

Exploration and evaluation expenditures incurred are accumulated in respect of each identifiable area of interest and are carried forward in the
statement of financial position where:

i) rights to tenure of the area and participating interest are current; and

ii) one of the following conditions is met:

» such costs are expected to be recouped through successful development and exploitation of the area of interest or alternatively, by its

sale; or

» exploration and/or evaluation activities in the area of interest have not, at reporting date, yet reached a stage which permits a reasonable
assessment of the existence or otherwise of economically recoverable reserves and active and significant operations in, or in relation to,
the areas are continuing.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area
of interest.

Accumulated expenditure on areas that have been abandoned or are considered to be of no future economic benefit is written off in the year in
which such a decision is made.

Expenditure relating to pre-exploration activities (such as for new venture work) is written off to the Statement of Profit or Loss and Other
Comprehensive Income during the period in which the expenditure is incurred. When production commences, the accumulated costs for the relevant
area of interest will be amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

As at 30 June 2019

Cost or fair value

Accumulated depreciation

Net book amount

Reconciliation of movement in plant and equipment

Opening net book amount

Additions

Depreciation charge for the year

Movement in foreign currency translation

Closing net book amount

As at 30 June 2018

Cost or fair value

Accumulated depreciation

Net book amount

Reconciliation of movement in plant and equipment:

Opening net book amount

Additions

Depreciation charge for the year

Movement in foreign currency translation

Closing net book amount

IT & OFFICE
EQUIPMENT
A$

FURNITURE &
FIXTURES
A$

LEASEHOLD
IMPROVEMENT
A$

TOTAL
A$

132,554

97,251

168,168

397,973

(112,953)

(97,251)

(168,168)

(378,372)

19,601

6,568

18,624

(5,706)

115

19,601

193

(193)

22,761

1,331

(22,761)

(1,138)

193

344

(168)

193

19,601

6,761

18,624

(5,899)

115

19,601

24,092

(23,899)

193

344

(168)

193

Plant and equipment is carried at cost less accumulated depreciation and impairment losses. Depreciation is calculated on a straight-line basis to write
off the net cost of each item of plant and equipment (excluding land) over its expected useful life to the Group. Estimates of remaining useful lives
are made on a regular basis for all assets, with annual reassessments for major items.

The depreciation rates used for each class of depreciable assets are:

CLASS OF FIXED ASSETS

IT and office equipment

Office furniture and fittings

Leasehold improvements

DEPRECIATION RATE

33.30%

20.00%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.

warregoenergy.com

Warrego Energy Annual Report 201911. INVESTMENT IN ASSOCIATE

The Group holds a 41% interest in Schuepbach Energy International LLC (SEI) The primary purpose of this interest was to facilitate exploration &
evaluation in Uruguay through the subsidiary.

12. REVERSE ACQUISITION (CONTINUED)

The following table shows the fair value of identifiable assets and liabilities of Petrel as at the date of the RTO transaction.

Petrel Assets acquired and Liabilities assumed at the date of acquisition

AT 15 MARCH 2019

Opening balance

Acquire from reverse acquisition

Impairment charged to Statement of Profit and Loss for the year

Closing balance

2019 A$

2018 A$

3,330,634

(3,330,634)

In the consolidated Statement of Financial Position investments in associates are initially recorded at cost using the equity method. Subsequently, the
Group’s proportional share of an associate’s profit or loss would increase or decrease the investment respectively.

During the year, the carrying amount of A$3,330,634 on the investment in SEI associated with the Piedra Sola Concession in Uruguay was written
down to nil as a result of SEI being unable to arrange partner funding to progress exploration of the Piedra Sola Concession. In addition, with a very
limited chance of financial return and given Warrego’s minority equity position in SEI, the Board decided in July 2019 not to allocate further working
capital to SEI.

12. REVERSE ACQUISITION

On 15 March 2019, Petrel Energy Limited (“Petrel”) acquired Warrego Energy Limited, a private UK company. Petrel was at the same time renamed
Warrego Energy Limited (referred to in this document as “Warrego” unless the context requires the use of the term “Petrel”) and the UK company
was renamed Warrego Energy UK Ltd (“WEUK”).

The acquisition has the features of a reverse acquisition in accordance with Australian Accounting Standard AASB 3 Business Combinations (“AASB
3”) due to WEUK shareholders owning the largest portion of the voting rights in the combined entity post acquisition.

The transaction has been treated as a reverse acquisition from the consolidation perspective, where WEUK is the accounting acquirer (legal
subsidiary) and Warrego is the accounting acquiree (legal parent) for accounting purposes. The consolidated financial statements represent a
continuation of WEUK financial statements with exception for the adjustment of its capital structure. Therefore, the consolidated financial statement
includes the financial statements of WEUK for the full year and Warrego for the period 15 March 2019 to 30 June 2019.

Measuring consideration transferred from WEUK

The share consolidation of the Group subsequent to the completion of the reverse acquisition is as follows:

Ordinary shares

Transaction ratio

Consolidation ratio

Post Consolidation shares

Warrego conversion factor

Shares issued to WEUK shareholders

Total Petrel shares post reverse acquisition

PETREL SHARES

WEUK SHARES

2,916,096

0.769231

2,414,437,494

0.230769

120,722,404

137.1375

399,906,249

520,628,653

Petrel issued 399,906,249 new shares for all 2,916,096 WEUK shares in accordance with the shareholder approval given at the 15 March 2019
Extraordinary General Meeting. As a result of the transaction, WEUK shareholders then owned 76.9% of the issued shares of the
combined entity.

To determine the consideration transferred the fair value of Warrego shares has been used. The consideration transferred from WEUK was calculated
to be A$9,980,257 based on a fair value of A$11.46 per WEUK share multiplied by 871,042 shares or 23.1% of ownership interest in the combined
entity.

Current assets

Cash and cash equivalents

Other current assets

Restricted cash

Total current assets

Non-current assets

Exploration and evaluation expenditure

Plant and equipment

Investment in associate

Total non-current assets

Total assets

Current liabilities

Trade and other payables

Employee benefits

Total current liabilities

Non-current liabilities

Employee benefits

Borrowings

Total non-current liabilities

Total liabilities

Fair value of net assets acquired

90,590

68,755

164,834

324,179

467,410

6,568

3,330,634

3,804,612

4,128,791

652,944

162,121

815,065

28,918

350,423

379,341

1,194,406

2,934,385

13. BUSINESS COMBINATION ACCOUNTING

The RTO or reverse acquisition is being accounted for under the principles of AASB 3 which deals with business combinations. A business
combination is a transaction or other event in which an acquirer obtains control of one or more businesses.

A reverse acquisition occurs when the entity that issues securities (the legal acquirer) is identified as the acquiree for accounting purposes. The entity
whose equity interests are acquired (the legal acquiree) must be the acquirer for accounting purposes for the transaction to be considered a reverse
acquisition.

In a reverse acquisition the entities are identified as follows:

a) the public entity (here Petrel Energy Limited (now renamed Warrego Energy Limited) is the acquiree for accounting purposes (the accounting

acquiree); and

b) the private entity (here Warrego Energy Ltd (now renamed WEUK)) is the acquirer for accounting purposes (the accounting acquirer).

In a reverse acquisition, the accounting acquiree (here Petrel) must meet the definition of a business for the transaction to be accounted for as a
reverse acquisition. If it does, then the “acquisition method” of accounting must be adopted under AASB 3. The accounting acquirer (WEUK) issues
no consideration for the acquiree (here Petrel). Instead, the accounting acquiree (Petrel) usually issues its equity shares to the owners (here the
shareholders) of the accounting acquirer (WEUK).

The acquisition method of accounting for a reverse transaction then requires:

a) The identification of the acquirer (see above);

b) The determination of the acquisition date (the date on which it obtains control of the acquiree;

c) Recognising and measuring the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree;

d) Separately recognising and measuring goodwill.

warregoenergy.com

Warrego Energy Annual Report 201913. BUSINESS COMBINATION ACCOUNTING (CONTINUED)

17. EMPLOYEE BENEFITS

The acquirer then classifies or designates the identifiable assets and liabilities assumed on the basis of contractual terms, economic conditions, its
operating or accounting policies and their pertinent conditions at the acquisition date. The acquirer has then to measure the identifiable assets and
liabilities assumed at fair value.

The acquirer then recognises the goodwill which is any excess of the purchase consideration of the business combination over the fair value
separately from the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. All acquisition-related costs
are expensed as incurred in the periods which the costs are incurred, and the services are received.

Had the RTO occurred from 1 July 2018 the accumulated losses of the combined Group would have been A$9,841,325. No goodwill that is expected
to be deductible for tax purposes.

14. GOODWILL FROM REVERSE ACQUISITION

Goodwill which arose for the first time in the current period was calculated on the cost of the consideration transferred over the acquirer’s interest in
the net fair value of the identifiable assets and liabilities, assumed as follows:

Consideration transferred

Less: Fair value of identifiable net assets acquired

Goodwill

AMOUNT A$

9,980,257

2,934,385

7,045,872

Current employee benefits

Provision for annual leave – opening balance

Provision from reverse acquisition

Charge to profit or loss

Provision for annual leave – closing balance

Non-current employee benefits

Provision for long service leave – opening balance

Provision from reverse acquisition

Charge to profit or loss

Provision for long service leave – closing balance

2019 A$

2018 A$

162,122

(67,078)

95,044

28,918

(5,713)

23,205

The goodwill calculation was based on the values disclosed in note 13. No indicators of impairment were noted for the current period.

Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash generating units and is tested annually for
impairment. The recoverable amounts of cash-generating units have been determined based on fair value less costs of disposal. Goodwill has an
infinite life with impairment testing undertaken each year. Any losses on goodwill are taken to profit or loss and are not subsequently reversed.

These provisions relate to employee annual leave and long service leave entitlements.

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled within 12 months of
the reporting date are recognised in current liabilities in respect of employees' services up to the reporting date and are measured at the amounts
expected to be paid when the liabilities are settled.

15. ASSET ACQUISITION

Other long-term employee benefits

On 25 March 2019, Warrego Energy Limited (Warrego) exercised its call option and acquired all shares in Palatine Energy Pty Ltd (PAL) for
consideration of A$250,000 of Warrego Convertible Notes.

PAL’s one asset is the STP-EPA-0127 application in WA. The consideration for STP-EPA-0127 application in WA was based on the following factors. A
further A$100,000 of ordinary shares is payable once approvals are in place and a work programme has commenced on STP-EPA-0127.

STP-EPA-0127:

• is 185km long and about 55km wide (8,700 km2) and covers much of the Coolcalalaya Sub-Basin.

• contains up to 9000m of Neo-Proterozoic, Palaeozoic and Mesozoic sediment

• lies at the northern limit of the prospective and partially developed Perth Basin, which produces conventional oil and gas from several fields.

Warrego has recognised the asset as acquired at fair value using the consideration value of A$250,000. The asset fair value was allocated to
exploration and evaluation expenditure as disclosed in note 9.

This transaction was not considered to be a business combination as per AASB 3 because Palatine Energy Pty Ltd has only one asset which is the STP-
EPA-0127 application in WA. There was no input or process in place, and no output at acquisition date.

16. TRADE AND OTHER PAYABLES

Trade and other payables

2019 A$

2018 A$

1,605,821

131,525

1,605,821

131,525

Trade and other payables are stated at their amortised cost. Trade and other payables represent liabilities for goods and services provided to the
Group prior to the end of the financial period that are unpaid when the Group becomes obliged to make future payments in respect of the purchase
of those goods and services. The amounts are unsecured and are usually paid within 30 days of purchase. They are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest method.

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are recognised in non-current
liabilities, provided there is an unconditional right to defer settlement of the liability. The liability is measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is
given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted
using market yields at the reporting date for corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated
future cash outflows.

18. CONVERTIBLE NOTES PAYABLE

Convertible notes

Deferred convertible notes interest

2019 A$

2018 A$

1,250,000

(134,604)

1,115,396

During January and February 2019, prior to the reverse acquisition, Warrego Energy Limited (Warrego), a private UK company undertook a
Convertible Note Issue. It issued 6,487,675 Convertible Notes at a 20% discount to the face value of A$1 per note, to raise A$5,190,000 to meet
transaction-related expenses and existing project costs including the West Erregulla-2 well. A further A$250,000 of convertible notes were issued as
non-cash consideration to acquire all the shares of Palatine Energy Pty Ltd.

Under their terms, the Convertible Notes were, subject to completion of the Warrego Transaction, convertible into Shares in the capital of the
Company:

• automatically on admission of the Company to quotation on the Alternative Investment Market of the London Stock Exchange (“AIM”), at a

conversion price equal to the listing price on the Company’s admission to AIM;

• automatically on the final maturity date of 31 December 2019, at a conversion price determined as the volume weighted average price of the

Company’s Shares over the 10 days preceding the maturity date; or

• at the election of the holder of the Convertible Note any time before the final maturity date of 31 December 2019, at a conversion price that is

determined as the volume weighted average price of the Company’s Shares over an applicable 10 day trading period, or the price at which a capital
raising has been undertaken by the Company (if the conversion is undertaken in connection with a capital raising by the Company).

74,292,197 shares were issued to settle 81.4% of the Convertible Notes as at 30 June 2019 leaving an outstanding unconverted balance of
A$1,250,000 of Convertible Notes. The discounted amounts of the Convertible Notes which have been converted are recognised as finance
expenses. The discounted portion of the outstanding Convertible Notes is deferred and amortised over the term of the Convertible Notes.

warregoenergy.com

Warrego Energy Annual Report 201918. CONVERTIBLE NOTES PAYABLE (CONTINUED)

Convertible Notes are financial instruments that fall within accounting standards AASB 132 Financial Instruments: Presentation, AASB 9: Financial
Instruments and AASB 7 Financial Instruments: Disclosure.

The Convertible Notes are classified as liabilities in the statement of financial position, net of transaction costs due to the conversion features,
constituting an obligation to deliver a variable number of shares on settlement.

On the issue of the Convertible Notes the fair value of the liability was recognised as cash received net of transaction costs and this amount was
carried as a current liability on the amortised cost basis until extinguished on conversion, maturity or redemption. The interest on convertible notes is
expensed to profit or loss using the effective interest method.

Outstanding Convertible Notes are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at
least 12 months after the reporting period.

19. CONTRIBUTED EQUITY

(a) Share capital

2019 SHARES NUMBER

2018 SHARES NUMBER

2019 A$

2018 A$

19. CONTRIBUTED EQUITY (CONTINUED)
Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and
amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one
vote, and upon a poll each share is entitled to one vote. The fully paid ordinary shares have no par value.

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.

(b) Options

As part of the 7 June 2019 share placement 7,000,000 unlisted alignment options were issued, over new ordinary shares, as consideration by the
Lead Manager to its nominees. The options which were issued on 4 July 2019 have an expiry date of 31 May 2021, an exercise price and weighted
average exercise price of A$0.124. There were no other options issued by the Group during the year (2018: nil).

There were no dividends paid or declared by the Group during the year (2018: nil).

Ordinary shares

609,355,769

2,916,096

79,073,008

500,075

20. ACCUMULATED LOSSES

Movements in share capital

DATE

DETAILS

NUMBER OF
SHARES

ISSUE
PRICE

1 July 2018

Opening balance

2,916,096

15 March 2019

Transfer of issued shares of legal subsidiary to reverse acquisition reserve from
reverse acquisition

(2,916,096)

Recognition of issued shares from legal Parent from reverse acquisition

120,721,875

500,075

(500,075)

58,335,634

15 March 2019

Shares issued to Warrego Energy UK Limited shareholders as reverse
acquisition consideration in accordance with shareholder approval of
Resolution 2 at Extraordinary General Meeting on 15 March 2019

262,438,536

0.0240

6,298,525

22 March 2019

Shares issued on conversion of Convertible Notes

71,247,313

0.0733

5,221,700

25 March 2019

Shares issued in consideration on exercised of call option for all the shares of
Palatine Energy Pty Limited holder of STP-EPA-0127

3,044,884

0.0821

250,000

50,000,000

0.0240

1,200,000

61,052,632

0.0950

5,800,000

40,850,000

0.0240

980,400

609,355,240

78,086,259

25 March 2019

Shares issued to Warrego Energy UK Limited shareholders as reverse
acquisition consideration in accordance with shareholder approval of
Resolution 2 at the EGM on 15 March 2019

25 March 2019

Share Placement

07 June 2019

Shares issued to Warrego Energy UK Limited shareholders as reverse
acquisition consideration in accordance with shareholder approval of
Resolution 2 at EGM on 15 March 2019

Add: Unissued shares yet to be issued to Warrego Energy UK Limited
shareholders as reverse acquisition consideration in accordance with
shareholder approval of Resolution 2 at EGM on 15 March 2019

Less: Transaction costs arising on share issue

30 June 2019

1 July 2017

Opening balance

17 May 2018

Shares issued

Less: Transaction costs arising on share issue

30 June 2018

Opening balance 1 July

Net loss for the year

Closing balance 30 June

21. RELATED PARTY TRANSACTIONS

(a) Directors

The following persons were directors of Warrego Energy Limited during or subsequent to the financial period:

2019 A$

2018 A$

4,649,923

4,392,355

7,532,858

257,568

12,182,781

4,649,923

Non-executive Chairman
Managing Director, Group Chief Executive Officer

appointed 22 October 2018
Greg Columbus
Dennis Donald
appointed 21 March 2019
Duncan MacNiven Executive Director - Approvals, H&S & Environmental appointed 21 March 2019
appointed 21 March 2019
Owain Franks
appointed 21 March 2019
Mark Routh
appointed 21 March 2019
David Biggs
resigned 21 March 2019
Alexander Sundich Non-executive Chairman
Managing Director
resigned 22 March 2019
David Casey
resigned 29 November 2018
Russell Porter
Non-executive Director
resigned 29 November 2018
Andrew Williams Non-executive Director

Executive Director - Finance, Strategy & Delivery
Non-executive Director
Non-executive Director

(b) Other key management personnel compensation

The following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly or indirectly,
during the financial year:

David Casey - CEO - Australia & Asia-Pacific
Ian Kirkham - Company Secretary and Chief Financial Officer

46,617,713

0.240

1,501,332

(514,583)

79,073,008

427,924

2,530,301

385,795

0.187

72,151

2,916,096

500,075

Salary & fees

Consultancy payments

Share based payments

Superannuation

Long service leave

2019 A$

2018 A$

1,373,148

172,266

247,463

52,512

642,677

27,058

23,132

7,884

19,223

1,670,801

894,562

Detailed remuneration disclosures can be found in sections (a) to (c) of the Remuneration Report which forms part of the Directors’ Report.

warregoenergy.com

Warrego Energy Annual Report 201921. RELATED PARTY TRANSACTIONS (CONTINUED)
(d) Other transactions with key management personnel

(I)

IAN KIRKHAM CONSULTING

Ian Kirkham, a senior executive, is also the Principal of Minex CFO Services. Warrego Energy Limited has engaged Minex CFO Services to provide
Company secretarial and accounting services on a part-time basis. The contract is based on normal commercial terms.

Amounts recognised as an expense

Accounting and secretarial services

The above amount has been included in the remuneration report.

22. CONTINGENCIES

(a) Contingent liabilities/restricted cash

Obligations under a bank corporate credit card facility with the Commonwealth
Bank of Australia

Bankers’ guarantee issued as security for the performance by the Company of its
obligations under a lease of office premises at Level 6, 10 Bridge Street, Sydney

Cash pledged as deposit for Spanish Ministry compliance programme

Total

The above are all secured by a charge over term deposits lodged with bankers of a like amount.

(b) Contingent assets

The Group has no contingent assets to report as at 30 June 2019 (2018: nil).

23. COMMITMENTS

Exploration expenditure

2019 A$

2018 A$

247,463

225,145

2019 A$

2018 A$

30,000

33,409

55,578

118,987

25. CASH OUTFLOW FROM OPERATING ACTIVITIES RECONCILIATION TO LOSS AFTER INCOME TAX

Loss for the year

Non-cash movement

Depreciation

Finance expenses associated with convertible notes

Impairment loss on other receivables from associates

Impairment loss on investment in associate

Foreign exchange gains

Movement in working capital

Increase in other current assets

(Increase)/decrease in trade and other payables

Net cash outflow from operating activities

2019 A$

2018 A$

(7,532,858)

(257,568)

5,899

151

1,159,737

126,850

3,330,634

(30,015)

21,259

(154,278)

(176,614)

(1,362)

76,755

(3,270,645)

(160,765)

Non-cash transactions affecting investing and financing activities

a) On 12 March 2019, A$250,000 of Convertible Notes were issued to exercise the Palatine Energy Limited call option.

b) On 22 March 2019, 262,438,536 ordinary shares were issued at A$0.024 each to WEUK shareholders as reverse acquisition consideration in

accordance with shareholder Resolution 2 approved at the 15 March 2019 Extraordinary General Meeting.

c) On 22 March 2019, 50,000,000 ordinary shares were issued at A$0.024 each to WEUK shareholders as reverse acquisition consideration in

accordance with shareholder Resolution 2 approved at the 15 March 2019 Extraordinary General Meeting.

d) On 7 June 2019, 40,850,000 ordinary shares were issued at A$0.024 each to WEUK shareholders as reverse acquisition consideration in

accordance with shareholder Resolution 2 approved at the 15 March 2019 Extraordinary General Meeting.

26. EARNINGS PER SHARE

(a) Basic loss per share

The Group is required to meet minimum expenditure requirements of various government regulatory bodies and joint arrangements. These
obligations may be subject to renegotiation, may be farmed out or may be relinquished and have not been provided for in the financial statements.

Loss from continuing operations attributable to the ordinary equity holders of the Company

Loss attributable to ordinary equity holders of the Company

Permit and lease commitments

Less than one year

Between one and five years

Total

The Group has no lease commitments to disclose as at 30 June 2019.

24. AUDITOR’S REMUNERATION

2019 A$

2018 A$

6,476,524

Basic loss or earnings per share is calculated by dividing the profit/loss attributable to equity holders of the Parent Entity, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.

(b) Diluted loss per share

Options issued to shareholders and related parties are considered to be potential ordinary shares if average market price during the period is above
the exercise price and have been considered in the determination of diluted earnings per share.

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account of the after income tax
effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to
have been issued for no consideration in relation to dilutive potential ordinary shares.

During the year the following fees were paid or payable for services provided by the auditor:

Audit services

BDO ECP – Audit and review of financial reports

Non BDO Audit Services Warrego Perth

Total

(i) The amount associated with former Petrel Energy Limited.
(ii) Includes the amount associated with former Petrel Energy Limited.

2019 A$

2018 A$

Basic earnings per share / Diluted earnings per share

118,000 (ii)

54,000 (i)

118,000 (ii)

5,000

59,000

Loss from continuing operations attributable to the ordinary equity holders of the Company

Loss attributable to ordinary equity holders of the Company

2019 A$

7,532,858

7,532,828

2018 A$

257,568

warregoenergy.com

2019 A$

7,532,858

7,532,828

2018 A$

257,568

Warrego Energy Annual Report 201929. INTERESTS IN JOINT OPERATIONS

The Group has the following participating interests in joint operations whose principal activities consists of oil & gas exploration. The joint operations
are not separate legal entities and are contractual arrangements between the participants for the sharing of exploration and development costs and
production.

JOINT OPERATIONS

Cardium, Alberta, Canada

EP469, Perth, Australia

30. SUBSEQUENT EVENTS

INTEREST

2019 %

2018 %

Other than disclosed below no matter has arisen in the period since 30 June 2019 that has significantly affected or may significantly affect the
operations of the Group, the results of those operations or the state of affairs of the Group in future financial periods:

• The West Erregulla-2 (WE-2) exploration well which was spudded in early June 2019 made three significant conventional gas discoveries which

were announced after 30 June 2019:

» On 1 August 2019 the Basal Wagina Sandstone was intersected with 10.2 metres of net pay in a total gas column to 79 metres. The discovery

appears analogous to Beharra Springs.

» On 27 August 2019 a significant gas discovery in the Kingia Sandstone was made with 58 metres of net pay in a gross Kingia gas column of

220 metres which was substantially thicker than Waitsia analogues.

» On 6 September 2019 a further major gas discovery was made in the High Cliff Sands with 10 metres of net pay in a gross gas column of 22

metres.

• On 4 July 2019 Warrego completed a Share Purchase Plan (“SPP”) raising a total of A$510,000 at a price of 9.5 cents per share.

• On 25 July 2019 half of the outstanding A$1,250,000 Convertible Notes were converted for 6,706,009 ordinary shares. The remaining Convertible

Notes were converted on 29 August 2019 for 3,245,067 ordinary shares. All pre RTO Warrego Convertible Notes have now been converted.

• On 16 September 2019 Warrego completed a A$12m share placement, primarily to institutions, at an issue price of 29 cents per share. In this

placement Dennis Donald and Duncan MacNiven were issued 19,750,000 shares each under the Share Purchase Agreement approved at the EGM
on 15th March 2019.

31. CORPORATE INFORMATION

The financial report of Warrego Energy Limited for the period ended 30 June 2019 was authorised for issue in accordance with a resolution of the
directors on 30 September 2019.

Warrego Energy Limited is a public company limited by shares, incorporated in Australia, whose shares are publicly traded on the Australian Securities
Exchange. The directors have the power to amend and re-issue the financial report.

26. EARNINGS PER SHARE (CONTINUED)
(d) Weighted average number of shares used as the denominator

WEIGHTED AVERAGE NUMBER OF SHARES USED AS DENOMINATOR IN CALCULATING:

Basic loss per share

Diluted loss per share

27. PARENT ENTITY INFORMATION

Loss after income tax

Total comprehensive loss for the year

Statement of financial position

Total current assets

Total assets

Total current liabilities

Total liabilities

Equity

Issued capital

Option reserve

Accumulated losses

Total equity

2019
NUMBER

2018
NUMBER

1,235,502,873

353,377,097

1,235,502,873

353,377,097

PARENT ENTITY

2019 A$

2018 A$

6,603,427

19,264,833

6,603,427

19,264,833

5,272,262

224,484

21,366,467

4,260,848

447,829

717,380

1,774,829

717,380

79,073,008

56,864,449

518,525

(59,999,895)

(53,839,506)

19,591,638

3,543,468

Guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries

The Parent Entity Warrego had no guarantees in relation to the debts of its subsidiaries as at 30 June 2019 and 30 June 2018.

Contingent liabilities

The Group had contingent liabilities as at 30 June 2019 and 30 June 2018 as detailed in Note 22(a).

Capital commitments - Plant and equipment

The Parent Entity had no capital commitments for plant and equipment as at 30 June 2019 and 30 June 2018.

Significant accounting policies

The accounting policies of the Parent Entity are consistent with those of the Group, as disclosed in note 1. In addition, investments in subsidiaries are
accounted for at cost, less any impairment, in the Parent Entity.

28. CONTROLLED ENTITIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries.

SUBSIDIARIES

Warrego Energy UK Ltd

Warrego Energy EP469 Pty Ltd

Palatine Energy Pty Ltd

Petrel Energy (Operations) Pty Ltd

Petrel Energy (Investments) Pty Ltd

PLACE OF
INCORPORATION

United Kingdom

WA, Australia

Victoria, Australia

Petrel Energy Texas Exploration LLC

Austin Texas, USA

Tarba Energia (formerly Schuepbach Energy Espania) Cadiz, Spain

2019
INTEREST
%

2018
INTEREST
%

100

PARENT

Warrego Energy Limited

Petrel Energy (Operations) Pty Ltd

Warrego Energy Limited

The ownership interests held in the subsidiaries are ordinary shares or participating interests as the case may be.

warregoenergy.com

Warrego Energy Annual Report 2019Directors’ Declaration

Auditors’ Report

In the directors' opinion:

• the attached financial statements and notes thereto comply with the Corporations Act 2001, the Australian Accounting Standards, the

Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes thereto comply with International Financial Reporting Standards as issued by the International

Accounting Standards Board as described in note 1 to the financial statements;

• the attached financial statements and notes thereto give a true and fair view of the Group's financial position as at 30 June 2019 and of its

performance for the financial year ended on that date; and

• there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

The directors have been given the declarations required by section 295A of the Corporations Act 2001.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

Dennis Donald

Managing Director and CEO
30 September 2019

Tel: +61 2 9251 4100
Fax: +61 2 9240 9821
www.bdo.com.au

Level 11, 1 Margaret St
Sydney NSW 2000
Australia

INDEPENDENT AUDITOR'S REPORT

To the members of Warrego Energy Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Warrego Energy Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 30 June 2019, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the financial report, including a summary of significant accounting policies and the directors’
declaration.

In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:

(i)

Giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its
financial performance for the year ended on that date; and

(ii)

Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members
of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia
Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of
independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

warregoenergy.com

Warrego Energy Annual Report 2019

AUDITORS’ REPORT

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.

Reverse acquisition accounting

Key audit matter

How the matter was addressed in our audit

As disclosed in note 12 of the financial report, to

In response to the risk identified in relation to the

facilitate a listing on the ASX, Warrego Energy (UK)

reverse acquisition, we undertook, amongst others, the

Limited undertook a transaction with Warrego Energy

following audit procedures:

Limited (formerly known as Petrel Energy Limited) on

15 March 2019. This transaction resulted in Warrego

Energy Limited, as the listed entity, being acquired via

a reverse acquisition by Warrego Energy (UK) Limited.

The accounting for the reverse acquisition under the

principles of AASB 3 Business Combinations is a key

audit matter due to the accounting complexity of the

transaction and the level of audit effort involved.

•

Obtained an understanding of the transaction

from a review of the sale and purchase

agreements between the entities involved.

Performed detailed audited procedures in order

to assess the accounting treatment applied to

the reverse acquisition. This included

consulting with internal IFRS specialists to

ensure the accounting treatment of the reverse

acquisition was in accordance with Australian

Accounting Standards.

•

Performed audit procedures in respect to

Warrego Energy Limited (UK) for the period 1

July 2017 to 30 June 2018 for the purposes of

the comparative information disclosed in the

financial statements.

•

Evaluated the adequacy and accuracy of the

associated disclosure note within the financial

report to ensure that it was sufficient and in

line with the requirements of AASB 3.

Accounting for convertible notes

Key audit matter

How the matter was addressed in our audit

As disclosed in note 18 of the financial report, the

Our audit procedures included, amongst others:

Group has issued convertible notes during the year.

•

Obtained an understanding of and assessed the

In accordance with AASB 132 Financial Instruments:

terms and conditions of the convertible note

Presentation, the accounting for convertible notes is

agreement to determine if the convertible

considered a key audit matter due to the complexity

notes were to be accounted for as equity, a

involved in assessing whether to account for the notes

liability or a combination of both in accordance

as equity, a liability or a combination of both and the

with AASB 132.

measurement at initial recognition based on the terms

and conditions of the agreement, under AASB 9

Financial Instruments.

Significant judgement is also involved in the

measurement subsequent to initial recognition

including the fair value measurement at balance sheet

date in accordance with AASB 9.

•

Considered the appropriateness of the valuation

methodology against the requirements of AASB

•

Reviewed the disclosures made within the

financial report to ensure these were in line

with the requirements of AASB 7 Financial

Instruments - Disclosures.

Other information

The directors are responsible for the other information. The other information comprises the
information contained in directors’ report for the year ended 30 June 2019, but does not include the
financial report and our auditor’s report thereon, which we obtained prior to the date of this auditor’s
report, and the annual report, which is expected to be made available to us after that date.

Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit or otherwise appears to be materially
misstated.

If, based on the work we have performed on the other information that we obtained prior to the date
of this auditor’s report, we conclude that there is a material misstatement of this other information,
we are required to report that fact. We have nothing to report in this regard.

When we read the annual report, if we conclude that there is a material misstatement therein, we are
required to communicate the matter to the directors and will request that it is corrected. If it is not
corrected, we will seek to have the matter appropriately brought to the attention of users for whom
our report is prepared.

Responsibilities of the directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.

warregoenergy.com

Warrego Energy Annual Report 2019

AUDITORS’ REPORT

Additional Information

Auditor’s responsibilities for the audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.

A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf

This description forms part of our auditor’s report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report under the heading
‘Remuneration Report’ for the year ended 30 June 2019.

In our opinion, the Remuneration Report of Warrego Energy Limited, for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.

BDO East Coast Partnership

Gareth Few
Partner

Sydney, 30 September 2019

Additional information included in accordance with Listing Rules of ASX Limited.

1. SHAREHOLDERS

a) Distribution of shareholders as at 17 October 2019

Fully paid ordinary shares

SIZE OF HOLDING

1-1,000

1,001-5,000

5,001-10,000

10,001-100,000

100,001-1,000,000

1,000,001-9,999,999,999

Totals

649 shareholders held less than a marketable parcel of shares.

b) Top twenty shareholders as at 17 October 2019

Fully paid ordinary

SHAREHOLDER

Mr Duncan Macniven

Mr Dennis Donald

Citicorp Nominees Pty Limited

Discovery Investments Pty Ltd

Mr James Clarke

Mr James Stuart Clarke

HSBC Custody Nominees (Aust) Limited

Mr Owain Franks

Mr Mark Routh

Ms Anne Routh

Stewart Macrae

Alasdair Buchanan

Cs Fourth Nominees Pty Ltd

Mr David Casey

J P Morgan Nominees Aust Pty Limited

BNP Paribas Nominees Pty Ltd

Veruse Pty Limited

James Brunton

Jane Brunton

Ms Jean Lockett

Total

HOLDERS

SHARES HELD

473

777

395

206,416

2,132,375

3,126,784

1,299

52,609,851

376

104,693,516

546,048,836

0.030

0.300

0.440

7.420

14.770

77.040

3,378

708,817,778

100.000

NUMBER OF
ORDINARY
SHARES HELD

% OF
SHARES
HELD

140,435,616

19.81%

140,435,616

19.81%

40,482,620

30,192,591

19,152,474

19,144,474

15,042,855

14,512,723

7,105,922

7,008,142

6,582,604

5,583,569

5,391,040

5,226,980

5,108,766

4,649,193

4,275,420

4,252,225

3,997,835

5.71%

4.26%

2.70%

2.12%

2.05%

1.00%

0.99%

0.93%

0.79%

0.76%

0.74%

0.72%

0.66%

0.60%

0.56%

482,832,890

68.118%

warregoenergy.com

Warrego Energy Annual Report 2019

Additional Information

2. VOTING POWER

The Company has ordinary shares on issue:

a) at meetings of members each member entitled to vote may vote in person or by proxy or attorney or, in the case of a member which is a body

corporate, by representative duly authorised;

b) on a show of hands every member entitled to vote and be present in person or by proxy or attorney or representative duly authorised shall

have one (1) vote; and

c) on a poll every member entitled to vote and be present in person or by proxy or attorney or representative duly authorised shall have

one (1) vote for each fully paid share of which he or she is a holder.

3. SUBSTANTIAL SHAREHOLDERS

The ordinary securities held by substantial shareholders are as follows:

NAMES

Mr Duncan MacNiven

Mr Dennis Donald

4. ON-MARKET BUY-BACK

There is no current on-market buy back.

5. TENEMENT LISTING

NUMBER OF SHARES

140,435,616

TENEMENT REFERENCE

LOCATION

NATURE OF INTEREST

INTEREST AT 30 JUNE 2019

Corporate Directory

Directors
Greg Columbus Non-executive Chairman
Dennis Donald Managing Director, Group Chief Executive Officer
Duncan MacNiven Executive Director - Approvals, H&S & Environmental
Owain Franks
Mark Routh
David Biggs

Executive Director - Finance, Strategy & Delivery
Non-executive Director
Non-executive Director

Company Secretary
Ian Kirkham

UK Office
39 Albert Street,
Aberdeen, AB25 1XU, Scotland

T: +44 (0)1224 974 980

Registered Office
Level 6, 10 Bridge Street
Sydney NSW 2000

T: +612 9254 9000

GROSS ACRES

E: office@warregoenergy.com

EP469

North Perth Basin Western Australia Direct JV interest

STP-EPA-0127 application

North Perth Basin Western Australia Application

Piedra Sola

Tesorillo^

Ruedalabola^

Norte Basin, Uruguay

Via Schuepbach Energy Int. LLC

Cadiz, Spain

Via Tarba Energia SRL

19-25-3W5M

Cardium, Alberta, Canada

Direct JV interest

50.0%

100.0%

41.0%

85.0%

40%

56,000

2,200,000

2,525,000

68,800

25,200

640

Note: ^ Warrego’s 85% working interest will reduce to 51.1% upon completion of the Prospex Share Purchase Agreement. Proceeds of €2.05m
(100%) will be used by Warrego to fund its share of an agreed Tesorillo work programme (estimated at €3.82m) which includes a
magnetotelluric programme and if successful, a well to target the Almarchal-1 discovery drilled in 1956.

6. CONTINGENT GAS RESOURCES (WARREGO SHARE)

Contingent Resources were prepared for the Dongara reservoir in the West Erregulla field during the year. No Contingent Resources have been
prepared for the Basal Wagina, Kingia and High Cliff reservoirs at the date of this report.

2C CONTINGENT RESOURCES

30 June 2018

Revision to previous estimates

Extensions and discoveries

Acquisitions and divestments

30 June 2019

PERTH BASIN GAS (BCF)

The Dongara reservoir 2C Contingent Resource report is based on, and fairly represents, information and supporting documentation provided by
Warrego and has been supervised by Mr Ian Cockerill, Head of Geoscience at RISC Advisory Pty Ltd. Ian is a Petroleum Geologist with 19 years of
experience and is a qualified petroleum reserves and resources evaluator (QPPRE) as defined by ASX listing rules. He is a full-time employee of RISC
and has consented to the inclusion of this information in the form and context in which it appears. The estimates are prepared in accordance with
the definitions and guidelines of the Petroleum Resources Management System 2007, published by the Society of Petroleum Engineers (SPE PRMS).

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