CENTRAL PETROLEUM LIMITED — Capital/Financing Update 2021

May 24, 2021

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Sale of 50% interest in Amadeus Producing Assets

25 May 2021 Central Petroleum Limited (ASX:CTP)

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Transaction overview

Transaction highlights

	▪	50% of Central’s interests in its Amadeus Basin producing
		assets : Mereenie, Palm Valley and Dingo
Sale Assets		(together, the “Sale Assets” or “Amadeus Basin Producing
		Assets”)
	▪	Central retains Operatorship over the Sale Assets
Buyer	▪	New Zealand Oil and Gas (“NZOG”) and Cue Energy (“Cue”) (together, the “NZOG Entities”)
	▪	Consideration comprised of:
		−$29m upfront cash payment;
		−$40m in carried funding of Central’s share of near-term
		development, appraisal and exploration activities;
		−$23 million(1) (Central’s book value at the effective date)
Consideration		through an assumption by the NZOG Entities of obligations to supply up to 4.9 PJ of gas (50% share)
		which has previously been paid for but not delivered
		under pre-sale or ‘take-or-pay’ arrangements; and
		−A completion adjustment for net cash flows generated
		between the effective date and the completion date.
	▪	Consideration valued at $85m at completion(2)
	▪	Customary sale terms and conditions, including FIRB
Key Terms	▪	approval Effective date of 1 July 2020
	▪	Completion expected Q3-2021

Map of Sale Assets

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Notes: (1) Based on Central’s book value for these liabilities at the effective date, including pre-sale subsequently executed in December 2020; (2) Estimated value at the assumed completion date of 1 August 2021 and subject to final determination of the completion adjustment and movements in liabilities associated with the Sale Assets between the effective date and the expected completion date. See Appendix 1 for further details

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Strategic objectives achieved

Allows Central to pursue multiple avenues for growth

P Value accretive	$85m consideration(1)for 50%,with an expected $35m - $40m profit(1), delivers a strong signal for the underlying value and quality of Central’s Amadeus Basin ProducingAssets
P Accelerates Growth	Provides $40m free-carry for near term exploration and development, which would facilitate approximately $100m (gross JV) investment across the Sale Assets without anyfurther cash outlayfrom Central
P Diversifies risk	Accelerating growth in the Amadeus Basin while sharing and diversifying geological, exploration and development risk through a new joint venture
P Aligned partner	Introduces technically capable partner(s) with financial capacity and aligned objectives
P Operatorship	Central retains operatorship
P Balance Sheet	Strengthens Central’s balance sheet through reduction of debt (by $30m) and deferred gas liabilities (by $21m)(2)

Note: (1) Estimated value at the assumed completion date of 1 August 2021 and subject to final determination of the completion adjustment and movements in liabilities associated with the Sale Assets between the effective date and the expected completion date; (2) Based on Central’s expected book value for these liabilities if the Transaction completes on 1 August 2021

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Value accretive

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Enterprise Value (A$m)
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Orange-3 eg Dukas (EP112)
Range
Corporate tax losses (401 PJ unrisked mean and Zevon (EP115)
(135 PJ 2C
(circa $30m) [(2)] prospective resource) [(4)] (multi TCF targets)
resource) [(4)]
$170m
$152 m
Other Assets not included in the Sale Assets
Central's current (3) Sale Assets (1)(2) Tax losses Range Orange-3 Other multi TCF targets
enterprise value (gross implied
enterprise value)
Sale Assets Assets not included in transaction
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Note: (1) Implied value for 100% of Sale Assets, based on total consideration of $85m for 50% interest sold; (2) Estimated value at the assumed completion date of 1 August 2021 and subject to final determination of the completion adjustment and movements in liabilities associated with the Sale Assets between the effective date and the expected completion date; (3) Based on last close share price of $0.105 per share (as at 21 May 2021), net debt as at 31 March 2021 ($31m) and deferred gas obligations as at 31 December 2020 ($45m); (4) Refer Appendix 2 for further information on reserves and resources

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Funding for accelerated growth

The $40 million free carry will fund Central’s share of circa $100m[(1) ] of current and near-term development investment across the Amadeus Basin Producing Assets without any cash outlay from Central

Identified activities include:

	✓	Current four well re-completion program
	✓	Two new production wells (starting Q2 CY2021)
Mereenie
	✓	Flare Gas Recovery Project (underway)
	✓	Two new future production wells(2)
	✓	Palm Valley Deep exploration well with production lateral (PV12) if exploration target is unsuccessful
Palm Valley
	✓	New future production well
Dingo	✓	Dingo Deep exploration well with option to access existing production formation
+ Other development activities across the Sale Assets up to the $40m free carry cap

Notes: (1) Gross JV including Macquarie Mereenie 50% interest; (2) Subject to JV approval

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Accelerated growth – two new exploration wells

Palm Valley Deep

• Targeting a mean recoverable volume[(1) ] of 123 PJ in the deep Arumbera Sandstone (61.5 PJ net to Central)

• The Arumbera Sandstone is the productive interval at the Dingo Field

• Deviated within the Arumbera Sandstone to 45[o] to optimise the intersection of open fractures

• If the deep test fails, the well will be plugged back and a 1500m lateral well will be drilled at the Pacoota level and completed for immediate tie-in

Dingo Deep

• Targeting a mean recoverable volume[(1) ] of 69 PJ (34.5 PJ net to Central)

• Deviated to 60[o] through the Pioneer and Areyonga Formations to maximise the chance of intersecting the open fracture network in the deeper targets

• Both formations have had gas shows with flows to surface achieved at Ooraminna at the Pioneer Sandstone level

• A successful exploration test will open up a new play fairway in the basin

• The well will also be completed at the productive Arumbera Formation level for tie-in to the Dingo facilities

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(1) Refer Appendix 2 for further information on reserves and resources

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Introduces technically capable partners with financial capacity and aligned objectives

The transaction introduces technically capable partner(s) with financial	The transaction introduces technically capable partner(s) with financial	capacity and aligned objectives
	▪Oil and gas exploration and production company listed on the NZX and ASX	✓Fully aligned
	▪Non-operating interests in producing assets and exploration and
	appraisal stage assets located in New Zealand, Australia and Indonesia ▪Owns ~50% of Cue Energy and and held ~NZ$72m(1) cash as at	✓Strong financial and technical capability
	31 March 2021
	▪Oil and gas exploration and production company listed on the ASX ▪Owns minority interests in various producing assets in New	✓Committed to creating value within the Amadeus Basin
	Zealand and Indonesia
	▪Holds operated and non-operated interests in exploration permits in the Carnarvon Basin, offshore Western Australia and onshore	✓Existing presence in
	Indonesia	Australia
	▪Held ~A$17m cash as at 31 March 2021

Note: (1) Reported on a consolidated basis including Cue’s cash

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Strengthens Balance Sheet

Transaction will result in significant reductions in liabilities

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(1)
(2)
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(4)
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Deferred gas supply (pre-sale and take-or-pay) liabilities

NZOG will take up 50% of pre-sale and take-or-pay liabilities which is expected to have a book value of $21m as at the completion date[(3)] ($22.3m at 31 December 2020 as illustrated above).

Debt

In the quarter of completion, Central will repay $30 million of debt, reducing the outstanding loan balance to $36.8 million if the transaction completes in the September quarter.

Notes: (1) As at the most recent published financial statements, 31 December 2020; (2) Pro-forma balances illustrate the impact on liabilities as at 31 December 2020 as if the transaction had completed at that time; (3) Based on Central’s expected book value for these liabilities if the Transaction completes on 1 August 2021; (4) Post transaction debt balance illustrates the balance of outstanding debt if the Transaction completes in the September 2021 quarter.

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Central’s Key Milestone Activities

CY2021 Q2 Q3 Q4	CY2021 Q2 Q3 Q4	CY2021 Q2 Q3 Q4	CY2021 Q2 Q3 Q4	CY2022	CY2022	CY2022
		Q3	Q4	Q1	Q2	Q3
Divestment announced / completes
Pay-down $30m of debt and $21m liability reduction(1)
Range pilot testing
Mereenie re-completions (x4)
Mereenie new production wells (x2)
Range permitting and approvals
Range pre-FID design & engineering(2)
Zevon seismic test line
Zevon seismic and well planning(2)
Palm Valley Deep exploration well(1)
Dingo Deep exploration well(1)
Drill Orange-3 exploration well(2)
Range FID target(2)

Notes: (1) Subject to completion of Transaction; (2) Subject to investment decision

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Appendix 1: Total Transaction Value (expected adjustments at Completion)

$ million		Effective Date (1 July 2020)	Expected adjustments(1)	Expected at Completion(1)
Upfront cash		29
less: completion adjustment	1		(5)
add: reimbursement of carried expenditure	2		5	29
Agreed Carry Programme (Central’s share)		40
less: reimbursement of carried expenditure	3		(5)	35	3
Assumption of obligation to supply gas less: deliveries of gas	4	23 (2)	(2)	21 (3)
Total Transaction Value		92	(7)	85
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Upfront cash payment to be adjusted for:

• 1 (-) NZOG Entities' 50% share of free cash generated from the Sale Assets between the Effective Date (1 July 2020) and the Completion Date, expected to be c$5m[(1)] ; and

• 2 (+) Central's share of development, appraisal and exploration activity to be funded by NZOG Entities per the Agreed Carry Program expected to be c$5m[(1)] (See point 3 below)

Adjusted for spend on development, appraisal and exploration activities between the Effective Date and the Completion Date, which are covered by the Agreed Carry Program (expected to be c$5m[(1)] )

Change in value of liabilities due to deliveries of gas under the pre-sale or take-or-pay arrangements, between the Effective Date and the expected Completion Date. NZOG’s share of obligation is expected to be 4.2 PJ[(3)] at completion.

Notes: (1) Estimated value at the assumed completion date of 1 August 2021 and subject to the actual cash flows and working capital movements prior to completion; (2) Based on Central’s book value for these liabilities at the effective date, including pre-sale subsequently executed in December 2020; (3) Based on Central’s expected book value for these liabilities if the Transaction completes on 1 August 2021.

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A endix 2: Reserves and Resources information pp

Oil and Gas Reserves and Resources	Before	After
CTP Share	transaction	transaction
As at 30 June 2020	(PJe)	(PJe)
Proved (1P)	127.7	61.7
Proved and probable (2P)	161.2	78.4
Proved, probable and possible (3P)	205.4	100.5
Contingent (2C)*	240.5	187.5

Reserves and contingent resources

Reserves and contingent resources for the Mereenie, Palm Valley and Dingo fields in this report are as at 30 June 2020 and were first reported to ASX on 24 July 2020, adjusted for Central’s reduced interests as a result of this Transaction.

• Includes 2C contingent resources for the Range Gas Project first reported to the market on 20 August 2019.

Central confirms that it is not aware of any new information or data that materially affects the information included in those announcements and all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed.

Prospective Resources – Amadeus exploration targets (CTP Share after transaction)

		Resources Estimates The volumes of Prospective Resources included in this presentation represent the unrisked recoverable volumes derived from Monte Carlo probabilistic volumetric analysis for each prospect as first reported to ASX on 7 August 2020 for Dingo, Orange and Palm Valley, adjusted for Central’s reduced interests as a result of this Transaction. Inputs required for these analyses have been derived from offset wells and fields relevant to each play and field. Recovery factors used have been derived from analogous field production data. Cautionary statement: the estimated quantities of petroleum that may_potentially be recovered_by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. Central confirms that it is not aware of any new information or data that materially affects the information included in those announcements and all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed.
Lead / Prospect	Target formation Permit Permit Interest (after transaction) Low Estimate P90 Recoverable (PJ) Best Estimate P50 Recoverable (PJ) High Estimate P10 Recoverable (PJ) Mean Recoverable (PJ)
Dingo Deep	Pioneer L7 50% 2.5 8.5 27.5 13.0
	Areyonga L7 50% 5.0 16.0 44.0 21.5
Orange-3	Arumbera EP82(DSA) 100% 14 49 148 71
	Pioneer EP82(DSA) 100% 15 67 233 107
	Areyonga EP82(DSA) 100% 49 168 456 223
Palm Valley Deep	Arumbera OL3 50% 13 37.5 140 61.5
Aggregate Gas 344 497

Resources Estimates

The volumes of Prospective Resources included in this presentation represent the unrisked recoverable volumes derived from Monte Carlo probabilistic volumetric analysis for each prospect as first reported to ASX on 7 August 2020 for Dingo, Orange and Palm Valley, adjusted for Central’s reduced interests as a result of this Transaction.

Inputs required for these analyses have been derived from offset wells and fields relevant to each play and field. Recovery factors used have been derived from analogous field production data.

Cautionary statement : the estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Central confirms that it is not aware of any new information or data that materially affects the information included in those announcements and all material assumptions and technical parameters underpinning the estimate continue to apply and have not materially changed.

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Notice and Legal Disclaimer

To the maximum extent permitted by law:

This presentation is not intended for prospective investors and does not purport to provide all of the information an interested party may require in order to investigate the affairs of Central Petroleum Ltd (“Company”). This presentation does not attempt to produce profit forecasts for the Company and should not be relied upon as a forecast or as a basis for investment in the Company. It presents details of scoping studies and does not present and should not be construed to present financial forecasts for potential shareholders or investors. The conclusions reached in this presentation are based on market conditions at the time of writing and as such may not be relied upon as a guide to future developments.

The information, data and advice herein is provided to recipients on the clear understanding that neither the Company nor any of its representatives, directors, officers, employees, agents or advisers (“Company Personnel”) makes any representation or warranty about its accuracy, reliability, completeness or suitability for any particular purpose and does not accept liability (including, but not limited to, for any expenses, losses, damages and/or costs (including, but not limited to, indirect or consequential damage)) nor take any responsibility of any kind whatsoever (including, but not limited to, whether in contract, tort, financial or otherwise) for the information, data or advice contained or for any omission or for any other information, statement or representation provided to any recipient (including, but not limited to, as a result of information, data or advice being inaccurate, unreliable, incomplete or unsuitable in any way and for any reason whatsoever). Recipients of this document must conduct their own investigation and analysis regarding any information, statement or representation contained or provided to any recipient or its associates by the Company or any of the Company Personnel. Each recipient waives any right of action, which it has now or in the future against the Company or any of the Company Personnel in respect of any errors or omissions in or from this document, however caused. Potential recoverable petroleum numbers are estimates only until the prospects are evaluated further by drilling and/or seismic and are un-risked deterministically derived (unless stated otherwise). The data and information herein are subject to change. Diagrams, charts and graphs are not to scale unless a scale is expressly provided.

This document is the property of the Company. The recipient of this presentation should take appropriate legal advice as to whether such receipt contravenes any relevant jurisdiction’s financial or corporate regulatory regimes, and, if so, immediately destroy this material or return it to the sender.

Reserves and contingent resources statements and other opinions expressed by the Company in this presentation may not have been reviewed by relevant Joint Venture partners. Therefore those reserves and contingent resources and opinions represent the views of the Company only. Activities which may be referred to in this presentation are subject to several contingencies inclusive of force majeure, access, funding, appropriate crew and equipment and may not have been approved by and relevant Joint Venture partners and accordingly constitute a proposal only unless and until approved.

This presentation may contain forward-looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which may be outside the control of the Company and could cause actual results to differ materially from these statements. These risks, uncertainties and assumptions include (but are not limited to) funding, exploration, commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals, cost estimates and other risk factors described from time to time in the Company's filings with the ASX. Actual values, results or events may be different to those expressed or implied in this presentation. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements. Any forward looking statement in this presentation is valid only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, or any other Listing Rules or Financial Regulators’ rules, the Company and the Company Personnel do not undertake any obligation to update or revise any information or any of the forward looking statement in this document if facts, matters or circumstances change or that unexpected occurrences happen to affect such a statement. Sentences and phrases are forward looking statements when they include any tense from present to future or similar inflection words, such as (but not limited to) "believe," “understand,” "estimate," "anticipate," "plan," "predict," "may," "hope," "can," "will," "should," "expect," "intend,“ “projects,” "is designed to," "with the intent," "potential," the negative of these words or such other variations thereon or comparable terminology, may indicate forward looking statements and conditional verbs such as "will," "should,“ "would," "may" and "could" are generally forwardlooking in nature and not historical facts.

No right of the Company or its subsidiaries shall be waived arising out of this presentation. All rights are reserved.

If the whole or any part of a provision of this “Notice and Legal Disclaimer” is invalid, illegal or unenforceable, then such provision will be severed and neither that part or provision or its severance will affect the validity or enforceability of the remaining parts or provisions.

© Central Petroleum Limited 2021

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Level 7, 369 Ann Street Brisbane QLD 4000 Australia

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Information
+61 (0)7 3181 3800
This ASX announcement was
approved and authorised for release
by Leon Devaney, Managing Director
and Chief Executive Officer
info@centralpetroleum.com.au
Investor and Media Inquiries
Greg Bourke: +61 0478 318 702
Sarah Morgan: +61 0421 664 969
info@centralpetroleum.com.au
www.centralpetroleum.com.au
Level 7, 369 Ann Street
Brisbane, Qld 4000, Australia
CENTRAL PETROLEUM LIMITED (ASX: CTP) 13
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