COMET RIDGE LIMITED — Investor Presentation 2021

Aug 2, 2021

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3 August 2021

Important notice and disclaimer

Disclaimer

This presentation (Presentation) has been prepared by Comet Ridge Limited (ABN 47 106 092 577) (Comet Ridge or the Company). The Presentation and information contained in it is being provided to shareholders and investors for information purposes only. Shareholders and investors should undertake their own evaluation of this information and otherwise contact their professional advisers in the event they wish to buy or sell shares. To the extent the information contains any projections, Comet Ridge has provided these projections based upon the information that has been provided to Comet Ridge. None of Comet Ridge or its directors, officers or employees make any representations (express or implied) as to the accuracy or otherwise of any information or opinions in the Presentation and (to the maximum extent permitted by law) no liability or responsibility is accepted by such persons.

Summary information

This Presentation contains summary information about Comet Ridge and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. It should be read in conjunction with Comet Ridge’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au.

ASX Releases

Investors are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Resource statements can be found in Comet Ridge’s ASX releases. Resource statements are provided to comply with ASX guidelines but investors are urged to read supporting information in full on the website.

Future performance

This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forwardlooking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance.

Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains such statements that are subject to known and unknown risks and uncertainties and other factors, many of which are beyond the control of Comet Ridge, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Such forward-looking statements are relevant at the date of this Presentation and Comet Ridge assumes no obligation to update such information.

Investment risk

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

An investment in Comet Ridge shares is subject to investment and other known and unknown risks, some of which are beyond the control of Comet Ridge. Comet Ridge does not guarantee any particular rate of return or the performance of Comet Ridge. Persons should have regard to the risks outlined in this Presentation.

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Agenda

1. Mahalo Acquisition Overview and Santos Arrangements

2. Mahalo Gas Project

3. Transaction Rationale 4. Key highlights

Appendices:

• A. Terms of the APLNG Acquisition and Conditions

• B. Loan Facility - Pure Asset Management

• C. Competent Person Statement

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Section 1

Mahalo Acquisition Overview and Santos Arrangements

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Comet Ridge to acquire additional 30% of Mahalo Gas Project for $20m

Strategic acquisition of an additional 30% equity interest in the Mahalo Gas Project from APLNG with compelling transaction metrics on an EV/2P and EV/3P basis

Strong transaction rationale underpinned by joint venture alignment between Comet Ridge and Santos Ltd

Payment in stages - $12m upfront consideration is fully funded via loan from Santos Ltd

Opportunity to leverage Santos’ modular plant design and operating base from nearby Arcadia CSG field

Mahalo is becoming a key Queensland gas development hub - poised to take advantage of ongoing favourable industry dynamics

Funded acquisition of APLNG’s 30% interest in Mahalo Gas Project

Transformational acquisition built on compelling metrics and Mahalo JV alignment

Comet Ridge has executed a binding agreement to acquire APLNG’s 30% interest in the Mahalo Gas Project

On completion, Comet Ridge will hold a 70% interest in the Mahalo Gas Project

Upfront consideration of $12m funded via Santos loan and deferred consideration of $8m, payable in tranches

• Compelling reserve metrics: - $0.25/GJ (2P Reserves) - $0.15/GJ (3P Reserves)

Santos to become development operator with Comet Ridge to undertake appraisal work (as agent) to drive FID timing

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Santos arrangements

Upfront consideration funded via Santos loan

Santos loan of up to $13.15m to fund upfront APLNG consideration and stamp duty costs

Loan is secured by first ranking charge over Comet Ridge’s Mahalo Gas Project interests

Interest accrues at 5.125% p.a.

Repayment of loan following exercise or expiry of Option 1

If Santos exercise Option 1, that part of the Santos loan ($5.14m) is extinguished

Opportunity for Santos to equalise Mahalo interests

Arrangements provide for equity alignment in the Mahalo Gas Hub area permits between Comet Ridge and Santos

Continuity of operator – Santos has been Mahalo appraisal operator and will continue into development

Santos firm option to acquire 12.86% of Mahalo from Comet Ridge (STO  to 42.86%) at proportional acquisition value

Expansion option – Santos right (on terms to be agreed) to  Mahalo interest to 50% and acquire 50% of Mahalo North and Mahalo East

Option term is six months from completion of APLNG acquisition

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Section 2

Mahalo Gas Project

Mahalo Gas Project – strong project fundamentals

✓ Significantly appraised project

• Over 20 appraisal wells

• Including two pilot schemes with both vertical and lateral (horizontal) wells

✓ Proven flow rates

• Mahalo 7 lateral pilot well flowed 426 Mcfd[1] from 361m in coal

• Mira 6 lateral pilot well flowed 1.4 MMcfd[2] from 924m in coal

• Development wells will be up to 1500+m in coal (targeting > 2 MMcfd)

✓ Certified 2P reserves

• Gross 2P reserves of 266 PJ within the PL areas only

• Equivalent to 60 TJ/d production for 12 years

• Further upside from Mahalo North and Mahalo East blocks

• 1 Mcfd is thousands of standard cubic feet of gas per day. 426 Mcfd corresponds to approx. 0.50 TJ/d. TJ/d is terrajoules (energy) per day.

• 2 MMcfd is millions of standard cubic feet of gas per day. 1.4 MMcfd corresponds to approx. 1.47 TJ/d.

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Mahalo Gas Project – development ready

✓ Low cost development

• shallow coal depth

• high productivity per well

• low water production and no coal fines

• sales spec gas (with minimal C02)

✓ Fully licenced

• Development ready gas project

• Petroleum Leases (PL) and environmental approvals granted

✓ Close to pipelines and markets

• approximately 65km to Jemena and GLNG pipelines

• Providing connection to key Gladstone domestic and international market and Wallumbilla gas hub

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Section 3

Transaction rationale

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Transaction Rationale

Material increase in Comet Ridge Reserves and Contingent Resources

Alignment of Comet Ridge and Santos as Mahalo joint venture partners

Unlocks entire Mahalo Gas Hub area – Common facilities, scale and cost efficiencies East coast gas market – Poised to take advantage of favourable industry dynamics

Material increase in Comet Ridge Reserves and Contingent Resources

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Material increase in COI share of Certified Reserves and Resources (PJ)
for Mahalo Gas Project
400.0
 134%
 75%
300.0
 148%
 75%
200.0
 151%
100.0
0.0
2P 3P 1C 2C 3C
COI current 40% interest Post Acquisition (COI 70%), before Santos option exercise
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Comet Ridge increase in reserves/resources due to:

• stepping up from 40% equity to 70% equity in existing Mahalo Permits; and

• Acquiring a 70% interest in the new shallow areas being included in the Mahalo JV.

1P reserves 75% 2P reserves 75% 1C resources 151% 2C resources 148% 3C resources 134%

Notes: refer to Competent Person disclosure - Reporting on Oil and Gas Activities on page 23 of this presentation.

Alignment of Comet Ridge and Santos as Mahalo joint venture partners

• Transaction creating a streamlined joint venture between Comet Ridge and Santos

• Continuity of Mahalo operator – Santos previously operated exploration/appraisal and will continue as development operator

• Option agreements (if exercised) create equalised 50/50 equity interests between Comet Ridge and Santos across all of the Mahalo Gas Hub permits

• Potential for a larger initial development project comprising the PL areas of Mahalo + Mahalo North + Mahalo East

• Opportunity to leverage Santos operating capability from nearby Arcadia CSG field and lower cost modular plant design

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Unlocks entire Mahalo Gas Hub area

• Streamlined Comet Ridge and Santos development , providing material equity interests across the entire Mahalo Gas Hub

• Capital efficient development - processing all gas across the entire Mahalo Gas Hub area through a single plant and export pipeline

• Initial development and production focus will be on the U-shaped high productivity fairway generating highest gas production output per well at lowest drilling cost

• Provides for additional high productivity development wells from inclusion of Mahalo North (ATP 2048) and Mahalo East (ATP 2061) into the Mahalo JV project

• Comet Ridge’s concept of 60-80 TJ/d for the Mahalo JV development could climb to 80-120 TJ/d for the entire Mahalo Gas Hub area from the high productivity fairway ,

• Significant new source of gas to meet east coat gas demand

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East Coast Gas Market – favourable dynamics for new gas supply

Southern gas production decline forecasts have worsened

Gas prices have strengthened since July ‘20 lows

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Southern gas production (PJ/a)
500
400
300
200
100
0
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Victoria Cooper NSW - Narrabri
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Source: EnergyQuest

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Section 4

Key highlights

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Key highlights

Comet Ridge to acquire APLNG’s 30% interest in Mahalo Gas Project, taking ownership to 70%

JV partner Santos providing a loan package to fund the upfront consideration in exchange for an option for increased equity in the Mahalo Gas Project and northern Mahalo blocks

Transaction unlocks Mahalo Gas Project providing pathway to project development with Santos to be development operator

Significant increase in Comet Ridge 2P and 3P Gas Reserves on completion, on favourable metrics

A key Queensland gas development hub - poised to take advantage of ongoing favorable industry dynamics

Appendices

Appendix A - APLNG Acquisition terms

Assets being acquired

• 30% interest in Mahalo Gas Project increasing Comet Ridge participating interest to 70%

• Mahalo Gas Project comprises PL 1082, PL 1083, PCA 302, PCA 303 and PCA 304,

• Mahalo JV area will be expanded to include the following areas (green areas on map):

• PL 1083 West Shallows area

• Lowesby Cutout Shallows area (expanded area of approx 989 km[2] )

Consideration payable to APLNG

• Upfront consideration of $12m payable on completion

• $8m deferred payment on the earlier of:

• Four annual instalments of $2m post completion; or

• A post-completion trigger event being Mahalo Gas Project FID or first gas, Comet Ridge change of control or sale of > 15% interest in Mahalo Gas Project by Comet Ridge;

• A deposit of $1m on execution of agreement (to be deducted from the upfront consideration)

Note that the Mahalo Gas Project encompasses the “shallows” areas of these blocks which is from surface down to the base of the Lower Mantuan Coal. The “Deeps” will continue to be held 50:50 by Santos and APLNG. There has been no activity in the Deeps since the Lowesby 1 well was drilled in 1991

1 PL is a Petroleum Lease which has been approved to be developed. PCA is a Potential Commercial Area which may usually require more appraisal and then federal and state environmental approvals before a development application (convert to a PL) can be made.

Appendix A - APLNG Acquisition terms (continued)

Conditions

• Qld Ministerial approval to transfer of title interests;

• Comet Ridge, Santos and APLNG entering into transfer, co-ordination and restructure deeds;

• Comet Ridge obtaining unconditional funding of not less than $13m – satisfied via the Santos loan;

• Award of new Mahalo environmental authority and financial assurance (to decouple from the existing Denison Trough JV environmental authority – Comet Ridge is not a party to this historical JV).

Timing

• It is anticipated the conditions will be satisfied within 3 to 4 months

• Completion should occur by late 2021

Appendix B – Term Loan Facility with Pure Asset Management

Two tranche term loan, with detached Facility structure warrants following each loan drawdown

$10m; comprising $6.5m for Tranche 1 and Facility size $3.5m for Tranche 2

12% p.a. prior to Mahalo Gas Project FID and Interest rate 10% thereafter

Term 48 months from utilisation of Tranche 1 loan

Non-amortising bullet repayment with Repayment voluntary prepayment allowed

Use of proceeds General corporate purposes of the Company

• 39.4m warrants

• Exercise price 16.5cps

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• Tranche 1 Exercise price of all warrants may adjust lower Warrants if the Company issues >15% of its issued capital below the warrant price, in any 12 month period

• 14.58m warrants to be issued if Tranche 2 loan drawn

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• Tranche 2 Exercise price lower of (i) 24cps; or (ii) 1.6 x Warrants 20-day VWAP prior to utilisation of Tranche 2 loan; or (iii) 1.6 x lowest price of any issuance prior to utilisation of Tranche 2 loan

Security

• First ranking general security over assets of Comet Ridge (and subsidiaries), excluding Mahalo Gas Project

• If Tranche 2 loan drawn, security will include a second-ranking charge over Mahalo

Appendix C – Competent Person Statement

Competent Person Statement and ASX Listing Rules Chapter 5 - Reporting on Oil and Gas Activities

The estimate of Reserves and Contingent Resources for the Mahalo Gas Project provided in this Presentation, is based on, and fairly represents, information and supporting documentation determined by Mr Timothy L. Hower of Sproule International (Sproule), in accordance with Petroleum Resource Management System guidelines. Mr Hower is a full-time employee of Sproule, and is a qualified person as defined under the ASX Listing Rule 5.42. Mr Hower is a Licensed Professional Engineer in the States of Colorado and Wyoming as well as being a member of The Society of Petroleum Engineers. Mr Hower has consented to the publication of the Reserve and Contingent Resource estimates for the Mahalo Gas Project in the form and context in which they appear in this Presentation.

The Reserve and Contingent Resource estimates for Comet Ridge’s current 40% interest in the Mahalo Gas Project, provided in this presentation, were released to the Market in the Company’s ASX announcement of 30 October 2019 and were estimated using the deterministic method with the estimate of Contingent Resources utilising the probabilistic method and not having been adjusted for commercial risk.

The Reserve and Contingent Resource estimates for the Mahalo Gas Project, pending completion of the APLNG acquisition, provided in this Presentation, have been prepared by Sproule International by taking into account Comet Ridge’s expected equity increase from 40% to 70% and including an expected 70% interest in the new PL 1083 West Shallows and Lowesby Cutout Shallows areas. The Reserves were estimated using the deterministic method with the estimate of Contingent Resources utilising the probabilistic method, and not having been adjusted for commercial risk.

Comet Ridge confirms that it is not aware of any new information or data that materially affects the information included in any of the announcements relating to the Mahalo Gas Project referred to above and that all of the material assumptions and technical parameters underpinning the estimates in the announcements continue to apply and have not materially changed.

FOR MORE INFORMATION Telephone: +61 7 3221 3661 Email: info@cometridge.com.au

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