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ABN 45 066 383 971

ASX RELEASE 6 December 2018

Notice of General Meeting, Explanatory Memorandum and Independent Expert's Report

Shareholders are advised that, pursuant to the Ironbark Gas Project’s WA-359-P Farmout Agreement and WA-409-P Option Agreement each entered into between Cue Exploration Pty Ltd ( CUE Exploration ), which is a wholly-owned subsidiary of Cue Energy Resources Limited ( CUE or the Company ), New Zealand Oil & Gas Limited ( NZOG ) and NZOG (Ironbark) Pty Limited ( NZOGIPL ), whose ultimate parent company is NZOG, as announced on 26 October 2018, the Company has despatched the enclosed Shareholder Information Booklet.

The Shareholder Information Booklet contains the following documents:

a) Notice of General Meeting;
b) Explanatory Memorandum; and
c) Independent Expert’s Report.

The General Meeting of the Company will be held at Allens, Level 37, 101 Collins Street, Melbourne on Tuesday, 8 January 2019 at 10am (AEDT).

A formal Notice of General Meeting is contained in Part 1 of this Shareholder Information Booklet.

The purpose of the General Meeting of the Company is to consider and, if thought fit, pass a resolution (the Proposed Resolution ) to approve:

a) the sale by CUE Exploration of a 15% participating interest in WA-359-P by CUE Exploration to NZOGIPL under the WA-359-P Farmout Agreement between CUE Exploration, NZOG and NZOGIPL ( WA-359-P Farmout Agreement ); and
b) the granting of an option by CUE Exploration to NZOGIPL to purchase a 5.36% participating interest in WA-409-P under the WA-409-P Option Agreement between CUE Exploration, NZOG and NZOGIPL ( WA-409-P Option Agreement ),
(together, the Proposed Transactions ).

Important Document

This Shareholder Information Booklet contains important information regarding the Proposed Transactions and how to vote in respect of the Proposed Resolution. You should carefully read this Shareholder Information Booklet in its entirety and seek professional advice where necessary prior to voting.

T +61 3 8610 4000 F +61 3 9614 2142 E [email protected] www.cuenrg.com.au Level 3, 10-16 Queen Street, Melbourne Victoria 3000, Australia

Independent Directors Recommendation

The Independent Directors are of the view that the Proposed Transactions:

represent the best option currently available to the Shareholders to meet CUE’s exploration funding commitment obligations in respect of WA-359-P and WA-409-P and reach the next stage of exploration and drilling program for the Ironbark Prospect; and
are in the best interests of the Company,

and therefore, the Independent Directors unanimously recommend that the Shareholders vote in favour of the Proposed Resolution approving the Proposed Transactions.

Independent Expert

The Company has engaged PKF Melbourne Corporate Pty Ltd ( PKF Corporate Advisory or Independent Expert ) as an independent expert to provide a report in respect of the Proposed Transactions. The Independent Expert has concluded that the Proposed Transactions are not fair but reasonable to the Non-Associated Shareholders. The Independent Directors’ comments on the Independent Expert’s Report, valuation methodology applied, and its findings are contained in Section 6 of the Explanatory Memorandum.

The Independent Expert’s Report is included in Part 3 of this Shareholder Information Booklet.

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Melanie Leydin Company Secretary

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ABN 45 066 383 971

SHAREHOLDER INFORMATION BOOKLET

GENERAL MEETING TO CONSIDER APPROVAL OF WA359-P FARMOUT AGREEMENT AND WA-409-P OPTION AGREEMENT BETWEEN CUE EXPLORATION PTY LTD, NEW ZEALAND OIL & GAS LIMITED AND NZOG (IRONBARK) PTY LIMITED

This Shareholder Information Booklet contains the following documents:

1. Notice of General Meeting;

2. Explanatory Memorandum; and

3. Independent Expert’s Report.

The Independent Directors of CUE unanimously recommend that Shareholders vote in favour of the Proposed Resolution.

The Independent Expert has concluded that the Proposed Transactions outlined in this Shareholder Information Booklet are not fair but reasonable to the Non-Associated Shareholders and consider that the advantages to the Proposed Transactions outweigh the disadvantages.

This Shareholder Information Booklet contains important information regarding the Company and in respect of determining how to vote on the Proposed Resolution. This Shareholder Information Booklet should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional advisor without delay and prior to voting.

Important Notices

General

You should read this Shareholder Information Booklet in its entirety before making a decision on how to vote on the Proposed Resolution to be considered at the General Meeting. The Notice of General Meeting convening the General Meeting is contained at Part 1 of this Shareholder Information Booklet. A Proxy Form for the General Meeting is enclosed with that notice.

Defined Terms

Capitalised terms in this Shareholder Information Booklet are defined in the Glossary in Section 7 of Part 2 of this Shareholder Information Booklet, unless stated otherwise.

A reference to A$ is a reference to Australian Dollars. A reference to US$ is a reference to United Stated Dollars.

Purpose of this Booklet

The purpose of this Booklet is to:

Convene a General Meeting of Members of the Company;
Provide Shareholders with all relevant information in respect of the Proposed Resolution (including the Proposed Transactions); and
Provide such information as is prescribed by the Listing Rules and/or the Corporations Act.

ASX

A copy of this Shareholder Information Booklet has been lodged with the ASX. None of the ASX or any of their officers takes any responsibility for the contents of this Shareholder Information Booklet.

Input from other parties

PKF Corporate Advisory (or Independent Expert ) has prepared the Independent Expert’s Report in relation to the Proposed Transactions between CUE Exploration, NZOGIPL and NZOG as described in Part 2 of the Shareholder Information Booklet. The Independent Expert takes responsibility for the Independent Expert’s Report as contained at Part 3 of the Shareholder Information Booklet. The Independent Expert is not responsible for any other information contained in this Shareholder Information Booklet. Shareholders are urged to read the Independent Expert’s Report carefully to understand the scope of the report, the methodology of the assessment, the source of information and the assumptions made. The Independent Expert has appointed SRK Consulting (Australasia) Pty Ltd ( SRK Consulting ) as a technical adviser on the terms and for the purposes set out in the Independent Expert's Report.

Other than in respect of the information provided by the Independent Expert, the information contained

in this Shareholder Information Booklet has been prepared by the Company and is the responsibility of the Company.

Investment decisions

This Shareholder Information Booklet does not take into account the investment objectives, financial situation, tax position, requirements or personal circumstances of any particular person. This Shareholder Information Booklet should not be relied on as the sole basis for any investment decision in relation to your shares. Independent financial and taxation advice should be sought before making any decision to invest in the Company or in relation to the Proposed Resolution set out in Part 1 of this Shareholder Information Booklet.

Shareholders should carefully consider the possible disadvantages and risks associated with the Proposed Transactions identified in Sections 4.4 and 5 of Part 2.

Shareholders should carefully consider these factors in light of their particular investment objectives, financial situation and tax position. If Shareholders are in any doubt on these matters, they should consult their legal, financial, taxation or other professional advisor before deciding how to vote on the Proposed Resolution.

Forward looking statements

This Shareholder Information Booklet includes certain forward looking statements which have been prepared based on current expectations about future events. The forward looking statements are however, subject to risks, uncertainties and assumptions that could cause actual results to differ materially from expectations described in such forward looking statements. The assumptions on which forward looking statements are based may prove to be incorrect or may be affected by matters not currently known to, or considered material by, the Company. Past performance is no indication of future performance.

Forward looking statements contained in this Shareholder Information Booklet reflect views held at the date of this booklet only. You should not place undue reliance on those statements.

Independent Directors

The Proposed Transactions have been considered and negotiated by the independent directors of the Company (being Mr Peter Hood and Mr Richard Malcolm as at the date of this Notice of General Meeting) on behalf of the Company ( Independent Directors ).

Shareholder Information

Shareholders wishing to obtain further information can contact the Company between 9 a.m. and 5 p.m. AEDT on: +61 3 8610 4000.

T +61 3 8610 4000 F +61 3 9614 2142 E [email protected] www.cuenrg.com.au Level 3, 10-16 Queen Street, Melbourne Victoria 3000, Australia

SHAREHOLDER INFORMATION BOOKLET PART 1 – NOTICE OF GENERAL MEETING

The General Meeting of

CUE ENERGY RESOURCES LIMITED ABN 45 066 383 971

Will be held at 10 AM (AEDT) on Tuesday, 8 January 2019

Allens, Level 37, 101 Collins Street, Melbourne

T +61 3 8610 4000 F +61 3 9614 2142 E [email protected] www.cuenrg.com.au Level 3, 10-16 Queen Street, Melbourne Victoria 3000, Australia

CUE ENERGY RESOURCES LIMITED

ABN 45 066 383 971

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of Shareholders of CUE Energy Resources Limited (the Company or CUE ) will be held at Allens, Level 37, 101 Collins Street, Melbourne at 10am (AEDT) on Tuesday, 8 January 2019.

Capitalised terms have the meaning provided in the Glossary in Section 7 of Part 2 of this Shareholder Information Booklet, unless stated otherwise.

This Notice of General Meeting is accompanied by a Proxy Form and an Explanatory Memorandum which contains an explanation of, and information regarding, the Proposed Resolution. The Proxy Form and Explanatory Memorandum form part of this Notice of General Meeting.

The Company’s Independent Directors are of the view that the Proposed Transactions are in the best interests of the Company and unanimously recommend the approval of the Proposed Transactions. A complete discussion of the Independent Directors’ recommendation is found in sections 1.4 and 6 of the Explanatory Memorandum on pgs. 12 and 22.

The Company has obtained an Independent Expert’s Report in respect of the Proposed Transactions being put to Shareholders for approval under the Proposed Resolution. The Independent Expert has concluded that Proposed Transactions are not fair but reasonable to Non-Associated Shareholders and consider that the advantages of the Proposed Transactions outweigh the disadvantages. The Independent Expert’s Report is included, in full, in Part 3 to the Shareholder Information Booklet. The Independent Directors have provided their comments in relation to the Independent Expert's conclusion in section 6 of the Explanatory Memorandum on pg. 22 and Shareholders are encouraged to read and consider the Independent Directors' comments in section 6 carefully.

Resolution – CUE Exploration to sell 15% participating interest in WA-359-P and grant an option to acquire 5.36% participating interest in WA-409-P to NZOGIPL

To consider and, if thought fit, pass the following as an ordinary resolution:

“That, for the purposes of ASX Listing Rule 10.1 and for all other purposes, approval is given for CUE Exploration to :

a) sell to NZOGIPL a 15% participating interest in WA-359-P under the WA-359-P Farmout Agreement; and
b) grant to NZOGIPL an option to purchase a 5.36% participating interest in WA-409-P under the WA-409-Option Agreement,

on the terms and conditions as set out in the Explanatory Memorandum (the Proposed Transactions ).”

Voting Exclusion

The Company will disregard particular votes cast in favour of this resolution by certain persons. Details of the applicable voting exclusions are set out in the "Voting Exclusions" section of the Explanatory Memorandum to this Notice.

Notes

Eligibility to Vote

Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) permits the Company to specify a time, not more than 48 hours before a general meeting, at which a 'snap-shot' of shareholders will be taken for the purposes of determining shareholder entitlements to vote at the General Meeting.

The Board has determined that the registered holders of fully paid ordinary shares at 7pm AEDT on 6 January 2019 will be taken to be holders of ordinary shares for the purposes of the General Meeting and accordingly, will be entitled to attend and vote at the General Meeting.

Voting by Proxy

An eligible Shareholder can vote in person at the General Meeting or appoint a proxy or, where a Shareholder is entitled to two or more votes, two proxies. Where two proxies are appointed, a Shareholder may specify the number or proportion of votes to be exercised by each proxy appointed. If no number or proportion of votes is specified, each proxy appointed will be taken to exercise half of that Shareholder’s votes (disregarding fractions).

If you cannot attend the General Meeting, you are strongly urged to complete the Proxy Form and return it to the Company's Share Registry, Computershare (see Proxy Form for details).

An appointed proxy need not themselves be a Shareholder.

To be valid, the appointment of a proxy (made using a properly completed and executed Proxy Form) must be received by the Company no later than 10am AEDT on Sunday, 6 January 2019. Proxy Forms can be submitted in two ways – please refer to the "Proxy Instructions" at the back of this Shareholder Information Booklet.

If a Proxy Form is signed by an attorney, a shareholder must also send in the original or a certified copy of the power of attorney or other authority under which the Proxy Form is signed.

Undirected Proxies

The chair of the General Meeting ( Chair ) intends to vote undirected proxy votes in favour of the Proposed Resolution (subject to the voting exclusions below).

Voting by Corporate Representative

A Shareholder or proxy which is a corporation and entitled to attend and vote at the General Meeting may appoint an individual to act as its corporate representative to vote at the General Meeting. The appointment must comply with section 250D of the Corporations Act 2001 (Cth) (the Corporations Act ). The representative should bring to the General Meeting evidence of his or her appointment unless it has previously been provided to the Company.

Voting by Attorney

A Shareholder entitled to attend and vote at the General Meeting is entitled to appoint an attorney to attend and vote at the General Meeting on the Shareholder's behalf. An attorney need not themselves be a Shareholder.

The power of attorney appointing the attorney must be signed and specify the name of each of the Shareholder, the Company and the attorney, and also specify the meeting at which the appointment may be used. The appointment may be a standing one.

To be effective, the power of attorney must also be returned in the same manner, and by the same time, as specified for Proxy Forms.

Voting Exclusions

The Corporations Act and the ASX Listing Rules require that certain persons must not vote in particular ways, and the Company must disregard particular votes cast by or on behalf of certain persons, on the Proposed Resolution to be considered at the General Meeting. Please refer to the "Voting Exclusions" section in the Explanatory Memorandum for more details, and note that NZOG and its associates (including NZOG Offshore Ltd), is not able to vote on the Proposed Resolution.

Resolutions

All items of business involving a vote by Shareholders require ordinary resolutions, which means that, to be passed, the item needs the approval of a simple majority of the votes cast by Shareholders entitled to vote on the resolution.

The Independent Directors of CUE are of the view that the Proposed Transactions are in the best interests of the Company and unanimously recommend the approval of the Proposed Resolution contained in this Notice of General Meeting and encourage eligible Shareholders to vote in favour of the Proposed Resolution.

BY ORDER OF THE BOARD

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Melanie Leydin Company Secretary Dated: 6 December 2018

SHAREHOLDER INFORMATION BOOKLET PART 2 – EXPLANATORY MEMORANDUM

CUE ENERGY RESOURCES LIMITED

ABN 45 066 383 971

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of the Notice of General Meeting dated 6 December 2018 and should be read in conjunction with that Notice as this Explanatory Memorandum contains important information on the Proposed Resolution.

Independent Director’s Summary

The Ironbark Prospect has the potential to add a step change in value to CUE if successful. The Independent Directors are strongly of the view that the Proposed Transactions are in the best interests of the Company and unanimously recommend that the Shareholders vote in favour of the Proposed Resolution because:

after actively marketing the prospect for three years and evaluating alternative funding arrangements, the Proposed Transactions represent the best option currently available for CUE to meet its exploration funding commitment obligations in respect of WA-359-P and WA409-P and reach the next stage of exploration and drilling program for the Ironbark Prospect;
the consideration to be received from NZOGIPL for the Proposed Transactions is greater than the consideration paid by BP in respect of the BP WA-359-P Option and is equal to the consideration paid by Beach under the Beach Farmout Agreement which are comparable transactions to the Proposed Transactions (in each case, when consideration is measured on a per percentage interest basis), and is consistent with market norms;
in respect of WA-359-P the Proposed Resolution will provide a pathway for CUE to fulfil the title commitment requirement for WA-359-P of drilling an exploration well, which may otherwise not be possible to achieve by CUE itself – failure to fulfil this requirement by the permit expiry date of 25 April 2019 is likely to result in CUE being in default of title commitments;
NZOG is a technically and financially strong partner and their participation in the permits is supported by both BP and Beach Energy; and
the participation of BP and Beach in WA-359-P is also currently conditional on the adoption of the Proposed Resolution. If the Proposed Resolution is not passed, CUE is unlikely to be able to fulfil certain requirements under its agreements with BP and Beach respectively by the 30 January 2019 Co-ordination Agreement deadline (see Section 2.2) and drilling of the Ironbark Prospect will likely not proceed.

1. Resolution – CUE Exploration to sell 15% participating interest in WA-359-P and grant an option to acquire 5.36% participating interest in WA-409-P to NZOGIPL

1.1. General

The Proposed Resolution seeks approval from Shareholders for the Company to enter into the Proposed Transactions. In summary, the Proposed Transactions are agreements to sell a 15% participating interest in WA-359-P to NZOGIPL (in accordance with the WA-359-P Farmout Agreement) and to grant to NZOGIPL an option to purchase 5.36% participating interest in WA409-P (in accordance with the WA-409-P Option Agreement).

Please see further details regarding the Proposed Transactions in sections 1 to 6 of this Explanatory Memorandum.

1.2. Reasons for Seeking Shareholder Approval – ASX Listing Rule 10.1

ASX Listing Rule 10.1 requires shareholder approval, by ordinary resolution, for the disposal of a substantial asset by an ASX listed company or its company group to a substantial holder. A substantial holder is a shareholder with greater than 10% of the issued share capital of the company. NZOG, which is the ultimate parent company of NZOGIPL, is a substantial holder of the Company, as it held a relevant interest of 50.04% in the Company’s securities at the time of entering into the WA-359-P Farmout Agreement and WA-409-P Option Agreement and continues to be a substantial holder.

For the purposes of Listing Rule 10.1, an asset will be substantial if its value, or the value of the consideration for it, is 5% or more of the equity interests of the ASX listed company as set out in the latest accounts given to ASX under the Listing Rules. The assets subject to the Proposed Transactions (being a 15% participating interest in WA-359-P and a 5.36% participating interest in WA-409-P) are substantial assets of the Company's group for this purpose.

Therefore, shareholder approval for the Proposed Transactions is required pursuant to Listing Rule 10.1.

1.3. Independent Expert Report – Requirements of ASX Listing Rule 10.10

In accordance with ASX Listing Rule 10.10, the Company must include with the Notice of General Meeting an Independent Expert Report in relation to the disposal of a substantial asset to a substantial holder. The Independent Expert’s Report on the fairness and reasonableness of the Proposed Transactions has been prepared by PKF Corporate Advisory. It relies in part on the “Independent Specialist Report on the WA-359-P and WA-409-P permits" prepared by the technical expert SRK Consulting ( Independent Specialist Report ). SRK Consulting was engaged by PKF Corporate Advisory to undertake an independent valuation of the Ironbark Prospect assets held by CUE. Both reports are included for reference with this Notice of General Meeting. The Independent Expert’s Report and the Independent Specialist Report can also be downloaded from the Company’s website at www.cuenrg.com.au and the ASX company

announcements platform at www.asx.com.au. Shareholders may receive a hard copy at no cost, by contacting the Company on (03) 8610 4000.

The Independent Expert has concluded that the Proposed Transactions are not fair but reasonable to the Non-Associated Shareholders (see sections 9 and 10 of the Independent Expert’s Report). The Independent Expert has also concluded that the advantages to the Proposed Transactions outweigh the disadvantages. The Independent Expert’s conclusion on “fairness” of the Proposed Transactions was measured by reference to the preferred valuation of the WA-359-P asset prepared by SRK Consulting and not by comparable transactions in the oil and gas sector, such as the recent agreements negotiated by CUE with BP and Beach at armslength in a competitive and open market in respect of the same permit (further details in respect of these transactions with BP and Beach are provided in section 2.2 and 2.3 below respectively).

The Independent Directors consider,in respect of the valuation of WA-359-P provided by SRK Consulting, the following:

the wide breadth of the valuation range provided (which ranges from A$570,000 to A$80.400 million for a 15% interest in WA-359-P), undermines the usefulness of the SRK Consulting valuation;
the fact that, at the high end of the range, the valuation of 15% Interest in WA-359-P (A$80.400 million) provided by SRK Consulting (which was based on the same information regarding WA-359-P that is currently publicly available), represents nearly two times CUE’s current market capitalisation (A$44.700 million as at 27 November 2018); and
the significant difference in the values between using the valuation of WA-359-P provided by SRK Consulting and the valuation provided by the Independent Expert based on the comparable market transactions methodology. Given the context, the Independent Directors maintain that the comparable market transactions methodology is the appropriate methodology to evaluate the Proposed Transactions and the Independent Directors believe that adopting this methodology could have led to a conclusion that the Proposed Transactions were both fair and reasonable.

The Independent Directors have set out in more detail their concerns with the valuation of WA359-P in section 6 below. Further, the Independent Directors note that, the determination of not fair but reasonable is not an uncommon determination in respect of these types of transactions (within the oil and gas industry).

1.4. Independent Director’s Recommendation

The Company’s Independent Directors are of the view that the Proposed Transactions are in the best interests of the Company and therefore unanimously recommend that you vote in favour of this Proposed Resolution.

The Independent Directors have reached this conclusion for the following primary reasons:

CUE has engaged with a range of counterparties in respect of farm-in and other arrangements for WA-359-P and, following reaching agreement with BP and Beach, is of the view that the Proposed Transactions represent the best option currently available for CUE to meet its exploration funding commitment obligations in respect of WA-359-P and WA-409-P and reach the next stage of exploration and drilling program for the Ironbark Prospect;
the consideration to be received from NZOGIPL for the Proposed Transactions is greater than the consideration paid by BP in respect of the BP WA-359-P Option and is equal to the consideration paid by Beach under the Beach Farmout Agreement, which in the opinion of the Independent Directors, are comparable transactions (in each case, when consideration is measured on a per percentage interest basis);
if CUE does not drill a commitment well for WA-359-P there is a significant risk that CUE will not be able to meet its title commitments in respect of WA-359-P by the current permit expiry date of 25 April 2019 which is likely to cause it to be in default of its title commitments;
despite approaching a range of potential counterparties over the past approximately three years, CUE does not currently have any alternative proposals which would be satisfactory to either CUE or BP and Beach and which could be implemented on a timetable which would meet CUE’s exploration funding commitment obligations in respect of WA-359-P (which expires in April 2019) and WA-409-P. Approval of the Proposed Transactions by the Shareholders is thus crucial to maintaining the WA-359-P permit and reaching the next stage of exploration and drilling program for the Ironbark Prospect; and
given its current cash position, it would not be possible or prudent for CUE to fund exploration costs on its own. If the Proposed Transactions proceed, subject to completion under the Co-ordination Agreement occurring, BP, Beach and NZOG will cumulatively cover approximately US$11.3 million of CUE’s share of the Ironbark-1 Exploration Well costs. Thus, CUE will maintain a significant interest in the Ironbark Prospect (21.5% of WA-359-P) while CUE’s partners will cover a substantial portion of the associated well expenses. In the oil and gas industry this is referred to as a “ free carry”.

1.5. Voting Exclusions

The Company will disregard any votes cast in favour of the Proposed Resolution by:

(a) a party to the Proposed Transactions or any person who might receive a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Proposed Resolution is passed – this would include NZOG; and
(b) an associate of that person (or persons) – this would include associates of NZOG (including NZOG Offshore Ltd).

However, the Company will not disregard a vote if:

(c) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(d) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

2. Background to the Proposed Transactions

2.1. Ironbark Prospect

The Ironbark Prospect is a giant Mungaroo Formation prospect that is mapped with an area of up to 400km[2] and a best technical estimate of 15 trillion cubic feet (Tcf) of prospective recoverable gas resource[1] based on an internal assessment performed by the Company. The Ironbark Prospect is less than 50km from the North Rankin platform (which ties into North West Shelf LNG Plant) and is near the Pluto and Wheatstone LNG project infrastructure, providing multiple cost-effective commercialisation options. The Ironbark Prospect has the potential to add company changing value to CUE in the near term if successful.

The Ironbark Prospect is contained within petroleum exploration permits WA-359-P and WA-409-P (see map below).

1 Prospective Resource Estimates Cautionary Statement

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

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2.2. WA-359-P

As at the date of this Explanatory Memorandum, CUE holds 100% of the legal and beneficial title to WA-359-P.

The Company announced on 13 October 2016 that it had granted BP Developments Australia Pty Ltd ( BP ) an option to acquire a 42.5% participating interest in WA-359-P and to participate in the proposed Ironbark-1 Exploration Well (the BP WA-359-P Option ).

On 29 November 2017, the Company announced that it had entered into a farmout agreement with Beach Energy Limited ( Beach ), whereby Beach would acquire a 21% equity interest in WA-359-P (in consideration for among other things, a free carry of CUE for 4% of the cost of drilling the Ironbark-1 Exploration Well in WA-359-P and Beach reimbursing CUE A$900,000 for past costs), conditional upon (among others conditions), BP exercising the BP WA-359-P Option (the Beach Farmout Agreement ).

On 9 August 2018, the Company announced that CUE had received notification of approval from the National Offshore Petroleum Titles Administrator of a suspension of work program commitments and extension of WA-359-P permit term until 25 April 2019.

On 26 October 2018, the Company announced that:

it had agreed with BP to extend the BP WA-359-P Option to 25 April 2019 (note that the Co-ordination Agreement (as defined below) further extended the BP WA359-P Option to 31 July 2019);
it had entered into the WA-359-P Farmout Agreement (see section 3 below);
it had executed an agreement with BP, Beach, NZOGIPL and NZOG ( Coordination Agreement ), whereby each of CUE, BP, Beach and NZOGIPL has

agreed to form a joint venture to drill the Ironbark-1 Exploration Well in WA-359-P conditional on the following conditions which are material or subject to risk (among others):

receipt of the Company's shareholder approval for the Proposed Transactions, or providing alternative funding for the share of the Ironbark-1 Exploration Well which would have otherwise been funded through the Proposed Transactions, by 31 Jan 2019;
CUE depositing a specified cash amount into an escrow account for its uncarried share of the estimated well costs (being approximately US$8.08 million based on the current estimate);
regulatory approval of a suspension of work program commitments and an extension to the WA-359-P permit term,

(the Co-ordination Agreement Conditions ).

Subject to completion occurring under the Co-ordination Agreement, BP, Beach and NZOGIPL have agreed to free-carry CUE up to a total of US$11.3 million (which may be adjusted) in respect of CUE's share of the Ironbark-1 Exploration Well costs. CUE intends to fund its remaining share of the Ironbark-1 Exploration Well costs using its cash reserves, which is to be deposited into escrow account referred to above in accordance with the Co-ordination Agreement.

2.3. WA-409-P

As at the date of this Explanatory Memorandum, CUE holds a 20% participating interest in WA-409-P (which adjoins WA-359-P). BP holds an 80% participating interest in WA 409-P and is the operator under a joint operating agreement between BP and CUE.

On 12 October 2016, CUE and BP entered into a farmout agreement in relation to WA409-P ( BP WA-409-P Farmout Agreement ). Under the BP WA-409-P Farmout Agreement, BP has agreed to:

fund 100% of the primary work program required under WA-409-P for the first three years of the licence renewal; and
contribute US$3.24 million towards CUE's share of the Ironbark-1 Exploration Well cost in relation to WA-359-P, if BP exercises the BP WA-359-P Option. The amount of US$3.24 million that BP will carry CUE on the Ironbark-1 Exploration Well is made up of a portion of the deferred consideration arising from the BP WA409-P Farmout Agreement, and a portion of the repayment costs already paid by CUE for seismic data upon the execution of the BP WA-409-P Farmout Agreement.

The Company and Beach entered into a deed relating to WA-409-P on 29 November 2017 ( Beach Option Deed ), whereby CUE granted Beach an option over a 7.5% participating interest in WA-409-P ( Beach WA-409-P Option ) which may be exercised until 90 days prior to the end of year 3 of WA-409-P, which is currently 12 October 2019. This means that the expiry of the Beach WA-409-P Option is currently 14 July 2019.

Under the Beach Option Deed, if the option is exercised, Beach must pay CUE consideration comprising:

a free carry in respect to CUE’s portion of the cost of a well in WA-409-P up to 7.5% of the gross well cost (capped at US$90 million gross well cost); and
a 10% royalty on all future revenue generated from Beach’s 7.5% participating interest in the permit.

On 26 October 2018, the Company announced that it had entered into the WA-409-P Option Agreement (see section 3 below).

2.4. Details of NZOG

NZOG is an exploration and production company founded in 1981 and listed on the New Zealand Stock Exchange. NZOG's exploration and production interests span New Zealand, Australia and Indonesia.

NZOG is following a strategy of acquiring producing assets and pursuing potentially transformational exploration opportunities. It focuses on opportunities where the company's capabilities can add value, with good markets, sound financial and legal systems, and geological potential with development upside.

NZOG’s approximately 70% shareholder is O.G. Oil & Gas (Singapore) Pte Ltd, and it is therefore part of the Ofer Global group of companies. Ofer Global is a private portfolio of international businesses principally focused on real estate, energy, shipping, banking and investments.

More information on Ofer Global can be found at www.oferglobal.com

More details on NZOG can be found at www.nzog.com

3. Material terms of the Proposed Transactions

3.1. WA-359-Farmout Agreement

Under the terms of the WA-359-P Farmout Agreement, NZOGIPL will acquire a 15% participating interest in WA-359-P from CUE in consideration for:

funding an additional 2.85% of Cue’s costs of drilling the Ironbark-1 Exploration Well; and
reimbursing CUE A$642,600 for past costs associated with WA-359-P.

The WA-359-P Farmout Agreement is conditional upon the following conditions which are material or subject to risk (among others):

(a) approval of shareholders of the Company in relation to the Proposed Transactions;
(b) the Co-ordination Agreement Conditions (see section 2.2) which have replaced the conditions precedent to the WA-359 Farm-out Agreement which have not been satisfied or waived.

The WA-359-P Farmout Agreement is on substantially the same commercial terms (on pro rata basis) as the Beach Farmout Agreement announced on 29 November 2017 and referred to in section 2.2 above.

3.2. WA-409-P Option Agreement

Under the WA-409-P Option Agreement, CUE has granted (for nominal consideration) NZOGIPL an option to acquire a 5.36% participating interest in WA-409-P by the expiry date, being 14 July 2019 (which is 90 days prior to the end of year 3 of WA-409-P) (the WA-409-P Option Expiry Date ).

If NZOGIPL exercises the option, NZOGIPL must pay to CUE consideration comprising:

a free carry in respect to CUE's portion of the cost of a well in WA-409-P up to 5.36% of the gross well cost, capped at US$90million gross well cost (or receive the cash equivalent); and
a 10% royalty on all future revenue generated from NZOGIPL’s 5.36% participating interest in the permit.

The WA-409-P Option Agreement is conditional upon the following material conditions which are material or subject to risk (among others):

(a) approval of shareholders of the Company in relation to the Proposed Transactions;
(b) consent of BP in relation to the transfer of 5.36% participating interest in WA-409-P to NZOGIPL;
(c) receipt of certain regulatory approvals; and
(d) all of the conditions precedent under the WA-359-P Farmout Agreement having been satisfied or waived (see section 3.1 above).

The WA-409-P Option Agreement is on substantially the same commercial terms, pro rata, as the Beach Option Deed announced on 29 November 2017 and referred to in section 2.3 above.

4. Effect of the Proposed Transactions

4.1. Participating interests in WA-359-P after the Proposed Transactions
(a) Subject to the Proposed Transactions being approved and the satisfaction (or waiver) of the conditions to the WA-359-P Farmout Agreement and the Co-ordination Agreement, the post-completion participating interests in WA-359-P will be:

BP	42.5%
CUE	21.5%
Beach	21%
NZOGIPL	15%

4.2. Participating interests in WA-409-P after the Proposed Transactions

Subject to the Proposed Transactions being approved and the satisfaction (or waiver) of the conditions to the WA-409-P Option Agreement (including the conditions to the WA-

359-P Farmout Agreement and Co-ordination Agreement), if NZOGIPL exercises the WA409-P Option by the WA-409-P Option Expiry Date then:

� if Beach has exercised the Beach WA-409-P Option prior to its expiry, the postexercise participating interests in WA-409-P will be: BP 80% Beach 7.5% CUE 7.14% NZOGIPL 5.36%; or � if Beach has not exercised the Beach WA-409-P Option prior to its expiry, the postexercise participating interests in WA-409-P will be: BP 80% CUE 14.64% NZOGIPL 5.36%

Advantages and Disadvantages

4.3. Advantages of the Proposed Transactions

The Independent Directors have reviewed alternatives for the financing of the Ironbark-1 Exploration Well and have formed the view that the Proposed Transactions represent the best option currently available to the Shareholders to meet CUE’s funding commitment obligations in respect of WA-359-P and WA-409-P and reach the next stage of exploration and drilling program for the Ironbark Prospect.

The Independent Directors are of the view that the following non-exhaustive list of advantages are likely to arise in relation to the Proposed Transactions and may be relevant to a Shareholder’s decision on how to vote on the Proposed Resolution.

(a) The Proposed Transactions provide CUE with the necessary additional funding for the Ironbark-1 Exploration Well required under the BP WA-359-P Option and the Beach Farmout Agreement making it more likely that the Ironbark-1 Exploration Well will be drilled.
(b) NZOGIL and NZOG have the financial capability and technical expertise to actively contribute to WA-359-P and WA-409-P joint ventures. BP and Beach support the involvement of NZOGIPL in WA-359-P and WA-409-P, which has resulted in the execution of the Co-ordination Agreement and has allowed Ironbark-1 Exploration Well planning activities to commence under BP’s leadership.
(c) The Proposed Transactions and the transactions contemplated by the Co-ordination Agreement:
result in BP being appointed as operator for the Ironbark-1 Exploration Well and has allowed BP to start work on the related well-planning activities;

allow CUE to retain a substantial equity interest of 21.5% in WA-359-P whilst being reimbursed A$642,600 for past costs and receiving a free carry for a portion of its share of drilling costs;
provide, if the option is exercised by NZOGIPL under the WA-409-P Option Agreement, funding for the CUE's share of costs in a potential WA-409-P Exploration Well and a long-term revenue royalty to the Company if hydrocarbons are discovered and produced. If the Beach WA-409-P Option is also exercised, CUE will be fully funded for WA-409-P Exploration Well and receive cash payment under the WA-409P Option agreement as set out in section 2.3; and
allow CUE to fulfil the title commitment requirement for WA-359-P of drilling an exploration well, which may otherwise not be possible to achieve by the Company alone and which could result in the Company being in default of title commitments.
(d) The approval of the Proposed Transactions is a condition to the Co-ordination Agreement and must be received by 30 January 2019. If approval is not received, the Company would need to procure alternative funding prior to 30 January 2019. Procuring alternative funding in this timeframe would be very difficult and as such, the continuance of the Coordination Agreement and, therefore the participation of BP and Beach would be at risk.
(e) A transaction with an alternative party for the purposes referred to in paragraph (d) above is not anticipated by the Independent Directors to be likely in the short term and there is no certainty that this would occur. The Company has run an extensive farmout campaign over an approximately three-year period which has resulted in the agreements with BP and Beach respectively.
(f) Alternative funding arrangements to satisfy the conditions of the BP and Beach agreements, even if possible to arrange, are likely to be less favourable to CUE and potentially dilutive to shareholders. The Independent Directors are confident that the Proposed Transactions represent the best available option for CUE to participate in the drilling of the Ironbark-1 Exploration Well.
(g) Without the clear pathway to the drilling of the Ironbark-1 Exploration Well that the Proposed Transactions and the Co-ordination Agreement provide, consent to suspend the work program commitments and extend the WA-359-P permit expiry date may be denied and is a significant risk that CUE will not be able to meet its title commitments in respect of WA-359-P by the current permit expiry date of 25 April 2019 which may cause it to be in default of its title commitments.
(h) The drilling of the Ironbark Prospect, if the Potential Transactions are approved and the Co-ordination Agreement Conditions are satisfied, has the potential to add company changing value to the Company if successful.

4.4. Disadvantages of the Proposed Transactions

The Independent Directors are of the view that the following non-exhaustive list of disadvantages may arise in relation to proceeding with the Proposed Transactions which may be relevant to a Shareholder’s decision on how to vote on the Proposed Resolution:

(a) whilst the Independent Expert has concluded that the Proposed Transactions are not fair but reasonable to Non-Associated Shareholders, Shareholders may disagree with the conclusions of the Independent Expert or the basis on which the Independent Expert has formed such conclusion;
(b) CUE will have its existing interest in WA-359-P diluted and potentially (subject to NZOGIPL exercising the WA-409-P Option) have its interest in WA-409-P diluted which could be considered a disadvantage if the Ironbark-1 Exploration Well is successful and commercialised. The Independent Directors note that CUE cannot prudently cover the entire share of drilling expenses and consider that the opportunity to drill the Ironbark-1 Exploration Well if the Proposed Transactions are approved should be considered an advantage as highlighted in 4.3(a); and
(c) Shareholders will be exposed to the additional risks associated with the Proposed Transactions and the assets, as set out in Section 5.

5. Risks

The Independent Directors have identified the following risks that the Company may be exposed to following approval of the Proposed Transactions that are in addition to those currently borne by Shareholders.

5.1. Failure to meet conditions

The Independent Directors note that even where Shareholders approve the Proposed Transactions, there remains a risk that the Proposed Transactions will not proceed because in addition to obtaining shareholder approval, the Proposed Transactions are subject to the fulfilment of certain other conditions. If the conditions precedent summarised in Section 3 above are not met with respect to the WA-359 Farmout Agreement, the WA-409-P Option Agreement and the Co-ordination Agreement, the Proposed Transactions will not complete.

5.2. Joint venture risks

CUE would be part of a joint venture (with BP, Beach and NZOGIPL) pursuant to the Coordination Agreement with respect to WA-359-P whereby BP will assume the role of operator. There is a risk that exploration or development activities could be disrupted in situations where there is a disagreement on exploration/development programs or other issues between the Company and the other participants.

5.3. Cost overrun risk

CUE will retain a 21.5% participating interest in WA-359-P. Under the Proposed Transactions, and the transactions contemplated under the BP WA-359-P Option, BP WA-409-P Farmout Agreement and the Beach Farmout Agreement, CUE will be funded for up to approximately US$11.3 million of its share of the Ironbark-1 Exploration Well. Under the Co-ordination Agreement, CUE is required to deposit approximately US$8.08m into escrow, being its uncarried share of the currently estimated well cost. There is a risk that the Ironbark-1 Exploration Well will incur overruns in cost, which may be borne by CUE at 21.5% participating interest. The Independent Directors consider that at the time of drilling the well, CUE is forecast to have sufficient cash reserves to fund Ironbark-1 Exploration Well cost overruns. If significant additional cost overruns occur, CUE may be required to raise funds or put mechanisms in place to ensure there is sufficient access to funds.

5.4. Ironbark Resources estimates

The Ironbark Prospect resource estimates are considered prospective resources . The estimated quantities of petroleum that may potentially be recoverable by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and risk of development. Exploration, appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. There is no guarantee that the exploration and proposed drilling of the Ironbark-1 Exploration Well will be successful.

5.5. Investment speculative

The above list of risk factors ought not to be taken as an exhaustive list of the risks faced by the Company or Shareholders. The above factors, and others not specifically referred to above may, in the future, materially affect the financial performance of the Company and the value of the Company’s securities.

6. Independent Expert's Report and Independent Directors’ Recommendations

6.1. Independent Expert’s Report and Independent Directors' Comments

The Independent Expert’s Report on whether the Proposed Transactions are fair and reasonable has been prepared and is included, in full, in Part 3 of the Shareholder’s Information Booklet together with the Independent Specialist Report on WA-359-P and WA-409-P prepared by SRK Consulting providing a technical valuation of the Ironbark Prospect. The Independent Expert has concluded that the Proposed Transactions are not fair but reasonable.

The Independent Expert reached its conclusion that the Proposed Transactions are 'not fair' to the Non-Associated Shareholders because the value of the participating interest in WA-359-P that CUE may sell as part of the Proposed Transactions (being approximately A$4.2 million), is

less than the A$53.55 million which is indicated by SRK Consulting as the preferred value for the interest held by CUE in the permit.

This preferred value of A$53.55 million was calculated by SRK Consulting using a net asset valuation methodology and positioned by SRK Consulting “ conservatively due to the varying levels of technical and geological uncertainty” . SRK Consulting’s valuation does not seem to take into consideration comparative transactions in the market (refer to section 5 of SRK Consulting’s report). In contrast, using comparable market transaction methodology, SRK Consulting estimated that the value of CUE’s farmout of an 80% interest in WA-409-P to BP was only approximately A$3.5 million (refer to section 4.5 of SRK Consulting’s report). It is not clear to the Independent Directors why SRK Consulting has taken different approaches to valuing WA-359-P and WA-409-P.

Further observations on the choice of valuation methodology applied by the Independent Expert to reach conclusion on “fairness and reasonableness” are provided in section 1.3 above.

The Independent Directors also wish to draw Shareholders' attention to the following matters in light of the conclusion of the Independent Expert:

(a) ASIC Regulatory Guide 111 - Content of Export Reports specifies that a proposed related party transaction is 'fair' if the value of the financial benefit to be provided by the entity to the related party is equal to or less than the value of the consideration being provided to the entity. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm's length. Before entering the agreements with NZOGIPL and NZOG in connection with the Proposed Transactions, the Company entered into confidentiality agreements with 13 international and Australian companies in the oil and gas sector over a period of approximately 3 years, for the purpose of testing whether there were other parties interested in acquiring an interest in WA-359-P. Apart from the offers from NZOG, and the agreements with BP and Beach, the Company did not receive any other offers. Therefore, the Independent Directors consider that the Proposed Transactions represent the best offer that the Company could obtain from a willing buyer in the open and competitive market for the WA-359-P and WA-409-P interests held by CUE.
(b) The Independent Expert relied on a technical and theoretical valuation of net assets methodology for assessing fairness. SRK Consulting calculated a theoretical value for the interest in WA-359-P to be sold to NZOGIPL using the net asset valuation methodology by applying two fixed risk factors to the success case valuation of the Ironbark Prospect to simulate certain events occurring or not occurring, leading to a preferred valuation of A$53.550 million. The Independent Directors consider that in light of the uncertainty associated with early stage exploration assets, this methodology does not represent the view that a buyer would take in a competitive market for such assets and is unlikely to ever lead to a transaction such as the Proposed Transaction being considered “fair”in practice.

The Independent Expert’s valuation of the assets to be disposed of by CUE was on the basis of “fair market value” defined as “the price that could be realized in an open market over a reasonable period of time given the current market conditions and currently available information, assuming that potential buyers have full information, in a transaction between a willing but not anxious seller and a willing but not anxious buyer acting at arm’s length ” (refer to section 7.1 of the Independent Expert’s Report). However, the net asset valuation methodology used by SRK Consulting in the Independent Specialist Report and in turn to assess “fairness” of the Proposed Transactions does not seem to provide a basis on which SRK Consulting considers that the preferred value of A $53.5 5 0 million would reflect a 'fair market value' for WA-359-P that a buyer is willing to pay.

The preferred valuation of A$53.550 million calculated by SRK Consulting using net asset valuation methodology, based on theoretical and technical projections to assess geological potential of the Ironbark Prospect, is disproportionate to the current market capitalisation of CUE.

(c) The BP and Beach transactions were not relied on by the Independent Expert to assess the fairness of the Proposed Transactions. The Independent Directors are of the view that the transactions with BP and Beach in respect of WA-350-P and WA 409-P represent suitable comparable farmout transactions to the Proposed Transactions, which should have been considered in the assessment of the fairness of the Proposed Transactions. Both of these companies are well informed companies operating in the oil and gas sector in Australia and globally. Both companies executed arms-length agreements with CUE. The Independent Expert notes that the Proposed Transactions are on terms that are relatively identical or more favourable than the terms agreed with BP and Beach, but does not utilise these transactions as a primary basis of assessing the fairness of the Proposed Transactions. The Independent Directors disagree with that conclusion.
(d) The consideration is within the indicative valuation range provided by SRK Consulting: Besides the preferred value, SRK Consulting has also given an indicative range of A$570,000 to A$80.400 million for the value of interest in WA-359-P, the subject of the Proposed Transactions. As noted above in section 1.3, ASIC regulatory guide suggests that the range of values provided by the independent expert should be as narrow as possible and that a broad range of values undermines the usefulness of the expert report. The Independent Expert was also concerned that the theoretical valuation prepared by SRK Consulting for the Ironbark Prospect was too wide to use as a basis for assessing fairness of the Proposed Transactions (see section 9.4 of the Independent Expert Report).

It is therefore unclear how the Independent Expert reconciled the uncertainly of the wide valuation range prepared by SRK Consulting with comparable market transactions evidenced by recent agreements with BP and Beach and why the net asset valuation

methodology was preferred to assess “fairness”. The A$4.2 million consideration being offered by NZOGIPL is also well within the indicative range proposed by SRK Consulting.

(e) The Independent Expert considers that it would be possible to conclude that the Proposed Transactions are fair on two different bases : In section 9.4 of the Independent Expert's Report, the Independent Expert considers that since the consideration being offered falls within the value range proposed by SRK Consulting and the Proposed Transactions are on terms that are relatively identical or more favourable than the terms agreed with BP and Beach, it could be possible to conclude that the Proposed Transactions are fair.

Despite the Independent Export’s preference for the net asset valuation methodology to assess “fairness”, the Independent Expert’s Report also noted that the Proposed Transactions reflect identical valuation parameters with the Beach transaction and improved financial parameters in comparison with the BP transaction.

As set out in section 10 of the Independent Expert’s Report, the Independent Expert further concluded that the Proposed Transactions are reasonable as the advantages of the Proposed Transactions outweigh the disadvantages for the following reasons, some of which are similar to those set out in section 4.3 above:

(a) the market has reacted positively to the Proposed Transactions, based on the share price of the Company before and after the announcement – consequently the non-approval by the Shareholders of the Proposed Resolution will therefore likely to impact negatively on the share price of the Company;
(b) the non-approval of the Proposed Transactions is likely to lead to CUE having difficulties meeting the minimum work requirements estimated expenditure of A$30 million by 25 April 2019 and forcing CUE to seek alternative funding options on less favourable terms;
(c) CUE advancing WA-359-P together with NZOGIPL, Beach and BP pursuant to the Coordination Agreement has the potential to add future value for the Shareholders due to the additional financial support and technical expertise provided by NZOGIPL; and
(d) there is potential for CUE to receive 10% of NZOGIPL's gross revenue from production in WA-409-P, subject to certain conditions being satisfied.

Shareholders are urged to carefully read the Independent Expert’s Report in full to understand the scope of the report, methodology of the valuation and the sources of information and assumptions made.

6.2. Independent Directors’ Recommendation

The Independent Directors do not have any material personal interests in the outcome of the Proposed Resolution and unanimously recommend that Shareholders vote in favour of the

Proposed Resolution as they consider the Proposed Transactions to be in the best interests of Shareholders for the following reasons:

(a) after assessment of the advantages and disadvantages referred to in section 4, the Independent Directors are of the view that the advantages outweigh the disadvantages; and
(b) the Independent Expert has determined that the Proposed Transactions are reasonable and consider that advantages of the Proposed Transactions significantly outweigh the disadvantages.

The Independent Directors of CUE unanimously recommend the approval of the Proposed Resolution contained in this Notice of General Meeting and encourage eligible Shareholders to vote in favour of the Proposed Resolution.

7. GLOSSARY

The following terms have the following meanings in this Explanatory Memorandum:

(a) AEDT means Australian Eastern Daylight Time;
(b) ASIC means the Australian Securities and Investments Commission;
(c) ASX means ASX Limited or the Australian Securities Exchange, as the context requires;
(d) Beach means Beach Energy Limited;
(e) Beach Farmout Agreement means the farmout agreement in relation to WA-359-P dated 29 November 2017 between Beach and CUE Exploration ;
(f) Beach Option Deed means the option deed dated 29 November 2017 between Beach and CUE Exploration in relation to the Beach WA-409-P Option ;
(g) Beach WA-409-P Option means the option granted by CUE Exploration to Beach on 29 November 2017 over a 7.5% participating interest in WA-409-P under the Beach Option Deed;
(h) Board means the Directors acting as the board of Directors of the Company or a committee appointed by such board of Directors;
(i) BP means BP Developments Australia Pty Ltd;
(j) BP WA-359-P Option means the option granted by CUE Exploration to BP as announced by the Company on 13 October 2016 in relation to the acquisition of a 42.5% participating interest in WA-359-P and to participate in the proposed Ironbark-1 Exploration Well;
(k) BP WA-409-P Farmout Agreement means the farmout agreement dated 12 October 2016 in relation to WA-409-P between BP and CUE Exploration ;
(l) Chair means the chair of the General Meeting ;
(m) Company or CUE means CUE Energy Resources Limited (ABN 45 066 383 971) or CUE Exploration, as the context requires;
(n) Co-ordination Agreement means the Co-ordination Agreement dated 26 October 2018 between CUE Exploration, BP, Beach, NZOGIPL and NZOG whereby, among other things, each of CUE Exploration, BP, Beach and NZOGIPL has agreed to form a joint venture to drill the Ironbark-1 Exploration Well;
(o) Co-ordination Agreement Conditions means the conditions precedent to the Coordination Agreement as referred to in section 2.2;
(p) CUE Exploration means Cue Exploration Pty Ltd (ABN 51 004 431 850), a wholly-owned subsidiary of the Company;
(q) Corporations Act means the Corporations Act 2001 (Cth);
(r) Director means a Director of the Company;
(s) Employee means a full-time or part-time employee of any member of the Company or its Related Bodies Corporate;

(t) Explanatory Memorandum means the explanatory memorandum as set out in Part 2 of this Shareholder Information Booklet;
(u) Free Carry has the meaning set out in Section 1.4 of the Explanatory Memorandum .
(v) General Meeting means the general meeting of the Company to be held on 8 January 2019 to consider and approve the Proposed Resolution;
(w) Independent Directors means the independent directors of the Company being Mr Peter Hood and Mr Richard Malcolm as at the date of this Shareholder Information Booklet ;
(x) Independent Expert means PKF Corporate Advisory that has been engaged by the Company to form an opinion on the Proposed Transactions ;
(y) Independent Expert's Report means the report prepared by the Independent Expert as set out in Part 3 of this Shareholder Information Booklet ;
(z) Independent Specialist Report means the Independent Specialist Report on the WA-359P and WA-409-P permits prepared by the technical expert SRK Consulting dated November 2018;
(aa) Ironbark-1 Exploration Well means the first exploration well to be drilled on WA-359-P;
(bb) Listing Rules means the Listing Rules of the ASX;
(cc) New Zealand Oil & Gas or NZOG means New Zealand Oil & Gas Limited a company incorporated in New Zealand;
(dd) Non-Associated Shareholders means shareholders of the Company which are not NZOG or associates of NZOG;
(ee) NZOGIPL means NZOG (Ironbark) Pty Limited;
(ff) Notice or Notice of General Meeting means the notice of general meeting convening a general meeting of shareholders of the Company dated 6 December 2018, which includes Part 1: Notice of General Meeting, Part 2: Explanatory Memorandum, Part 3: Independent Expert Report and the Proxy Form as set out in this Shareholder Information Booklet;
(gg) PKF Corporate Advisory means PKF Melbourne Corporate Pty Ltd;
(hh) Proposed Resolution means the resolution to approve the Proposed Transactions;
(ii) Proposed Transactions means the sale of a 15% participating interest in WA-359-P by CUE Exploration to NZOGIPL under the WA-359-P Farmout Agreement and the granting of an option by CUE Exploration to NZOGIPL to purchase a 5.36% participating interest in WA-409-P under the WA-409-P Option Agreement;
(jj) Proxy Form means the proxy form that accompanies this Notice of General Meeting;
(kk) Related Body Corporate has the meaning given to that term in the Corporations Act;
(ll) Shareholder means a holder of fully paid ordinary shares in the Company;
(mm) Shareholder Information Booklet means the shareholder information booklet consisting of Part 1: Notice of General Meeting, Part 2: Explanatory Memorandum and Part 3: Independent Expert's Report in relation to the general meeting of the Company to be held on 8 January 2019 to consider and approve the Proposed Resolution;

(nn) SRK Consulting means SRK Consulting (Australasia) Pty Ltd;
(oo) WA-359-P means petroleum exploration permit WA-359-P;
(pp) WA-359-P Farmout Agreement means the WA-359-P Farmout Agreement dated 26 October 2018 between CUE Exploration, NZOG and NZOGIPL;
(qq) WA-409-P means petroleum exploration permit WA-409-P;
(rr) WA-409-P Option Agreement means the WA-409-P Option Agreement dated 26 October 2018 between CUE Exploration, NZOG and NZOGIPL;
(ss) WA-409-P Option Expiry Date means currently 14 July 2019, the date by which NZOGIPL may exercise its option to purchase a 5.36% participating interest from CUE Exploration under WA-409-P Option Agreement; and
(tt) WA-409-P Exploration Well means the first exploration well to be drilled on WA-409-P.

Proxy Instructions

A Shareholder entitled to attend and vote at the General Meeting is entitled to appoint up to two individuals or bodies corporate to act as proxies to attend and vote on the Shareholder's behalf. Where more than one proxy is appointed each proxy may be appointed to represent a specific proportion of the shareholder's voting rights. If the appointment does not specify the proportion or number of votes that each proxy may exercise, each proxy may exercise half of the votes.

A proxy may, but need not, be a shareholder of the Company.

Shareholders, or their attorneys, who plan to attend the General Meeting are asked to arrive at the venue at least 15 minutes prior to the time designated for the General Meeting so that their Shareholding may be checked against the Company's share register and attendance recorded. Attorneys should bring with them an original or certified copy of the power of attorney under which they have been authorised to attend and vote at the General Meeting.

A Shareholder that is a body corporate or corporation, or which has been appointed as a proxy, is entitled to appoint any individual to act as its representative at the General Meeting. The appointment of the representative must comply with the requirements under section 250D of the Corporations Act. The representative should bring to the General Meeting a properly executed letter or other document confirming his/her authority to act as the Shareholder's corporate representative.

Completed Proxy Forms (and the powers of attorney or other instruments or authorities, if any, under which each Proxy Form is signed) or a copy of a facsimile which appears on its face is to be an authentic copy of the Proxy Form (and the power of attorney or other instrument or authority) can be sent by post to the Share Registry at:

By Mail – Computershare Investor Services, GPO Box 242, Melbourne VIC 3001 Australia

Alternatively, these documents may be faxed to the Share Registry on + 61 3 9473 2555

An instrument or authority appointing a proxy:

(a) shall be in writing under the hand of the appointer or of his/her attorney, or if the appointer is a body corporate, either under seal or under the hand of a duly authorised officer or attorney;

(b) may specify the manner in which the proxy is to vote in respect of a Proposed Resolution and, where an instrument of proxy so provides, the proxy is not entitled to vote on the Proposed Resolution except as specified on the Proxy Form;

(c) shall be deemed to confer authority to demand or join in demanding a poll; and
(d) shall be in such form as the Directors determine and which complies with section 250A of the Corporations Act and the Listing Rules.

If a proxy is not directed how to vote on a Proposed Resolution or item of business, the proxy may vote, or abstain from voting, as they think fit, unless otherwise set out in this Notice of General Meeting. Should any resolution, other than the Proposed Resolution specified in this Notice of General Meeting, be proposed at the General Meeting, a proxy may vote on that resolution as they think fit.

Proxy Form

A Proxy Form accompanies this Notice of General Meeting. The Proxy Form is an integral part of this Notice and both documents should be read together.

The Proxy Form must be signed by the Shareholder or his/her attorney duly authorised in writing. In the case of Shares jointly held by two or more persons, all joint-holders must sign the Proxy Form.

Proxy Forms must be submitted no later than 48 hours before the time for holding the Meeting, or adjourned Meeting as the case may be, at which the individual or body corporate named in the Proxy Form proposes to vote.

Shareholders who return their Proxy Forms with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairman as their proxy to vote on their behalf.

If a Proxy Form is returned but the nominated proxy does not attend the Meeting, the Chairman will act in place of the nominated proxy and vote in accordance with any instructions.

Proxy appointments in favour of the Chairman, the secretary or any Director that do not contain a direction on how to vote will be used where possible to support each of the Proposed Resolution proposed in this Notice of General Meeting.

Attendance and Voting Eligibility

For the purposes of determining voting entitlements at the Meeting, Shares will be taken to be held by the persons who are registered as holding the Shares at the time that is 48 hours before the Meeting. Accordingly, share transactions registered after that time will be disregarded in determining Shareholders' entitlements to attend and vote at the Meeting.

SHAREHOLDER INFORMATION BOOKLET PART 3 – INDEPENDENT EXPERTS REPORT

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Independent Specialist Report on WA-359-P and WA409-P, assets held by Cue Exploration Pty Limited

Report Prepared for

PKF Melbourne Corporate Pty Ltd

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Report Prepared by

SRK Consulting (Australasia) Pty Ltd PKF002 November 2018

SRK Consulting

Page i

Independent Specialist Report on WA-359-P and WA409-P, assets held by Cue Exploration Pty Limited

PKF Melbourne Corporate Pty Ltd

Level 12, 440 Collins Street Melbourne VIC 3000

SRK Consulting (Australasia) Pty Ltd

Level 5, 200 Mary Street, BRISBANE QLD 4000

e-mail: [email protected] website: www.asia-pacific.srk.com

Tel: +61 7 3054 5000 Fax: +61 7 3054 5001

SRK Project Number PKF002

November 2018

Compiled by

Peer Reviewed by

Dr Bruce McConachie Associate Principal Consultant

Jeames McKibben Principal Consultant

Carl D’Silva Associate Principal Consultant

Email: [email protected]

Author/s:

Bruce McConachie; Anargul Kushkarina

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Executive Summary

Cue Energy Resources Limited, the owner of Cue Exploration Pty Ltd (Cue) is seeking a Joint Venture partner or partners to fund and/or operate the Ironbark-1 well in WA-359-P in the offshore Carnarvon Basin of Western Australia. In October 2018, Cue entered into an agreement to farm out to BP Developments Australia Pty Ltd (BP) an option over 42.5% equity in WA-359-P.

Separate agreements were made with Beach Energy and New Zealand Oil and Gas (NZOG) subject to completion of the agreement with BP. On 26 October 2018, Cue announced that it had executed agreements whereby New Zealand Oil and Gas (NZOG) will, subject to certain conditions and approvals, acquire equity in Northwest Shelf exploration permits, WA-359-P and WA-409-P.

Cue has commissioned PKF Melbourne Corporate Pty Ltd (PKF) to prepare an Independent Expert Report (IER) commenting on the fairness and reasonableness of the proposed transactions for WA359-P and WA-409-P.

Mr Paul Lom of PKF subsequently requested SRK Consulting (Australasia) Pty Ltd (SRK) to provide an Independent Technical Specialist Report relating to Cue’s Blocks WA-409-P and WA-359-P located in the offshore Carnarvon Basin of Western Australia. SRK understands that this report is to be included as an appendix to PKF’s IER.

Cue has identified a new play type associated with the prolific gas-bearing Triassic Mungaroo Formation. The “Ironbark” prospect, a Mungaroo Formation prospect with multiple objectives has been identified as the primary candidate for drilling and Cue estimates that it holds a success case best technical estimate of 15 trillion cubic feet (TCF) of gas.

Cue is seeking a Joint Venture partner or partners to fund and/or operate the Ironbark-1 well in WA359-P. Cue is in the process of farming out a fixed carry to BP Developments Australia Pty Ltd (BP) and 21% (Cue carry 4.0% capped at US$3.60 million) to Beach. Cue plans to farmout 15% (Cue carry 2.85% capped at US$ 2.57 million) to NZOG.

Outline of work program

Work program was as follows:

Assess and compile the technical data
Review and estimate the Prospective Resources
Undertake financial modelling and comparative transaction analysis
Determine valuation estimates (high, most likely and low).

Results

The estimates provided in the current SRK report conform to the definitions and guidelines of the Petroleum Resources Management System (PRMS, 2018) approved by the SPE/WPC/AAPG/SPEE/SEG /SPWLA/EAGE. (Society of Petroleum Engineers, American Association of Petroleum Geologists, World Petroleum Council, Society of Petroleum Evaluation Engineers, Society of Exploration Geophysicists, Society of Petrophysicists and Well Log Analysists and European Association of Geologists and Engineers). In addition, the Guidelines for Application of the Petroleum Resources Management System (PRMS, 2011) by SPE/AAPG/WPC/SPEE/SEG provided supporting information.

Resource categorisation conveys the relative degree of certainty described in Appendix A .

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This valuation complies with the minimum reporting requirements of the VALMIN Code (2015).

The Resources sub-categorisation is based on current exploration. SRK’s report includes a discussion covering the current field focal area. Commercial viability and economic field limits are based on the available data and understanding of existing infrastructure. Scoping plans, costs and economics were provided by Cue and checked against SRK’s knowledge of the current activity in the northern Carnarvon Basin.

Prospective Resources presented in SRK’s report are estimates only. The Resources may or may not be recoverable. The revenues and the costs related to the gas extraction could vary significantly. New estimates should be made when additional data becomes available.

Engineering and geological matters are detailed in our report along with the basis for our VALMIN compliant valuation. This work represents our professional opinion based upon our judgement and experience.

All supporting data and files are stored at SRK Brisbane offices.

Estimated Value

The “Ironbark” prospect, a Triassic-aged Mungaroo Formation prospect with multiple objectives, is the primary candidate for drilling and the key to the value estimate for exploration permits, WA-409-P and WA-359-P located in the offshore Carnarvon Basin of Western Australia.

Cue estimates that it holds a success case best technical estimate of about 15 trillion cubic feet (TCF) of gas and associated condensate. A secondary Jurassic-aged stratigraphic target is also possible at the Ironbark location, but no value is currently ascribed to that potential.

Cue currently holds the following interests in exploration permits, WA-409-P and WA-359-P ( Table ES-1 ).

Table ES-1: Permit status for WA-409-P and WA-359-P

Table ES-1: Permit status for WA-409-P and WA-359-P	Table ES-1: Permit status for WA-409-P and WA-359-P

WA-359-P
Status	Exploration
Location	Carnarvon Basin,Offshore Western Australia
WorkingInterest	100%
Operator	Cue Exploration PtyLtd.
WA-409-P
Status	Exploration
Location	Carnarvon Basin,Offshore Western Australia
WorkingInterest	20%
Operator	BP Developments Australia PtyLtd

In October 2016, Cue farmed out an 80% equity interest in WA-409-P to BP. Cue has no funding requirements for the primary term work commitment, which included reprocessing of seismic geophysical data over the permit.

SRK has estimated the following value ranges for the Prospective Resources associated with Cue’s interest in WA-409-P and WA-359-P ( Table ES-2 ).

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Table ES-2: Summary of SRK’s valuation of Cue’s gas assets as at 14 November 2018 on a 100% equity basis

Project	Asset	Valuation method	Low (A$MM)	High (A$MM)	Preferred (A$MM)
Ironbark-1	WA-359-P (100%) Cue Interest 100%	2U P50 Prospective Resources (Expenditure Values and Comparative Transactions)	3.8	536	357
Ironbark-1	WA-409-P (100%) Cue Interest 20%	2U P50 Prospective Resources (Expenditure Values and Comparative Transactions)	3.5	230	153

Note: Any discrepancies between values in the table are due to rounding (US$ converted to A$ at 0.7US$ to 1.0A$ from Table 4-4 and 4-5)

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Table of Contents	Table of Contents
Executive Summary ..................................................................................................................................... ii
Disclaimer.................................................................................................................................................. viii
List	of Abbreviations.................................................................................................................................... ix
Statement of Competency............................................................................................................................x
1Introduction and Scope of Report...............................................................................1
1.1	Nature of the brief ...............................................................................................................................2
1.2	Summary of principal objectives .........................................................................................................3
1.3	Outline of work program......................................................................................................................3
1.4	Program objectives .............................................................................................................................3
1.5	Reporting standard..............................................................................................................................4
1.6	Work program .....................................................................................................................................4
1.7	Key sources of data ............................................................................................................................4
1.8	Effective date ......................................................................................................................................4
1.9	Project team ........................................................................................................................................4
1.10Limitations, reliance on information, declaration and consent............................................................5
	1.10.1Limitations ...............................................................................................................................5
	1.10.2Statement of SRK independence............................................................................................5
	1.10.3Indemnities ..............................................................................................................................5
	1.10.4Consent ...................................................................................................................................5
	1.10.5Consulting fees........................................................................................................................6
2Project Area Description and Ironbark Prospect.......................................................7
2.1	Regional Setting and Stratigraphy ......................................................................................................7
2.2	Exploration History............................................................................................................................10
2.3	Petroleum System.............................................................................................................................11
	2.3.1Source and Generation .........................................................................................................11
	2.3.2Reservoir ...............................................................................................................................13
	2.3.3Seal .......................................................................................................................................14
	2.3.4Structure................................................................................................................................15
	2.3.5Charge timing and migration (critical moment) .....................................................................16
	2.3.6Preservation ..........................................................................................................................16
2.4	Dry Well Analysis ..............................................................................................................................16
2.5	Ironbark Prospect and Well Proposal ...............................................................................................19
3Prospective Resources Estimation Review .............................................................22
3.1	Resource Parameters and Risking ...................................................................................................22
3.2	Prospective Resources .....................................................................................................................22
4Expenditure Values, Block Commitments, Project Development Economic
Analysis and Comparative Transactions .................................................................24
4.1	SRK’s Approach................................................................................................................................24
4.2	WA-359-P and WA-409-P Commitments..........................................................................................24

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4.3	Expenditure Values...........................................................................................................................25
4.4	Conceptual Project Development .....................................................................................................25
4.5	Comparative Transactions ................................................................................................................26
5Valuation Summary....................................................................................................28
5.1	Discussion on SRK’s Valuation Range.............................................................................................28
5.2	Valuation Risks .................................................................................................................................29
	5.2.1Exploration and Testing Risks...............................................................................................30
	5.2.2Development and Production Risks......................................................................................30
	5.2.3Environmental risks...............................................................................................................30
	5.2.4Financing...............................................................................................................................30
	5.2.5Native Title and Lease Access..............................................................................................30
6Conclusions................................................................................................................31
7Selected References ..................................................................................................32

List of	Tables
Table 3-1:	Prospect risks assigned to the SRK Prospective Resource estimation for Ironbark Prospect..22
Table 3-2:	Cue’s probabilistic volume summary – primary Triassic targets................................................23
Table 3-3:	Cue’s probabilistic volume summary – secondary Triassic target.............................................23
Table 3-4:	SRK’s 2U (P50) probabilistic volume estimation .......................................................................23
Table 4-1:	Commonwealth of Australia Petroleum Exploration Permit WA-359-P. Permit term details and
	work requirements......................................................................................................................24
Table 4-2:	Commonwealth of Australia Petroleum Exploration Permit WA-409-P Permit term details and
	work requirements......................................................................................................................25
Table 4-3:	Fields discovered and developed in the Mungaroo Formation in the northern Carnarvon Basin
	(Department of Mines and Petroleum, WA, 2014).....................................................................27
Table 4-4:	Estimated value of discovered hydrocarbons in WA-359-P based on BOE transaction values
	(100% basis) ..............................................................................................................................27
Table 4-5:	Estimated value of discovered hydrocarbons in WA-409-P based on BOE transaction values
	(100% basis) ..............................................................................................................................27
Table 5-1:	Summary of SRK’s valuation of the WA-359-P and WA-409-P permits as at 14 November 2018
	on a 100% equity basis..............................................................................................................28
Table 5-2:	General guide regarding confidence for target and Resource/Reserve Estimates ...................29

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List of Figures

Figure	1-1:	Location map of offshore WA-359P and WA-409-P with wells and seismic geophysical data,
		Northern Carnarvon Basin ...........................................................................................................1
Figure	2-1:	Regional Setting and section line (Figure 2-2).............................................................................8
Figure	2-2:	Regional cross section from Gorgon-1 to Brigadier-1 (untested deeper section comprising the
		Ironbark prospect (shown in red) .................................................................................................9
Figure	2-3:	Regional Stratigraphy, Carnarvon Basin (Triassic Mungaroo sands and Jurassic Legendre
		sands indicated) .........................................................................................................................10
Figure	2-4:	Source rocks comprising coals and carbonaceous claystones in the Mungaroo Formation.....12
Figure	2-5:	Modelling demonstrates that the source rock will be mature for gas at the site of the Ironbark
		Prospect .....................................................................................................................................12
Figure	2-6:	Facies components of the Triassic Mungaroo Formation..........................................................13
Figure	2-7:	Lithofacies log signatures in the Mungaroo Formation..............................................................13
Figure	2-8:	Regional Pressure Gradient.......................................................................................................14
Figure	2-9:	Sealing capacity of the bounding faults is critical for hydrocarbon preservation in the Ironbark
		Prospect .....................................................................................................................................15
Figure	2-10:	Ironbark structure is a large horst high block mapped over the entire area of the prospect (top
		Mungaroo Formation and spill point gas-water contact – Tr 17 depth mSS (Source Cue) .......15
Figure	2-11:	Galahad-1 – Brigadier-1 wells correlation................................................................................17
Figure	2-12:	Regional correlation of the Mungaroo Formation Gorgon-1 to Brigadier-1 (showing the deeper
		Triassic section intersected in Goodwyn-6) ...............................................................................18
Figure	2-13:	Hydrocarbon charged reservoirs in the Gorgon Field................................................................19
Figure	2-14:	Estimated gross rock volume (GRV) versus depth and Top Tr19 structure map (depth mSS).20
Figure	2-15:	Estimated gross rock volume (GRV) versus depth and Top Tr17 structure map (depth mSS).20
Figure	2-16:	Estimated gross rock volume (GRV) versus depth and Top Tr14 structure map (depth mSS).21
Figure	2-17:	Proposed Ironbark-1 well depth vs time (with TD total depth estimated at 6500 mSS) ............21
Figure	4-1:	Ironbark conceptual condensate field production forecast ........................................................26
Figure	5-1:	Uncertainty by advancing exploration stage ..............................................................................29

List of Appendices

Appendix A: Category Definitions of 1P, 2P and 3P Appendix B: Glossary of Terms

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Disclaimer

The opinions expressed in this Report have been based on the information supplied to SRK Consulting (Australasia) Pty Ltd (SRK) by Cue Energy Limited (Cue Energy). The opinions in this Report are provided in response to a specific request from Cue Energy to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them. Opinions presented in this Report apply to the site conditions and features as they existed at the time of SRK’s investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this Report, about which SRK had no prior knowledge nor had the opportunity to evaluate.

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List of Abbreviations

Abbreviation	Meaning
A$	Australian dollars
Cue	Cue energy limited
bbl	Barrel
BCF	Billions of standard cubic feet
BOE	Barrel(s) of oil equivalent
cc/g	Cubic centimetres per gram
DST	Drill stem test
EA	Environmental authority
EUR	Estimated ultimate recovery
g/cc	Grams per cubic centimetre
GJ	Gigajoule
kg	Kilogram
km	Kilometres
km²	Square kilometres
kPa	Kilopascals
LCC	Lowest closing contour
LKG	Lowest known gas
LPG	Liquid petroleum gas
M	Thousand
MM	Millions
m	Metres
MSA	Master services agreement
Mscf/d	Thousands of cubic feet per day
mD	Millidarcies
MMcf	Millions of cubic feet
MMcf/d	Millions of cubic feet per day
mSS	Metres sub sea
OGIIP	Original gas initially-in-place
PHIE	Effective porosity derived from petrophysics
PJ	Petajoule
PL	Petroleum lease
psi/ft	Pounds per square inch per foot
SCAL	Special core analysis
SPE	Society of Petroleum Engineers
SPEE	Society of Petroleum Evaluation Engineers
SRK	SRK consulting (Australasia) Pty Ltd
SWE	Effective water saturation derived from petrophysics
TCF	Trillion of standard cubic feet
WPC	World Petroleum Council

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Statement of Competency

Dr Bruce Alan McConachie

Dr Bruce Alan McConachie is a geologist with extensive experience in economic resource evaluation and exploration. His career spans over 30 years and includes production, development and exploration experience in petroleum, coal, bauxite and various industrial minerals.

Work history includes:

Comalco: 15 years (Rio Tinto-Alcan) - Chemist, Mine Geologist, Planning Engineer, Senior Geologist and Team Leader (Petroleum Group)
Australian Geological Survey Organisation / Bureau of Mineral Resources: 2½ years (Geoscience Australia) - Senior Research Scientist (Petroleum Systems Petrel Sub-basin Project)
Santos: 7 years - Senior Geologist, Team Leader and Chief Geologist – Indonesia
BHP Billiton : 2½ years - Global Bauxite Commodity Specialist and Manager Bulk Commodities
SRK Consulting : 9 years – Principal Consultant and Associate Principal Consultant (Manager Petroleum Group)

Experience:

Extensive relevant experience covering petroleum exploration programs, joint venture management, farmin and farmout deals, onshore and offshore operations, field evaluation and development, oil and gas production and economic assessment, and relevant experience assessing petroleum resources under the PRMS code and mineral commodities under the JORC code.

Industry Group Memberships:

The Australasian Institute of Mining and Metallurgy (AusIMM) – 30 Years
American Association of Petroleum Geologists (AAPG) – 11 Years
Petroleum Exploration Society Australia (PESA) and
Society of Petroleum Engineers (SPE).

Qualifications:

Graduate degrees in geology and analytical chemistry
Master of Applied Science by research and thesis on the coal geology of the Bowen Basin, Queensland
Doctor of Philosophy by dissertation on foreland and fold belt basin analysis to characterise petroleum and mineral systems and deposits

I am an Associate employee of SRK Consulting and am an experienced petroleum reserves and resources estimator with over 15 years relevant experience. I have adhered to the ASX Listing Rules Guidance Note 32. My qualifications and experience meet the requirements to act as a Competent Person to report petroleum reserves under PRMS (2018) and assess assets under the VALMIN Code (2015) of the AusIMM.

The data and interpretations presented in this document accurately reflect my view of the Cue Energy Resources Limited (Cue Exploration Pty Limited) gas assets that are the subject of this report.

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Dr Bruce Alan McConachie

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Statement of Competency

Carl D’Silva

Associate Member (SRK Consulting, Brisbane Office)

Carl is a geologist with extensive working experience in petroleum and coal seam gas exploration, operation and evaluation. His career spans over 15 years’ experience focusing on exploration and production, operation, and evaluation of petroleum, CSG as well as coal resources, with working experience in varied oil/gas exploration and appraisal in both mature and frontier basins in Australia, Papua New Guinea and SE/Central Asia countries.

Work history includes:

AGL Energy Limited: 3 years – Senior Geologist/Project Leader, Surat Basin.

Clean Global Energy Limited: 2 years – Exploration & Geology Manager, UCG Development in Surat Basin, Australia, India and USA.

Santos Limited/Eastern Star Gas: 5.5 years – Senior Geologist/JV Co-ordinator – Developing CSG Projects in Gunnedah Basin.

Arrow Energy NL: 6 months – Senior Geologist – Planning and drilling of Tipton West and Daandine CSG Pilot Projects in Surat Basin, Qld.

Santos Limited: 7 years – Geologist – Geological Mapping, seismic interpretation and prospect generation in Western PNG Assets and Indonesia.

SRK Consulting Pty Limited: Associate Professional Consultant

Experience:

Extensive relevant experience covering conventional petroleum / coal seam gas exploration, production, operation and evaluation, joint venture management, New Venture appraisal, and relevant experience in petroleum and CSG reserves and resources evaluation under the PRMS 2018.

Industry Group Memberships:

American Association of Petroleum Geologists (AAPG) – 15 Years
Petroleum Exploration Society Australia (PESA) – 20 Years

Qualifications:

Bachelor of Applied Science (Geology), Honours, University of Technology, Sydney

My qualifications and experience meet the requirements to act as a Competent Person to report petroleum Reserves under PRMS (2018).

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Carl D’Silva

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1 Introduction and Scope of Report

Mr Paul Lom of PKF Melbourne Corporate Pty Ltd (PKF) requested that SRK Consulting (Australasia) Pty Ltd (SRK) provide an Independent Technical Specialist Report for the Cue Energy Resources Limited’s (Cue) Blocks WA-409-P and WA-359-P located in the offshore Carnarvon Basin of Western Australia. SRK understands that this report is to be included as an Appendix to an Independent Expert Report (IER) to be prepared by PKF in relation to a potential transaction involving these tenures, particularly WA-359-P and WA-409 P.

Cue has identified a new play type associated with the prolific gas-bearing Triassic-aged Mungaroo Formation. The “Ironbark” prospect, a Mungaroo Formation prospect with multiple objectives has been identified as the primary candidate for drilling and Cue estimates that it holds a success case best technical estimate of 15 trillion cubic feet (TCF) of gas.

The location setting with wells and seismic geophysical data coverage of exploration permits, WA409-P and WA-359-P are shown in Figure 1-1 .

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Figure 1-1: Location map of offshore WA-359P and WA-409-P with wells and seismic geophysical data, Northern Carnarvon Basin

As per our mandate, SRK has prepared this report in line with prevailing compliance requirements, which include:

A detailed technical description of the blocks and their associated prospectivity;
A description of the primary and cross-check valuation methodologies used and justification for the use of these methods;
The estimated value of each asset;
The information relied upon by the valuer and the evaluation of that information;

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The assumptions adopted by the valuer and the evaluation of those assumptions;
A description of any material risks;
Identification of any expert reports used and a description of how those reports were used; and
A description of the terms of the engagement.

As defined in the VALMIN Code (2015), mineral assets comprise all property including (but not limited to) tangible property, intellectual property, mining and exploration tenure and other rights held or acquired in connection with the exploration, development of and production from those Tenures. This may include the plant, equipment and infrastructure owned or acquired for the development, extraction and processing of Minerals and Petroleum in connection with that Tenure.

For the purpose of this valuation, the project held by Cue were classified according to the development stage categories outlined in the VALMIN Code (2015) these being:

Early-Stage Exploration Projects – Tenure holdings where mineralisation may or may not have been identified, but where Mineral (or Petroleum) Resources have not been identified.
Advanced Exploration Projects – Tenure holdings where considerable exploration has been undertaken and specific targets have been identified that warrant further detailed evaluation, usually by drill testing, trenching or some other form of detailed geological sampling. A Mineral (or Petroleum) Resource estimate may or may not have been made, but sufficient work will have been undertaken on at least one prospect to provide both a good understanding of the type of mineralisation present and encouragement that further work will elevate one or more of the prospects to the Mineral (or Petroleum) Resources category.
Pre-Development Projects – Tenure holdings where Mineral (or Petroleum) Resources have been identified and their extent estimated (possibly incompletely) but where a decision to proceed with development has not been made. Properties at the early assessment stage, properties for which a decision has been made not to proceed with development, properties on care and maintenance and properties held on retention titles are included in this category if Mineral (or Petroleum) Resources have been identified, even if no further work is being undertaken.
Development Projects – Tenure holdings for which a decision has been made to proceed with construction or production or both, but which are not yet commissioned or operating at design levels. Economic viability of Development Projects will be proven by at least a Pre-Feasibility Study.
Production Projects – Tenure holdings - particularly mines, wellfields and processing plants - that have been commissioned and are in production.

Based on these classifications, in SRK’s opinions the Ironbark Project comprises an advanced exploration project. SRK’s technical assessment and valuation is current as at 14 November 2018. All monetary amounts are expressed in Australian dollar (A$) terms as specified throughout the Report. The final valuation is expressed in A$.

1.1 Nature of the brief

This Independent Specialist Report was initiated by Mr Paul Lom, Director, PKF Melbourne Corporate Pty Ltd. The Report is to be included as an appendix to PKF’s IER, which will provide an opinion on the fairness and reasonableness of the proposed transaction by NZOG to acquire a 15% interest in the WA-359-P and a 5.36% option over WA-409-P.

Specifically, PKF has requested the following:

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That SRK provide PKF with an independent opinion on the market valuation of Cue’s Ironbark Prospect;
The Report should include a Competent Person’s statement, in accordance with the requirements of a practitioner under Section 2.2 of the VALMIN Code 2015;
The basis of the consideration and approximate fee for the report to comply with Section 6.3 of the VALMIN Code 2015; and
Compliance with section 7.2 of the VALMIN Code 2015, relating to Status of Tenure.

Cue’s key assets to be considered in this Report comprise interests in WA-409-P and WA-359-P.

1.2 Summary of principal objectives

The objective of this Report is to provide an independent technical assessment and valuation of the petroleum assets held by Cue.

This Report has been prepared in accordance with the “Australasian Code for the Public Reporting of Technical Assessment and Valuation of Mineral Assets” - VALMIN Code (VALMIN, 2015) which incorporates the “Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves” - JORC Code (2012) and conforms to the requirements of Petroleum Resources Management System (PRMS, 2018) of the Society of Petroleum Engineers etc.

1.3 Outline of work program

The following activities were carried out during the preparation of this Report:

Review of technical reports and supporting documentation prepared by and/ or on behalf of the parties.
Discussions with key technical personnel of Cue.
Valuation of the respective interests and preparation of an Independent Specialist Report.

1.4 Program objectives

This Report and associated valuation has been prepared by SRK under instructions from PKF. This Report complies with the mineral and petroleum asset information required under various securities laws of Australia.

As per the VALMIN Code (2015) a first draft of the Report was supplied to PKF and Cue to check for material error, factual accuracy and omissions before the final report was issued. SRK’s scope of work was limited to the second draft of the Report after a round of edits by PKF and Cue. The final report was issued following review of any comments by the project team.

SRK has selected the most appropriate valuation technique for the assets, based on the development status of the projects and the available information. This Report expresses an opinion regarding the value of certain petroleum assets held by Cue as directed in SRK’s mandate from PKF. This Report does not comment on the ‘fairness and reasonableness’ of any transaction between the owners of these petroleum interests and any other parties.

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1.5 Reporting standard

This Report has been prepared to the standard of, and is considered by SRK to be, a Technical Assessment and Valuation Report under the guidelines of the VALMIN Code (2015). It should be noted that the author of this Report is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM), the SPE (society of Petroleum Engineers) and the American Association of Petroleum Geologists (AAPG) and, as such, is bound by both the VALMIN and PRMS Codes.

This Report has been prepared according to:

2015 edition of the Australasian Code for the Public Reporting of Technical Assessments and Valuations of Mineral Assets (“VALMIN Code”)
2018 PRMS and 2011(Guideline) Editions of the Petroleum Resource Management System of the Society of Petroleum Engineers’(SPE-PRMS).

For the purposes of this Report, value is defined as ‘market value’ being the amount of money (or the cash equivalent or some other consideration) for which a mineral asset should change hands on the date of Valuation between a willing buyer and a willing seller in an arm’s length transaction after appropriate marketing wherein the parties each acted knowledgeably, prudently and without compulsion.

1.6 Work program

This assignment commenced in early November 2018, with a review of electronic company data and other information sourced by SRK from literature and company websites, as well as subscription databases. SRK consultants worked through the relevant databases, completed research on comparable market transactions to assist with the valuation, and compiled the Report.

SRK notes that the VALMIN Code (2015) recommends that a site inspection be completed should it be ‘likely to reveal information or data that is material to the report’. A site visit was not undertaken for the purposes of this Report mostly due to the nature of the asset (offshore sub-sea with no associated infrastructure).

SRK carried out the following work program:

Assignment commenced 01 November 2018 Submission of draft report 14 November 2018 Submission of updated draft report 15 November 2018 Submission of final report 20 November 2018.

1.7 Key sources of data

Data and information on the assets used by SRK during the preparation of this Report are referenced throughout the Report.

1.8 Effective date

The effective date of this Report is 15 November 2018.

1.9 Project team

This Report has been prepared based on a technical review by a team of consultants from SRK’s Australian offices. Details of the qualifications and experience of the consultants who have carried out the work in this Report, who have extensive experience in the petroleum industry and are members in good standing of appropriate professional institutions.

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1.10 Limitations, reliance on information, declaration and consent

1.10.1 Limitations

SRK’s opinion contained herein is based on information provided to SRK by Cue throughout the course of SRK’s investigations as described in this Report, which in turn reflect various technical and economic conditions at the time of writing. Such technical information as provided by Cue was taken in good faith by SRK. SRK has not independently verified historical Petroleum Resources estimates by means of recalculation.

This Report includes technical information, which requires subsequent calculations to derive subtotals, totals, averages and weighted averages. Such calculations may involve a degree of rounding. Where such rounding occurs, SRK does not consider them to be material.

As far as SRK has been able to ascertain, the information provided by Cue was complete and not incorrect, misleading or irrelevant in any material aspect.

Cue has confirmed in writing to SRK that full disclosure has been made of all material information and that to the best of their knowledge and understanding, the information provided by Cue was complete, accurate and true and not incorrect, misleading or irrelevant in any material aspect. SRK has no reason to believe that any material facts have been withheld.

1.10.2 Statement of SRK independence

Neither SRK, nor any of the authors of this Report, have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK.

SRK has no prior association with Cue regarding the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

1.10.3 Indemnities

As recommended by the VALMIN Code (2015), Cue has provided SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

which results from SRK's reliance on information provided by Cue or Cue not providing material information; or
which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

1.10.4 Consent

SRK consents to this Report being included, in full, in PKF’s documents in the form and context in which the technical assessment is provided, and not for any other purpose. SRK provides this consent on the basis that the technical assessments expressed in the Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report.

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1.10.5 Consulting fees

SRK’s estimated fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The fees are agreed based on the complexity of the assignment, SRK’s knowledge of the assets and availability of data. The fee payable to SRK for this engagement is estimated at approximately A$20,000. The payment of this professional fee is not contingent upon the outcome of the Report.

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2 Project Area Description and Ironbark Prospect

Cue’s Ironbark petroleum exploration permits, WA-359-P and WA-409-P, are located in the offshore Carnarvon Basin, in northwestern Western Australia, approximately 800 km north of Perth. The permits lie between latitudes 18°55’ to 19°20’ S and longitudes 116°00’ and 116°30’ E.

Initial targeting by Cue comprised a comprehensive regional study using 15,000 km[2] (5,791 sq mi) of three-dimensional (3D) and two-dimensional (2D) seismic geophysical data and 17 well ties to map sands of the Triassic-aged Mungaroo Formation over the permits, as encountered at the Gorgon gas field.

This led to identification of the Ironbark gas prospect, which straddles WA-359-P and WA-409-P in moderate water depths, as a drillable target. Ironbark is a Mungaroo Formation gas (with possible associated condensate) prospect in the Carnarvon Basin, which covers an area of up to 400 sq km (154 sq mi).

The Ironbark prospect is based on two primary reservoir targets, TR19 and TR17 levels in the Mungaroo Formation and a secondary Triassic reservoir section at TR14. A previous secondary reservoir target comprising J29 Jurassic-aged Legendre Sands may occur at the site of the Ironbark Prospect. However, the reservoir occurs at shallow depth and will be at lower pressure and lower maturity. Any trap will rely on stratigraphic seals that are typically subject to base leakage. These are no longer considered valid targets for the well but may have some production potential during the life of a discovered and developed field.

The Ironbark prospect is less than 50 km (31 mi) from the associated North Rankin platform and close to the Pluto and Wheatstone liquid natural gas (LNG) infrastructure, so potentially there are multiple commercialisation options. According to Cue, Wood Mackenzie estimates that the North West Shelf LNG plant and infrastructure will have spare capacity from 2021 onwards.

2.1 Regional Setting and Stratigraphy

The regional setting of the Ironbark area in the offshore northern Carnarvon Basin is shown in Figure 2-1 and a regional structural line of section comprising wells from Gorgon to Brigadier is shown in Figure 2-2 .

The Ironbark prospect lies outboard of the Rankin Platform.

The regional stratigraphy of the Carnarvon Basin (Triassic Mungaroo sands and Jurassic Legendre sands indicated) is shown in Figure 2-3 . The prospective section at Ironbark comprises the fluviodeltaic Mungaroo Formation from TR19 to TR14.

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Figure 2-1: Regional Setting and section line (Figure 2-2) (Source: Cue)

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Figure 2-3: Regional Stratigraphy, Carnarvon Basin (Triassic Mungaroo sands and Jurassic Legendre sands indicated)

(Source: Cue)

2.2 Exploration History

Locally at Ironbark, the only well completed was the shallower Brigadier-1 well, which was drilled by Woodside Petroleum Limited (Woodside) in 1978. To the south, Goodwyn-6 penetrated the TR12 to Tr 21 sequence equivalent to the proposed Ironbark-1. Banambu Deep-1 to the west of Ironbark is the deepest local well, penetrated the upper Mungaroo Formation Tr 27.

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2.3 Petroleum System

A petroleum system comprises eight independent variables – source, generation, reservoir, seal, structure, timing, migration and preservation.

Two Mesozoic petroleum supersystems have been identified within the Northern Carnarvon Basin. Bradshaw (1993) and Bradshaw et al (1994, 1997) developed a petroleum system and supersystem framework that linked Australian basins by age, facies, tectonic history and hydrocarbon generation history. Each petroleum system within a supersystem is defined by a combination of play elements separated by either tectonic and/or climatic events. The petroleum systems of the Northern Carnarvon Basin were characterised by Spencer et al (1993, 1994 and 1995) and Bradshaw et al (1994) as belonging to the Westralian 1 and Westralian 2 supersystems.

On the basis of a United States Geological Survey (USGS) resource assessment analysis, Bishop (1999) further defined the two petroleum systems in the Northern Carnarvon Basin using the source– reservoir couplet nomenclature of Magoon and Dow (1994):

The ‘Locker/Mungaroo–Mungaroo/Barrow’ Petroleum System.
The ‘Dingo–Mungaroo/Barrow’ Petroleum System.

These systems are considered to be the source of the majority of the commercial petroleum discoveries within the Carnarvon Basin. The ‘Locker/Mungaroo–Mungaroo/Barrow’ Petroleum System is the focus at Ironbark.

The gas-prone ‘Locker/Mungaroo–Mungaroo/Barrow’ Petroleum System covers most of the basin and extends to the margins of the Exmouth Plateau. The primary source rock for this petroleum system is the Upper Triassic deltaic Mungaroo Formation (and marine equivalents) with a possible secondary contribution from organic-rich marine units in the Lower Triassic Locker Shale. The majority of recent exploration on the Exmouth Plateau has been based on a model that invokes gas charge from deeply buried coals and carbonaceous claystones within the Mungaroo Formation.

From a regional perspective, the ‘Locker/Mungaroo–Mungaroo/Barrow’ Petroleum System can be considered part of the Westralian 1 Petroleum Supersystem (Bradshaw et al, 1994; Edwards and Zumberge, 2005; Edwards et al, 2007). This supersystem includes giant gas accumulations that have been predominantly sourced from fluvial-deltaic Triassic to Lower–Middle Jurassic source rocks in the Bonaparte, Browse and Northern Carnarvon Basins. Similarities between carbon isotopic profiles of gases and condensates within the Westralian Superbasin reflect recurring organofacies that existed in the fluvial-deltaic environments developed from the Triassic to the Middle Jurassic (Edwards and Zumberge, 2005; Edwards et al, 2006).

2.3.1 Source and Generation

Source rock is known to be widely distributed in the Carnarvon Basin on Western Australia’s Northwest Shelf. Source rocks comprising coals and carbonaceous claystones are known to occur in the Mungaroo Formation ( Figure 2-4 ). Loading of the sub-basin during the Cenozoic, due to the deposition of a carbonate wedge, has driven late-stage maturation of hydrocarbons. As a result, hydrocarbons generated during the Cenozoic may have been trapped and preserved in the Ironbark prospect. Modelling demonstrates that the source rock will be mature for gas at the site of the Ironbark Prospect ( Figure 2-5 ). The terrestrial nature of the source rock at Ironbark is predisposed to gas rather than liquids. Nearby gas analysis data demonstrate that the likelihood of significant carbon dioxide or nitrogen presence is low.

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Figure 2-4: Source rocks comprising coals and carbonaceous claystones in the Mungaroo Formation

(Source: Cue)

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Figure 2-5: Modelling demonstrates that the source rock will be mature for gas at the site of the Ironbark Prospect

(Source: Cue)

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2.3.2 Reservoir

The primary and secondary reservoir targets at the Ironbark prospect occur in the fluvio-deltaic Mungaroo Formation ( Figure 2-6 ). The formation comprises stacked fining upward channel and coarsening upward delta front sands, which have been sufficiently reworked to provide favourable porosity-permeability ( Figure 2-7 ). Petrophysical and core analyses of the Mungaroo sands from core analyses and correlations to Goddwyn-6 predict good porosity and permeability at Ironbark target depths. Gorgon-1 is a reservoir analogue to Ironbark but occurs at shallower depth structurally and lower temperature.

Pressure gradients and the potential for reservoir overpressure (considered low) are shown in Figure 2-8 . Being an uplifted horst structure, overpressure at depth is possible.

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Figure 2-6: Facies components of the Triassic Mungaroo Formation

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Figure 2-7: Lithofacies log signatures in the Mungaroo Formation

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Figure 2-8: Regional Pressure Gradient (Source Cue)

2.3.3 Seal

The Ironbark structure is a horst block and hydrocarbon fill is dependent upon the sealing capacity of the bounding faults ( Figure 2-9 ). It is predicted that the seal is likely effective at the Ironbark location given evidence of gas chimneys (subsurface leakage of gas from a poorly sealed hydrocarbon accumulation) is generally lacking in seismic geophysical data. In general:

1 Maximum burial: Faults buried >1 km during deformation have a greater chance to seal; Triassic faults of the Ironbark horst were at depths of >2 km during deformation.
2 Area of critical juxtaposition: Thick shale and claystone sediments of the Mungaroo Formation combined with large fault throws juxtapose most sands against shales and claystones providing a lateral seal.
3 Shale Gouge Ratio (SGR) and Clay Smearing Potential (CSP): SGR and CSP are quantitative measures of the sealing behaviour for parts of a fault system. The SGR is simply the percentage of shale or clay in the slipped interval while CSP is a ranking of the probability that clay will be smeared out sufficiently along a fault surface to precent the flow of fluids/gas across that fault. High SGR and CSP suggest elevated sealing potential for the faults, with large column heights able to be supported across the fault.
4 Present stress and fault orientation: Interpretation of the present stress regime in relation to fault orientation appears favourable for across fault sealing.
5 The presence of favourable counter dip across almost the entire structure.

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Figure 2-9: Sealing capacity of the bounding faults is critical for hydrocarbon preservation in the Ironbark Prospect

(Source 3D Geo/Cue)

2.3.4 Structure

The Ironbark structure is a large horst high block mapped over the entire area of the prospect ( Figure 2-10 ). The depth of the reservoir targets and the simplicity of the structure (lack of faulting at depth, continuity of reservoir sands both by amplitude extractions and through regional geological models) indicate robust fault closure.

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Figure 2-10: Ironbark structure is a large horst high block mapped over the entire area of the prospect (top Mungaroo Formation and spill point gas-water contact – Tr 17 depth mSS (Source Cue)

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2.3.5 Charge timing and migration (critical moment)

Modelled maturity suggests gas generation is a recent local occurrence due to Tertiary subsidence and burial. Therefore, the likelihood of charge time coincident with the modern mapped structure is favourable.

2.3.6 Preservation

Preservation of hydrocarbon charge is difficult to assess from the available data. The presence of amplitude events within the seismic geophysical data over the Ironbark structure at reservoir level is – difficult to interpret definitively. The depth is too great to allow amplitude variation with offset (AVO a seismic interpretation technique used to determine a rock’s fluid content, porosity, density or seismic velocity) offsets to positively determine the fluid presence in the targeted reservoirs. No direct hydrocarbon indicators are currently associated with the Ironbark structure. Residual gas will create an acoustic impedance contrast sufficient to produce high amplitudes however amplitude extractions showed the brighter events to be entirely consistent with sand channel architecture. The lack of shallow gas in the Brigadier-1 well is a positive indication that losses from the deeper reservoirs are unlikely.

2.4 Dry Well Analysis

Dry well analysis is an exploration methodology to determine what can be learnt from unproductive wells and what unique reasons there may be for a lack of hydrocarbons.

The local top Mungaroo (Top Tr30) correlation from the Galihad-1 to Brigadier-1 wells is shown in Figure 2-11 . The local wells are shallow and did not test the T19 to T14 prospective section at the Ironbark prospect. The upper section of the Mungaroo Formation appears thicker at the Ironbark prospect, which is consistent with local Triassic subsidence and/or increased sediment supply at the time of deposition. The prospective lower section of the Mungaroo Formation shows bright amplitude events and some washout over the prospect potentially indicating local hydrocarbon presence.

A regional line of section flattened on the top Mungaroo Formation and passing through the outboard deeper penetration at Goodyn-6 is shown in Figure 2-12 . This shows the Gorgon reservoir and the correlation to the Ironbark prospect location. Alternative interpretations suggest the Goodwyn-6 lithostratigraphy showing Tr19 and Tr17 may be significantly shallower than shown.

Figure 2-13 diagrammatically shows the hydrocarbon charged reservoirs in the Gorgon Field including the fault sealed nature of the trap at Gorgon.

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Figure 2-11: Galahad-1 – Brigadier-1 wells correlation (Source Cue)

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Figure 2-13: Hydrocarbon charged reservoirs in the Gorgon Field (Source Cue)

2.5 Ironbark Prospect and Well Proposal

On the basis of seismic data and the lithofacies model for the targeted reservoir, SRK increased the net to gross reservoir range to capture the downside risk and account for this possible outcome.

Reservoirs are interpreted by SRK to be normally pressured with expected temperatures of between160[o] C to 170[o] C. Thick, high net to gross reservoirs with good porosity and permeability for gas and little evidence of compartmentalisation are interpreted. Aquifer support is expected indicating the potential for high gas recoveries.

Figures 2-14 to 2-16 show the T19, T17 and T14 depth structure maps and gross rock volumes to the LCC (lowest closing contour) spill points at each level.

Figure 2-17 shows the proposed Ironbark-1 well schematic with TD (total depth) at 6500 mSS (meters subsea).

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Figure 2-14: Estimated gross rock volume (GRV) versus depth and Top Tr19 structure map (depth mSS)

(Source Cue)

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Figure 2-15: Estimated gross rock volume (GRV) versus depth and Top Tr17 structure map (depth mSS)

(Source Cue)

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Figure 2-16: Estimated gross rock volume (GRV) versus depth and Top Tr14 structure map (depth mSS) (Source Cue)

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Figure 2-17: Proposed Ironbark-1 well depth vs time (with TD total depth estimated at 6500 mSS) (Source Cue)

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3 Prospective Resources Estimation Review

SRK reviewed and undertook verification of the potential hydrocarbon volumes and risks estimated for the Ironbark prospect. SRK reviewed the risking and concurred with Cue’s risk probabilities ( Table 3-1).

3.1 Resource Parameters and Risking

Based on its review, SRK considers the following resource parameters and risking applies at Ironbark:

Play is proven and therefore play risk is one.

SRK’s prospect risking is based on four elements – structure (trap closure), reservoir (quality and quantity), seal (vertical and lateral) and charge (source, generation, timing, migration and preservation) that capture the eight independent elements that comprise prospect risk ( Table 3-1 ).

Table 3-1: Prospect risks assigned to the SRK Prospective Resource estimation for Ironbark Prospect

Risk Element	Comments	Probability
Structure	Large (~400 km2) robust horst structure with symmetric north-south dip closure.	0.85
Reservoir	Well-documented (Gorgon Field pay sands), thick, laterally extensive TR17 and TR19 Mungaroo stacked, sheet-like channel sands (~150-300 m). Depth trends predicted from petrophysics and core data indicates good reservoir quality at depths >6,500 m.	0.7
Seal	Mungaroo shales are excellent top seals. Fault- plane and juxtaposition of shales form lateral seals.	0.85
Charge	Mungaroo coals and carbonaceous shales are proven gas-prone source rocks throughout the basin. Thermal modelling of the Ironbark area indicates favourable generation and expulsion conditions for large charge volumes. Risk of inert gas contamination is low.	0.5
Overall Prospect Risk		0.25

(Source: SRK Analysis)

3.2 Prospective Resources

By producing order of magnitude estimates for each of the prospective reservoir levels, SRK was able to confirm Cue’s overall estimates. Comparison between Cue’s results ( Tables 3-2 and 3-3) and SRK’s results (Table 3-4) confirmed that Cue’s estimates are reasonable.

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Table 3-2: Cue’s probabilistic volume summary – primary Triassic targets

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(Source: Cue)

Table 3-3: Cue’s probabilistic volume summary – secondary Triassic target

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(Source: Cue)

SRK undertook an independent probabilistic estimation of the Prospective Resources and confirmed that the estimates provided by Cue were reasonable. SRK estimated the overall Prospective Resources as shown in Table 3-4. SRK also made estimates truncated to a minimum economic pool size of 3 TCF of gas.

Table 3-4: SRK’s 2U (P50) probabilistic volume estimation

Target (P50)	In Place (unrisked, Tcf) Resource (unrisked, Tcf) Resource (risked, Tcf) Condensate (unrisked, MMbbls) Condensate (Risked, MMbbls)	In Place (unrisked, Tcf) Resource (unrisked, Tcf) Resource (risked, Tcf) Condensate (unrisked, MMbbls) Condensate (Risked, MMbbls)	In Place (unrisked, Tcf) Resource (unrisked, Tcf) Resource (risked, Tcf) Condensate (unrisked, MMbbls) Condensate (Risked, MMbbls)	In Place (unrisked, Tcf) Resource (unrisked, Tcf) Resource (risked, Tcf) Condensate (unrisked, MMbbls) Condensate (Risked, MMbbls)	In Place (unrisked, Tcf) Resource (unrisked, Tcf) Resource (risked, Tcf) Condensate (unrisked, MMbbls) Condensate (Risked, MMbbls)
Triassic T19 Primary	15.6	9.0	2.3	81.4	20.4
Triassic T17 Primary	18.9	10.4	2.6	114.0	28.5
Total(untruncated)	34.5	19.4	4.9	195.4	48.9

Triassic T14 Secondary (untruncated)	8.1	4.7	1.2	32.8	8.2

(Source: SRK Analysis)

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4 Expenditure Values, Block Commitments, Project Development Economic Analysis and Comparative Transactions

4.1 SRK’s Approach

For the purpose of determining the respective values for Cue’s permits (petroleum exploration permits) WA-359-P and WA-409-P, SRK considered the book values of the blocks since inception, the block commitment work programs and estimated expenditures, the comparative transaction values based on the Prospective Resources and the estimated potential project value defined by an exploration success case.

On a 2U (P50) basis, SRK has attributed approximately 30% of the Ironbark Prospective Resource occurs within WA-409-P (mainly Northeast Ironbark) and 70% in WA-359-P.

4.2 WA-359-P and WA-409-P Commitments

The block work commitments and permit term details for each permit are presented in Tables 4-1 and

4-2 respectively.

Table 4-1: Commonwealth of Australia Petroleum Exploration Permit WA-359-P. Permit term details and work requirements

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(Source: Cue)

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Table 4-2: Commonwealth of Australia Petroleum Exploration Permit WA-409-P Permit term details and work requirements

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(Source: Cue)

The current estimated dry hole cost for drilling of the proposed Ironbark-1 well is US$91.6 Million. SRK emphasises that this is an estimate only and based on trouble free drilling. Side-tracks or major drilling difficulties could potentially add 50% or more to this cost estimate.

4.3 Expenditure Values

The Cue expenditure to date for WA-359-P as at 31 October 2018 since inception is A $3,830,452.91.

The Cue expenditure to date for WA-409-P as at 31 October 2018 since inception is A $3,492,467.53.

In summary these expenditure values represent the low-end values for the blocks.

4.4 Conceptual Project Development

The conceptual Ironbark development model for both gas and condensate is shown in Figure 4-1 .

At the current exploration phase, SRK considers the full success financial model is not appropriate to estimate a speculative outcome, that may vary significantly for any modelled scenario.

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Figure 4-1: Ironbark conceptual condensate field production forecast (Source: Cue)

4.5 Comparative Transactions

In October 2016, Cue farmed out an 80% equity interest in WA-409-P to BP. Cue has no funding requirements for the primary term work costs, which included reprocessing of seismic data over the permit. The farmout included a technical services agreement requiring BP to provide a technical data room for Cue to facilitate further interest in the Ironbark prospect. SRK estimates the value of this transaction at A$3.5 Million (for an 80% interest, which grossed up to a 100% interest implies A$4.38 Million), is towards the lower end of the likely value range. However, the overarching agreement was aimed to facilitate the drilling of the proposed Ironbark-1 well in WA-359-P.

The Ironbark prospect in the northern Carnarvon Basin is estimated to have a 0.25 technical chance of success. Table 4-3 indicates the chance of economic development for Mungaroo Formation reservoirs in the northern Carnarvon Basin is 2 in 7.

SRK estimated the comparative transaction values based on barrel of oil equivalent (BOE) data indicating a range of US$1/ BOE to US$3/BOE with a typical long-term average of US$2/BOE as the benchmark for the comparative value transaction estimation. The data was derived from Newton, Indonesian M&A transactions database, 2017.

Tables 4-4 and 4-5 respectively indicate the risked hydrocarbon volumes and estimated values of the permits after incorporating both a technical and economic development basis.

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Table 4-3: Fields discovered and developed in the Mungaroo Formation in the northern Carnarvon Basin (Department of Mines and Petroleum, WA, 2014)

Fields and significant discoveries in State areas of the Northern Carnarvon Basin	Fields and significant discoveries in State areas of the Northern Carnarvon Basin	Fields and significant discoveries in State areas of the Northern Carnarvon Basin	Fields and significant discoveries in State areas of the Northern Carnarvon Basin	Fields and significant discoveries in State areas of the Northern Carnarvon Basin	Fields and significant discoveries in State areas of the Northern Carnarvon Basin
FIELD	YEAR	RESERVOIRS	AGE OF RESERVOIR	HYDROCARBON TYPE	STATUS*
Baker	2000	Brigadier Formation Mungaroo Formation	Upper Triassic	gas	undeveloped
Cadell	1999	Mungaroo Formation	Upper Triassic	gas	undeveloped
Josephine	2000	North Rankin Formation Brigadier Formation Mungaroo Formation	Lower Jurassic Upper Triassic Upper Triassic	gas	undeveloped
Leatherback	1991	Mungaroo Formation	Upper Triassic	oil	undeveloped
Monty	1999	North Rankin Formation Brigadier Formation Mungaroo Formation	Lower Jurassic Upper Triassic Upper Triassic	gas, condensate	undeveloped
Rose	1998	North Rankin Formation Brigadier Formation Mungaroo Formation	Lower Jurassic Upper Triassic Upper Triassic	gas, condensate	producing
Tubridgi	1981	Birdrong Sandstone Flacourt Formation Mungaroo Formation	Lower Cretaceous Lower Cretaceous Upper Triassic	gas	depleted

Table 4-4: Estimated value of discovered hydrocarbons in WA-359-P based on BOE transaction values (100% basis)

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Table 4-5: Estimated value of discovered hydrocarbons in WA-409-P based on BOE transaction values (100% basis)

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5 Valuation Summary

PKF commissioned SRK to prepare an Independent Specialist Report incorporating a technical assessment and valuation of the hydrocarbon assets held by Cue. This Report has been prepared under the guidelines of the VALMIN Code (2015), which incorporates the PRMS (2018) guidelines.

While the VALMIN Code (2015) states that decisions as to which valuation methodology is used are the responsibility of the Expert or Specialist, where possible, SRK considered several methods. The aim of this approach was to compare the results achieved using different methods to select a preferred value within a valuation range. This reflects the uncertainty in the data and interaction of the various assumptions inherent in the valuation.

SRK has recommended preferred values and value ranges for Cue’s gas assets based on the estimated Prospective Resources (2U, P50) and perceived exploration potential. SRK has considered a Comparable Transactions approach to arrive at a valuation range.

SRK’s recommended valuation ranges and preferred values for each project are summarised in Table 5-1 . SRK has produced a Market Value as defined by the VALMIN Code (2015). SRK’s preferred values are positioned conservatively due to varying levels of technical and geological uncertainty, including but not limited to the expected difficulties in converting resources into reserves.

Table 5-1: Summary of SRK’s valuation of the WA-359-P and WA-409-P permits as at 14 November 2018 on a 100% equity basis

Project	Asset	Valuation method	Low (A$MM)	High (A$MM)	Preferred (A$MM)
Ironbark-1	WA-359-P (100%) Cue Interest 100%	2U P50 Prospective Resources (Expenditure Values and Comparative Transactions)	3.8	536	357
Ironbark-1	WA-409-P (100%) Cue Interest 20%	2U P50 Prospective Resources (Expenditure Values and Comparative Transactions)	3.5	230	153

Note: Any discrepancies between values in the table are due to rounding (US$ converted to A$ at 0.7US$ to 1.0A$ from Table 4-4 and 4-5)

5.1 Discussion on SRK’s Valuation Range

In assigning its valuation range and preferred value, SRK is mindful that the valuation range is also indicative of the uncertainty associated with early stage exploration assets.

The wide range in value is driven by the confidence limits placed around the size and quality of the hydrocarbon occurrences assumed to occur within each project area. Typically, this means that as exploration progresses, and a prospect moves from an early to advanced stage prospect, through Prospective and Contingent Resource categories to economic Reserve status, there is greater confidence around the likely size and quality of the contained hydrocarbons and the fields potential to be extracted profitably. Table 5-2 presents a general guide of the confidence in resource and reserve estimates, and hence value.

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Table 5-2: General guide regarding confidence for target and Resource/Reserve Estimates

Table 5-2: General guide	regarding confidence for targ
Classification	Estimate range (% Chance of Success)
1P Reserves	P90%
2P Reserves	Best estimate P50%
3P Reserves	P10%
Contingent Resources	1C P90, 2C P50, 3C P10
Prospective Resources	1U P90, 2U P50, 3U P10

This level of uncertainty with advancing project stages is shown graphically in Figure 5-1.

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Figure 5-1: Uncertainty by advancing exploration stage

Estimated confidence of plus or minus 60% to 100% or more are not uncommon for exploration areas and are within acceptable bounds given the level of uncertainty associated with early stage exploration assets. By applying narrower confidence ranges, one is actually implying a greater degree of certainty regarding these assets than may be the case in reality.

The Ironbark exploration asset is in the mature stage of exploration assessment. Therefore, there remain significant uncertainties around its attributes which will be assessed by drilling. This results in a wide valuation range. Where possible, SRK has endeavoured to narrow its valuation range. In recognising this wide range, SRK has also indicated a preferred value for the project.

5.2 Valuation Risks

SRK is conscious of the risks associated with valuing exploration assets, which impacts on the valuation range. In defining its valuation range, SRK notes that there are always inherent risks involved when deriving any arm’s length valuation for exploration properties given the level of uncertainty present for each of the variables that impact on prospects and their valuation. These factors can ultimately result in significant differences in valuations over time. The key risks include but are not limited to the following.

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5.2.1 Exploration and Testing Risks

The business of petroleum exploration, project development and production is by nature high risk. The exploration potential of tenements where resources are not yet defined may vary considerably as further exploration is undertaken.

The exploration for, and production of, hydrocarbons involves various operating hazards including, but not limited to, adverse weather conditions, shortages or delays in the availability of drilling rigs, or other critical equipment or personnel.

Resource estimates prepared under PRMS (2018) are best estimates based on individual judgement and reliance upon knowledge and experience using industry standards and the available database. No firm estimates are available currently. However, this may change over time as more information comes to hand.

5.2.2 Development and Production Risks

The projects discussed in this report are at a mature stage of exploration evaluation but none of the assets have discovered hydrocarbons or any defined Reserves. Forecasting cash flows for these assets is speculative and therefore riskier than for projects in production, development or with a feasibility study completed.

The successful development of a petroleum production operation is dependent upon geological interpretation to define extractable hydrocarbons and an appropriate schedule to meet expected sales volumes. Actual produced hydrocarbons may be very different in quality and quantity to the estimates presented here and development conditions anticipated may prove to be different. Operating costs can be adversely affected by disruptions due to geological conditions, equipment failure or industrial disputes. Development of a new production operations is dependent upon the provision of transport and port facilities for international shipping.

5.2.3 Environmental risks

Environmental conditions will be attached to future production tenements which if not deemed compliant by the relevant authorities could result in the forfeiture of these rights. Substantial costs can be encountered for environmental rehabilitation, damage, control and losses, which can vary over the life of the mining operation. Conditions attached to the development rights may also vary over the life of the project and in response to any change in the size or type of operation that cannot be anticipated at this time.

5.2.4 Financing

Further funds may be required to further explore and develop the project. Failure to obtain sufficient financing for the projects may result in a delay or indefinite postponement of exploration and development activities on the properties or even a loss of a property interest. Additional financing may not be available when needed or, if available, the terms of such financing might not be favourable to the Company.

5.2.5 Native Title and Lease Access

Production title has not been granted on any of the tenements discussed in this report. Native title claims, and heritage issues may arise in the future and thus delay the development of any future mining operation and/or production from areas where freehold land or mining leases have not been obtained. These issues are likely to be addressed in future should the future exploration be successful and warrant the conversion of exploration permits to production licenses.

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6 Conclusions

The Ironbark prospect is an exciting opportunity to initiate a new phase of frontier gas exploration development in the northern Carnarvon Basin. The prospect is very large but carries with it significant technical and economic development risks.

SRK consider that the range of potential outcomes means that our preferred value estimate could vary significantly dependent on circumstances and potential development risks and timing. SRK is confident that the values of the exploration permits, WA-359-P and WA-409-P reside within our low and high estimates.

Compiled by

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Bruce McConachie Associate Principal Consultant

Peer Reviewed by

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Carl D’Silva Associate Principal Consultant

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Jeames McKibben Principal Consultant

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7 Selected References

Adamson, K.R., Lang, S.M., Marshall, N.G., Seggie, R., Adamson, N.J. and Bann, K.L., 2013. Understanding the Late Triassic Mungaroo and Brigadier Deltas of the Northern Carnarvon Basin, North West Shelf. In: The Sedimentary Basins of Western Australia IV: (Eds M. Keep and S.J. Moss), Proceedings of the Petroleum Exploration Society of Australia Symposium, Perth, WA.

Bradshaw, M.T., 1993—Australian petroleum systems. PESA Journal, 21, 43–53.

Bradshaw, M.T., Bradshaw, J., Murray, A., Needham, D.J., Spencer, L., Summons, R., Wilmot, J. and Winn, S., 1994—Petroleum systems in West Australian basins. In: Purcell, P.G. and Purcell, R.R. (eds), The Sedimentary Basins of Western Australia 1. Proceedings of the Petroleum Exploration Society of Australia Symposium, Perth, 1994, 93–118.

Bradshaw, M.T., Edwards, D., Bradshaw, J., Foster, C., Loutit, T., McConachie, B., Moore, A., Murray, A.P. and Summons, R.E., 1997—Australian and Eastern Indonesian petroleum systems. In: Howes, J.V.C. and Noble, R.A. (eds), Proceedings of the Conference on Petroleum Systems of SE Asia and Australasia, Indonesian Petroleum Association, Jakarta, May 1997, 141–153.
Clayton, C., Boyd, G., Conroy, T., Hartanto, L., Johnson, G., Lance, D., Philip, G., Rayfield, M., and Tibury, L., 2008 – The Pluto Field – from LNG Opportunity from the Northwest Shelf of Australia. Proceedings of the AAPG International Conference and Exhibition, Cape Town South Africa.
Department of Mines and Petroleum, WA, 2014. Western Australia’s Petroleum and Geothermal Explorer’s Guide. Government of Western Australia, Department of Mines and Petroleum, Petroleum Division, Mineral House, 100 Plain Street, East Perth, Western Australia 6004.
Edwards, D. and Zumberge, J., 2005—The Oils of Western Australia II: Regional Petroleum Geochemistry and Correlation of Crude Oils and Condensates from Western Australia and Papua and New Guinea. Geoscience Australia and GeoMark Research Ltd, unpublished.
Edwards, D.S., Boreham, C.J., Zumberge, J., Hope, J., Kennard, J.M. and Summons, R.E., 2006— Hydrocarbon families of the NW Shelf: a regional synthesis of the molecular and isotopic composition of oils and gases. Abstract, AAPG International Conference and Exhibition, Perth, 5–8 November 2006.
Edwards, D.S., Zumberge, J.E., Boreham, C.J., Kennard, J.M., Barrett, A. and Bradshaw, M.T., 2007—Petroleum systems and supersystems of the Australian North West Shelf: a geochemical approach. Abstract, Geological Society of London: Emerging Plays in Australasia Symposium, July 2007.
PRMS, 2011.Guidlines for Application of the Petroleum Resources Management System (PRMS) Society of Petroleum Engineers, American Association of Petroleum Geologists, World Petroleum Council, Society of Petroleum Evaluation Engineers (SPEE), Society of Exploration Geophysicists. 221 p. http://www.spe.org/spe-app/spe/industry/reserves/index.htm.
PRMS, 2018. Petroleum Resources Management System (PRMS). SPE/WPC/AAPG/SPEE/SEG /SPWLA/EAGE. Society of Petroleum Engineers, American Association of Petroleum Geologists, World Petroleum Council, Society of Petroleum Evaluation Engineers, Society of Exploration Geophysicists, Society of Petrophysicists and Well Log Analysists and European Association of Geologists and Engineers 57p. http://www.spe.org/speapp/spe/industry/reserves/index.htm.

Spencer, L., Needham, J., Edgecombe, S., Bradshaw, J., Foster, C., Bradshaw, M., Vizy, J. and Zuccaro, G., 1993—Australian Petroleum Systems Dampier Sub-basins Module. Australian Geological Survey Organisation Record 1993/31.

Spencer, L., Needham, J., Bradshaw, J., Bradshaw, M., Foster, C., Noonan, J., Edgecombe, S. and Zuccaro, G., 1994—Australian Petroleum Systems Barrow-Exmouth Sub-basins Module. Australian Geological Survey Organisation Record 1994/19.

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Spencer, L., Sayers, J., Bradshaw, J., Bradshaw, M., Foster, C., Murray, A., Edwards, D., Zuccaro, G., Buchanan, C. and Apps, H., 1995—Australian Petroleum Systems Exmouth Plateau & Outer Rankin Platform Module. Australian Geological Survey Organisation Record 1995/80.
VALMIN (2015), Australasian Code for the Public Reporting of Technical Assessments and Valuations of Mineral Assets

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Appendices

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Appendix A

Appendix A: Category Definitions of 1P, 2P and 3P

(PRMS, 2018) For further details on the definitions and guidelines, please see the original document.

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Appendix A

The following (Figure A-1) (from the World Petroleum Council) presents 1P 2P and 3P category definitions. Furthermore, it provides guidelines designed to promote consistency in resource assessments. The following summarizes the definitions for each Reserves category in terms of both the deterministic incremental approach and scenario approach and also provides the probability criteria if probabilistic methods are applied.

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Figure A-1: Resources classification framework

Proved Reserves are those quantities of petroleum, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate.
Probable Reserves are those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
Possible Reserves are those additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P) Reserves, which is equivalent to the high estimate scenario. In this context, when probabilistic methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or exceed the 3P estimate.

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Appendix A

The “Range of Uncertainty” reflects a range of estimated quantities potentially recoverable from an accumulation by a project, while the vertical axis represents the “Chance of Commerciality”, that is, the chance that the project that will be developed and reach commercial producing status.

The following definitions apply to the major subdivisions within the resources classification:

TOTAL PETROLEUM INITIALLY-IN-PLACE is that quantity of petroleum that is estimated to exist originally in naturally occurring accumulations. It includes that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production plus those estimated quantities in accumulations yet to be discovered (equivalent to “total resources”).

DISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity of petroleum that is estimated, as of a given date, to be contained in known accumulations prior to production.

PRODUCTION is the cumulative quantity of petroleum that has been recovered at a given date. While all recoverable resources are estimated and production is measured in terms of the sales product specifications, raw production (sales plus non-sales) quantities are also measured and required to support engineering analyses based on reservoir voidage.

Multiple development projects may be applied to each known accumulation, and each project will recover an estimated portion of the initially-in-place quantities. The projects shall be subdivided into Commercial and Sub-Commercial, with the estimated recoverable quantities being classified as Reserves and Contingent Resources respectively, as defined below.

RESERVES are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria’s: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status.

CONTINGENT RESOURCES are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be subclassified based on project maturity and/or characterized by their economic status.

UNDISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity of petroleum estimated, as of a given date, to be contained within accumulations yet to be discovered.

PROSPECTIVE RESOURCES are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be subclassified based on project maturity.

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Appendix A

UNRECOVERABLE is that portion of Discovered or Undiscovered Petroleum Initially-in- Place quantities which is estimated, as of a given date, not to be recoverable by future development projects. A portion of these quantities may become recoverable in the future as commercial circumstances change or technological developments occur, the remaining portion may never be recovered due to physical/chemical constraints represented by subsurface interaction of fluids and reservoir rocks.

Estimated Ultimate Recovery (EUR) is not a resources category, but a term that may be applied to any accumulation or group of accumulations (discovered or undiscovered) to define those quantities of petroleum estimated, as of a given date, to be potentially recoverable under defined technical and commercial conditions plus those quantities already produced (total of recoverable resources).

In specialized areas, such as basin potential studies, alternative terminology has been used, the total resources may be referred to as Total Resource Base or Hydrocarbon Endowment. Total recoverable or EUR may be termed Basin Potential. The sum of Reserves, Contingent Resources and Prospective Resources may be referred to as “remaining recoverable resources.” When such terms are used, it is important that each classification component of the summation also be provided. Moreover, these quantities should not be aggregated without due consideration of the varying degrees of technical and commercial risk involved with their classification.

Project-Based Resources Evaluations

The resources evaluation process consists of identifying a recovery project, or projects, associated with a petroleum accumulation(s), estimating the quantities of Petroleum Initially-in-Place, estimating that portion of those in-place quantities that can be recovered by each project, and classifying the project(s) based on its maturity status or chance of commerciality.

This concept of a project-based classification system is further clarified by examining the primary data sources contributing to an evaluation of net recoverable resources ( Figure A-2 ) that may be described as follows:

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Figure A-2: Resources Evaluation data sources

Resources Classification

The basic classification requires establishment of criteria for a petroleum discovery and thereafter the distinction between commercial and sub-commercial projects in known accumulations (and hence between Reserves and Contingent Resources).

Determination of Discovery Status

A discovery is one petroleum accumulation, or several petroleum accumulations collectively, for which one or several exploratory wells have established through testing, sampling, and/or logging the existence of a significant quantity of potentially moveable hydrocarbons.

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Appendix A

In this context, �significant� implies that there is evidence of a sufficient quantity of petroleum to justify estimating the in-place volume demonstrated by the well(s) and for evaluating the potential for economic recovery. Estimated recoverable quantities within such a discovered (known) accumulation(s) shall initially be classified as Contingent Resources pending definition of projects with sufficient chance of commercial development to reclassify all, or a portion, as Reserves.

Where in-place hydrocarbons are identified, but are not considered currently recoverable, such quantities may be classified as Discovered Unrecoverable, if considered appropriate for resource management purposes, a portion of these quantities may become recoverable resources in the future as commercial circumstances change or technological developments occur.

Determination of Commerciality

Discovered recoverable volumes (Contingent Resources) may be considered commercially producible, and thus Reserves, if the entity claiming commerciality has demonstrated firm intention to proceed with development and such intention is based upon all of the following criteria:

Evidence to support a reasonable timetable for development.
A reasonable assessment of the future economics of such development projects meeting defined investment and operating criteria.
A reasonable expectation that there will be a market for all or at least the expected sales quantities of production required to justify development.
Evidence that the necessary production and transportation facilities are available or can be made available.
Evidence that legal, contractual, environmental and other social and economic concerns will allow for the actual implementation of the recovery project being evaluated.

To be included in the Reserves class, a project must be sufficiently defined to establish its commercial viability. There must be a reasonable expectation that all required internal and external approvals will be forthcoming, and there is evidence of firm intention to proceed with development within a reasonable time frame. A reasonable time frame for the initiation of development depends on the specific circumstances and varies according to the scope of the project. While 5 years is recommended as a benchmark, a longer time frame could be applied where, for example, development of economic projects are deferred at the option of the producer for, among other things, market-related reasons, or to meet contractual or strategic objectives. In all cases, the justification for classification as Reserves should be clearly documented.

To be included in the Reserves class, there must be a high confidence in the commercial producibility of the reservoir as supported by actual production or formation tests. In certain cases, Reserves may be assigned on the basis of well logs and/or core analysis that indicate that the subject reservoir is hydrocarbon-bearing and is analogous to reservoirs in the same area that are producing or have demonstrated the ability to produce on formation tests.

Project Status and Commercial Risk

Evaluators have the option to establish a more detailed resources classification reporting system that can also provide the basis for portfolio management by subdividing the chance of commerciality axis according to project maturity. Such sub-classes may be characterized by standard project maturity level descriptions (qualitative) and/or by their associated chance of reaching producing status (quantitative).

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Appendix A

As a project moves to a higher level of maturity, there will be an increasing chance that the accumulation will be commercially developed. For Contingent and Prospective Resources, this can further be expressed as a quantitative chance estimate that incorporates two key underlying risk components:

The chance that the potential accumulation will result in the discovery of petroleum. This is referred to as the “chance of discovery”.
Once discovered, the chance that the accumulation will be commercially developed is referred to as the “chance of development.”

Thus, for an undiscovered accumulation, the �chance of commerciality� is the product of these two risk components. For a discovered accumulation where the �chance of discovery� is 100%, the �chance of commerciality� becomes equivalent to the �chance of development.�

Project Maturity Sub-Classes

As illustrated in Figure A-3 , development projects (and their associated recoverable quantities) may be sub-classified according to project maturity levels and the associated actions (business decisions) required to move a project toward commercial production.

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Figure A-3: Project maturity sub-classes

Project Maturity terminology and definitions have been modified from the example provided in the 2001 Supplemental Guidelines, Chapter 2. Detailed definitions and guidelines for each Project maturity sub-class are provided in Figure A-3. This approach supports managing portfolios of opportunities at various stages of exploration and development and may be supplemented by associated quantitative estimates of chance of commerciality. The boundaries between different levels of project maturity may be referred to as “decision gates.”

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Appendix A

Decisions within the Reserves class are based on those actions that progress a project through final approvals to implementation and initiation of production and product sales. For Contingent Resources, supporting analysis should focus on gathering data and performing analyses to clarify and then mitigate those key conditions, or contingencies, that prevent commercial development.

For Prospective Resources, these potential accumulations are evaluated according to their chance of discovery and, assuming a discovery, the estimated quantities that would be recoverable under appropriate development projects. The decision at each phase is to undertake further data acquisition and/or studies designed to move the project to a level of technical and commercial maturity where a decision can be made to proceed with exploration drilling.

Evaluators may adopt alternative sub-classes and project maturity modifiers, but the concept of increasing chance of commerciality should be a key enabler in applying the overall classification system and supporting portfolio management.

Reserves Status

Once projects satisfy commercial risk criteria, the associated quantities are classified as Reserves. These quantities may be allocated to the following subdivisions based on the funding and operational status of wells and associated facilities within the reservoir development plan:

Developed Reserves are expected quantities to be recovered from existing wells and facilities.
Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate.
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves.
Undeveloped Reserves are quantities expected to be recovered through future investments.

Where Reserves remain undeveloped beyond a reasonable timeframe, or have remained undeveloped due to repeated postponements, evaluations should be critically reviewed to document reasons for the delay in initiating development and justify retaining these quantities within the Reserves class. While there are specific circumstances where a longer delay (see Determination of Commerciality, section 2.1.2) is justified, a reasonable time frame is generally considered to be less than 5 years.

Development and production status are of significant importance for project management. While Reserves Status has traditionally only been applied to Proved Reserves, the same concept of Developed and Undeveloped Status based on the funding and operational status of wells and producing facilities within the development project are applicable throughout the full range of Reserves uncertainty categories (Proved, Probable and Possible).

Quantities may be subdivided by Reserves Status independent of sub-classification by Project Maturity. If applied in combination, Developed and/or Undeveloped Reserves quantities may be identified separately within each Reserves sub-class (On Production, Approved for Development, and Justified for Development).

Economic Status

Projects may be further characterized by their Economic Status. All projects classified as Reserves must be economic under defined conditions.

Based on assumptions regarding future conditions and their impact on ultimate economic viability, projects currently classified as Contingent Resources may be broadly divided into two groups:

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Appendix A

Marginal Contingent Resources are those quantities associated with technically feasible projects that are either currently economic or projected to be economic under reasonably forecasted improvements in commercial conditions but are not committed for development because of one or more contingencies.
Sub-Marginal Contingent Resources are those quantities associated with discoveries for which analysis indicates that technically feasible development projects would not be economic and/or other contingencies would not be satisfied under current or reasonably forecasted improvements in commercial conditions. These projects nonetheless should be retained in the inventory of discovered resources pending unforeseen major changes in commercial conditions.

Where evaluations are incomplete such that it is premature to clearly define ultimate chance of commerciality, it is acceptable to note that project economic status is �undetermined.� Additional economic status modifiers may be applied to further characterize recoverable quantities; for example, non-sales (lease fuel, flare, and losses) may be separately identified and documented in addition to sales quantities for both production and recoverable resource estimates. Those discovered in-place volumes for which a feasible development project cannot be defined using current or reasonably forecast improvements in technology are classified as Unrecoverable.

Economic Status may be identified independently of, or applied in combination with, Project Maturity sub-classification to more completely describe the project and its associated resources.

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Appendix B

Appendix B:

Glossary of Terms

For further details on the definitions and guidelines, please see the original documents. Minor edits and additions were made by the current authors

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Appendix B

Adsorption - The property of some solids and liquids to attract a liquid or a gas to their surfaces. For coal, it is the property of the coal matrix to attract natural gas to the coal surface.

As-Received (Basis) - Represents an analysis of a sample as received at a laboratory.

Assessment - The geosciences, engineering, and associated studies conducted on a petroleum exploration, development, or producing project resulting in estimates of the quantities that can be recovered and sold and the associated cash flow under defined forward conditions. Projects are classified and estimates of derived quantities are categorized according to applicable guidelines.

Best Estimate - This is considered to be the best estimate of the quantity that will actually be recovered from the accumulation by the project. It is the most realistic assessment of recoverable quantities if only a single result were reported. If probabilistic methods are used, there should be at least a 50% probability (P50) that the quantities actually recovered will equal or exceed the best estimate. For prospective resources estimates, this estimate is dependent on a discovery being made. For contingent resources, this estimate is dependent on economic contingencies being successfully addressed.

Capital Costs - Monies spent in drilling and completing a well that cannot be deducted under federal income tax law. The monies are recovered by the slower and less desirable depletion or depreciation methods. Capital expenditures also include geological and geophysical costs, equipment costs, and lease bonuses.

Cleating - A series of tight, closely spaced, small fractures in the coal bed caused by geologic stress. Cleating, and coal permeability, may be enhanced in areas of faulting, fracturing, or structural stress.

Coal Seam - A strata of coal that is thick enough to be mapped over an area or mined.

Coal Thickness – The true perpendicular thickness of a coal strata. Gross coal thickness is normally the distance between the top and base of the coal seam. Net coal thickness is normally determined by excluding coal sections with densities above 1.75 g/cc.

Coal Bed Methane (CBM) - Natural gas contained in coal deposits, whether or not stored in gaseous phase. Coal bed gas, although usually mostly methane, may be produced with variable amounts of inert or even non-inert gases.

Commerciality - When a project is commercial, this implies that the essential social, environmental, and economic conditions are met, including political, legal, regulatory, and contractual conditions. In addition, a project is commercial if the degree of commitment is such that the accumulation is expected to be developed and placed on production within a reasonable time frame.

Contingent Resources - Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more commercial contingencies.

Core Hole - A well drilled with a slim-hole rig. The wellbore is 6¼ in. in diameter or less. Well logs are run in a core hole, although a core is not necessarily taken.

Density - Mass per unit of volume. Density is typically reported in g/cc (for example, rocks) or pounds per barrel (drilling mud) in the oil field.

Desorption - The release of gas from the coal matrix as the pressure is lowered and the adsorption capacity of the coal is subsequently lowered.

Estimated Ultimate Recovery - Those quantities of petroleum, which are estimated, on a given date, to be potentially recoverable from an accumulation, plus those quantities already produced there from.

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Appendix B

Exploration Well - A well drilled in order to locate an undiscovered petroleum reservoir, either by discovering a new field or a new shallower or deeper reservoir in a previously discovered field.

Fair Market Value - The amount of money (or the cash equivalent of some other consideration) determined by the expert in accordance with the provisions of the VALMIN Code for which the mineral or petroleum asset or security should change hands on the valuation date in an open and unrestricted market between a willing buyer and a willing seller in an "arm's length" transaction, with each party acting knowledgeably, prudently and without compulsion. Value is usually comprised of two components, the underlying or 'technical value' of the mineral or petroleum asset or security and a premium or discount relating to market, strategic, or other considerations. Value should be selected as the most likely figure from within a range after taking account of risk and the possible variation in ore grade, metallurgical recovery, capital and operating costs, commodity prices, exchange rates and the like.

Formation - A strata of rock that is sufficiently distinctive and continuous that it can be mapped.

Gas Content - For coalbed methane evaluations, this is the amount of gas adsorbed onto the coal matrix surfaces, usually expressed as cubic meters or standard cubic feet per ton of coal.

High Estimate - This is considered to be an optimistic estimate of the quantity that will actually be recovered from an accumulation by a project. If probabilistic methods are used, there should be at least a 10% probability (P10) that the quantities actually recovered will equal or exceed the high estimate. For prospective resources estimates, this estimate is dependent on a discovery being made. For contingent resources, this estimate is dependent on contingencies being successfully addressed.

Horizontal Well - A well that is drilled by deviation drilling and tracks the dip of a subsurface reservoir. A horizontal well traditionally consists of a vertical section and a lateral horizontal section which penetrates the target reservoir.

Langmuir Equation - Relates the coverage or adsorption of molecules on a solid surface to gas pressure or concentration of a medium above the solid surface at a fixed temperature. The equation was developed by Irving Langmuir in 1916.

Low Estimate - This is considered to be a conservative estimate of the quantity that will actually be recovered from the accumulation by a project. If probabilistic methods are used, there should be at least a 90% probability (P90) that the quantities actually recovered will equal or exceed the low estimate. For prospective resources estimates, this estimate is dependent on a discovery being made. For contingent resources, this estimate is dependent on contingencies being successfully addressed.

Net Coal Thickness - The net thickness of the coal bed. Net coal thickness is normally the distance between the top and base of the coal seam once the coal sections with densities above 1.75 g/cc are excluded.

Operating Costs - The direct operating costs plus district overhead plus employee benefits for a specific producing property.

Original Gas-in-Place (OGIP) - The total quantity of natural gas that is estimated to exist originally in naturally occurring reservoirs.

Overburden Thickness - The thickness of the overburden rock above top of the coal seam. The distance between ground level and the top of the coal seam.

Permeability - The measurement of a rock's ability to transmit fluids, typically measured in darcies or millidarcies.

Pilot - A small development project to validate the petroleum engineering estimates of recovery, rates, and spacing before the operator commits to commercial development.

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Appendix B

Probabilistic Methods - The method of estimation of resources is called probabilistic when the known geoscience, engineering, and economic data are used to generate a continuous range of estimates and their associated probabilities.

Probability - The extent to which an event is likely to occur, measured by the ratio of the favourable cases to the whole number of cases possible. SPE convention is to quote cumulative probability of exceeding or equalling a quantity where P90 is the small estimate and P10 is the large estimate.

Production Sharing Contract (PSC) - An agreement between the parties to a well and a host country regarding the percentage of production each party will receive after the participating parties have recovered a specified amount of costs and expenses.

Prospect - A project associated with a potential accumulation that is sufficiently well defined to present a viable drilling target.

Prospective Resources - Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations.

Rat hole - Extra hole drilled at the end of the well (beyond the last zone of interest) to ensure that the zone of interest can be fully evaluated or a sump to enable dewatering.

Recovery Factor - A numeric expression of that portion of inplace quantities of petroleum estimated to be recoverable by specific processes or projects, most often represented as a percentage.

Reserves - Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: They must be discovered, recoverable, commercial, and remaining (as of a given date) based on the development project(s) applied.

Risk - The probability of loss or failure.

Risk Factor - The chance of success.

Structure - A geological feature produced by deformation of the Earth's crust, such as a fold or a fault; a feature within a rock, such as a fracture or bedding surface; or, more generally, the spatial arrangement of rocks.

Vertical Well - A well drilled vertically into the subsurface.

Volumetric Estimate - An estimate of the volume of gas-inplace or resources/reserves using generally accepted petroleum engineering equations.

Uncertainty - The range of possible outcomes in a series of estimates. For recoverable resources assessments, the range of uncertainty reflects a reasonable range of estimated potentially recoverable quantities for an individual accumulation or a project.

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Client Distribution Record

SRK Report Client Distribution Record

Project Number: PKF002 Report Title: Carnarvon Basin – WA-359-P Valuation Report Date Issued: 20 November 2018

Name/Title	Company
Mr Paul Lom	Cue Energy

Rev No.	Date	Revised By	Revision Details
0	15/11/2018	Bruce McConachie	DRAFT for client review
1	16/11/2018	Bruce McConachie	DRAFT reissued for client review
2	16/11/2018	Bruce McConachie	DRAFT reissued for client review
3	20/11/2018	Bruce McConachie	Final issued to client

This Report is protected by copyright vested in SRK Consulting (Australasia) Pty Ltd. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, SRK.

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Lodge your vote:

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
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Online:

www.investorvote.com.au



By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

CUE

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

XX

Vote online



Go to www.investorvote.com.au or scan the QR Code with your mobile device.
• Follow the instructions on the secure website to vote.

Your access information that you will need to vote:

Control Number: 999999 SRN/HIN: I9999999999 PIN: 99999 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

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 For your vote to be effective it must be received by 10am (AEDT) Sunday 6 January 2019

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote or abstain as they choose (to the extent permitted by law). If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions for Postal Forms

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the help tab, "Printable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

GO ONLINE TO VOTE,  or turn over to complete the form

Samples/000001/000001/i12

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ‘ X ’) should advise your broker of any changes.

Proxy Form

Please mark

Appoint a Proxy to Vote on Your Behalf



I 9999999999

I ND

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to indicate your directions

XX

I/We being a member/s of CUE Energy Resources Limited hereby appoint

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the Chairman of the Meeting

OR



PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the General Meeting of CUE Energy Resources Limited to be held at Allens, Level 37, 101 Collins Street, Melbourne on Tuesday, 8 January 2019 at 10am (AEDT) and at any adjournment or postponement of that meeting.

Items of Business  PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

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For Against Abstain
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Resolution 1 CUE Exploration to sell 15% participating interest in WA-359-P and grant an option to acquire 5.36% participating interest in WA-409-P to NZOGIPL

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business. In exceptional circumstances, the Chairman of the Meeting may change his/her voting intention on any resolution, in which case an ASX announcement will be made.

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SIGN
Signature of Securityholder(s) This section must be completed.
Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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C U E

9 9 9 9 9 9 A

AI assistant

CUE ENERGY RESOURCES LIMITED — Proxy Solicitation & Information Statement 2018

64722_rns_2018-12-05_b527557f-67cd-4ee4-b27a-d45c5a485a10.pdf

ASX RELEASE 6 December 2018

Notice of General Meeting, Explanatory Memorandum and Independent Expert's Report

Important Document

Independent Directors Recommendation

and therefore, the Independent Directors unanimously recommend that the Shareholders vote in favour of the Proposed Resolution approving the Proposed Transactions.

Independent Expert

SHAREHOLDER INFORMATION BOOKLET

This Shareholder Information Booklet contains the following documents:

The Independent Directors of CUE unanimously recommend that Shareholders vote in favour of the Proposed Resolution.

Important Notices

General

Defined Terms

Purpose of this Booklet

ASX

Input from other parties

Investment decisions

Forward looking statements

Independent Directors

Shareholder Information

SHAREHOLDER INFORMATION BOOKLET PART 1 – NOTICE OF GENERAL MEETING

CUE ENERGY RESOURCES LIMITED ABN 45 066 383 971

CUE ENERGY RESOURCES LIMITED

ABN 45 066 383 971

NOTICE OF GENERAL MEETING

Resolution – CUE Exploration to sell 15% participating interest in WA-359-P and grant an option to acquire 5.36% participating interest in WA-409-P to NZOGIPL

Voting Exclusion

Notes

Eligibility to Vote

Voting by Proxy

Undirected Proxies

Voting by Corporate Representative

Voting by Attorney

Voting Exclusions

Resolutions

BY ORDER OF THE BOARD

CUE ENERGY RESOURCES LIMITED

ABN 45 066 383 971

EXPLANATORY MEMORANDUM

Independent Director’s Summary

1. Resolution – CUE Exploration to sell 15% participating interest in WA-359-P and grant an option to acquire 5.36% participating interest in WA-409-P to NZOGIPL

1.1. General

1.2. Reasons for Seeking Shareholder Approval – ASX Listing Rule 10.1

1.3. Independent Expert Report – Requirements of ASX Listing Rule 10.10

1.4. Independent Director’s Recommendation

1.5. Voting Exclusions

2. Background to the Proposed Transactions

2.1. Ironbark Prospect

1 Prospective Resource Estimates Cautionary Statement

2.2. WA-359-P

(the Co-ordination Agreement Conditions ).

2.3. WA-409-P

2.4. Details of NZOG

3. Material terms of the Proposed Transactions

3.1. WA-359-Farmout Agreement

3.2. WA-409-P Option Agreement

4. Effect of the Proposed Transactions

4.2. Participating interests in WA-409-P after the Proposed Transactions

Advantages and Disadvantages

4.3. Advantages of the Proposed Transactions

4.4. Disadvantages of the Proposed Transactions

5.1. Failure to meet conditions

5.2. Joint venture risks

5.3. Cost overrun risk

5.4. Ironbark Resources estimates

5.5. Investment speculative

6. Independent Expert's Report and Independent Directors’ Recommendations

6.1. Independent Expert’s Report and Independent Directors' Comments

Shareholders are urged to carefully read the Independent Expert’s Report in full to understand the scope of the report, methodology of the valuation and the sources of information and assumptions made.

6.2. Independent Directors’ Recommendation

7. GLOSSARY

Proxy Instructions

By Mail – Computershare Investor Services, GPO Box 242, Melbourne VIC 3001 Australia

Proxy Form

Attendance and Voting Eligibility

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