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Orca Energy Limited ABN 25 009 121 644 Notice of General Meeting TIME: 9:00am (WST) DATE: 7[th] August 2013 PLACE: 35 Richardson Street, West Perth, Western Australia This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting. Shareholders should carefully consider the Independent Expert Report prepared by Stantons International Securities for the purposes of Resolution 1 which comments on the fairness and reasonableness of the proposed Share buy-back to the non-associated Shareholders in the Company and concludes that the proposed transaction is FAIR AND REASONABLE. Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (08) 9488 5220.

Contents Page

Business of the Meeting (setting out proposed resolutions)	Page 3
Explanatory Statement (explaining the proposed resolutions)	Page 4
Glossary	Page 9
Proxy Form
Annexure A – Independent Expert Report and Valuation Report

Important Information

Time and Place of Meeting

Notice is given that the General Meeting of Shareholders of Orca Energy Limited which this Notice of Meeting relates to will be held on 7[th] August 2013 at 9:00am (WST) at 35 Richardson Street, West Perth, Western Australia.

Your Vote Is Important

The business of the General Meeting affects your shareholding and your vote is important.

Voting Eligibility

The Directors have determined pursuant to Regulation 7.11.37 of Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders at 9.00am (WST) on 5[th] August 2013.

Voting in Person

To vote in person, attend the General Meeting on the date and at the place set out above. The meeting will commence at 9:00am (WST).

Voting by Proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by 5:00pm (WST) on 2[nd] August 2013 and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, members are advised that:

each member has a right to appoint a proxy;
the proxy need not be a member of the Company; and
a member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

New sections 250BB and 250BC of the Corporations Act came into effect on 1 August 2011 and apply to voting by proxy on or after that date. Shareholders and their proxies should be aware of these changes to the Corporations Act, as they will apply to this General Meeting. Broadly, the changes mean that:

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes are set out below.

Proxy vote if appointment specifies way to vote

Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does :

the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (ie. as directed); and

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if the proxy has 2 or more appointments that specify different ways to vote on the resolution – the proxy must not vote on a show of hands; and
if the proxy is the chair of the meeting at which the resolution is voted on – the proxy must vote on a poll, and must vote that way (i.e. as directed); and
if the proxy is not the chair – the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).

Transfer of non-chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and
the appointed proxy is not the chair of the meeting; and
at the meeting, a poll is duly demanded on the resolution; and
either of the following applies:
the proxy is not recorded as attending the meeting;
the proxy does not vote on the resolution,

chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

Notes:

A shareholder of the Company entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholder’s voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a shareholder of the Company.

For the purposes of the Corporations Regulations, the Directors have set a snapshot date to determine the identity of those entitled to attend and vote at the Meeting. The snapshot date is 9:00am (WST) on 5[th] August 2013. Accordingly, transactions registered after this time will be disregarded in determining entitlements to attend and vote at the meeting.

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Orca Energy Limited ABN 25 009 121 644

Business of the Meeting

Notice is given that the General Meeting of Shareholders of Orca Energy Limited will be held at 35 Richardson Street, West Perth, Western Australia at 9:00am (WST) on 7[th] August 2013 ( General Meeting ).

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company as at 9:00am on 5[th] August 2013.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the glossary or in the Explanatory Statement.

Agenda

The Explanatory Statement to this Notice of Meeting describes the matters to be considered at the General Meeting.

Ordinary Business

1. RESOLUTION 1 – APPROVAL OF SELECTIVE BUY BACK AND SALE OF 20% JOINT VENTURE INTEREST TO SENEX ENERGY LIMITED

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That for the purposes of section 257D of the Corporations Act and Listing Rule 10.1, and for all other purposes, the Shareholders approve:

(a) the selective buy-back of 115,000,000 Shares from Senex Energy Limited; and
(b) the sale of a 20% participating interest in petroleum exploration licence (PEL) 115 to Senex Energy Limited,

for the purpose and on the terms and conditions set out in the Explanatory Statement.”

Voting Prohibition: In accordance with section 257D of the Corporations Act, no votes may be cast in favour of this Resolution by any person whose Shares are proposed to be bought back and any of their associates.

Voting Exclusion: In accordance with Listing Rule 10.1, the Company will disregard any votes cast by a party to the transaction and any associate of that party. However, and subject to the Voting Prohibition Statement above, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) it is cast by the Chairman 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.

Dated this 8[th] July 2013 By order of the Board

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Greg Bandy Executive Director

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Explanatory Statement

This Explanatory Statement has been prepared for the information of the Shareholders of the Company in connection with the business to be conducted at the General Meeting to be held at 9:00am (WST) on 7[th] August 2013 at 35 Richardson Street, West Perth, Western Australia.

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

This Explanatory Statement is an important document and should be read carefully in full by all Shareholders. If you have any questions regarding the matters set out in this Explanatory Statement or the preceding Notice, please contact the Company, your stockbroker or other professional adviser.

1. RESOLUTION 1 – APPROVAL OF SELECTIVE BUY BACK AND SALE OF 20% JOINT VENTURE INTEREST TO SENEX ENERGY LIMITED

1.1 Transaction

As announced by the Company on 13 June 2013, the Company has entered into a conditional agreement with Senex Energy Limited ( Senex ) pursuant to which Senex (through its wholly owned subsidiary, Stuart Petroleum Pty Ltd) will acquire:

a) the 20% participating interest currently held by the Company (through its wholly owned subsidiary, Komodo Energy Pty Ltd ( Komodo )) in South Australian petroleum exploration licence 115 (except those parts related to the Continued Interest) ( PEL 115 ); and
b) all of Komodo’s 20% participating interest in the joint venture associated with PEL 115 (except for the 20% participating interest relating to the Continued Interest) (being the PEL 115 JV ), (together, the Sale Interest ).

Under the terms of the agreement with Senex ( Agreement ), Orca will retain its 20% interest in two key assets within PEL 115, namely the Fury oil discovery and the Burruna-1 oil exploration well ( Continued Interest ). The parties will apply for a separate petroleum exploration licence for the Fury and Burruna blocks that are part of the Continued Interest (refer Figure 1 below). The current terms of the PEL 115 JV will continue to apply to the Continued Interest, with Senex holding an 80% interest and the Company holding 20%.

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Until such time as the Continued Interest is represented by a separate license, the Continued Interest will be held on trust for Komodo as part of PEL 115.

Conditions

Completion of the Agreement is subject to:

a) Shareholder approval for the Share Buy-Back and the nature of the consideration being paid, for the purposes of section 257D of the Corporations Act and Listing Rule 10.1;
b) Senex obtaining any necessary approvals for the Transaction in accordance with the Foreign Acquisitions and Takeovers Act 1975 (Cth) ( FIRB Condition ); and
c) Receipt of all government and counterparty approvals required in connection with the sale of the Sale Interest, including approval by the Minister under the Petroleum and Geothermal Energy Act 2000 (SA).

Completion of the Transaction will occur 5 business days following the date of satisfaction of the above conditions. In any event the Shareholder condition and the FIRB Condition must be satisfied by 31 December 2013 otherwise the Transaction will not proceed.

Consideration

As consideration for the Sale Interest, Senex will:

(a) agree to the buy-back and cancellation of 115,000,000 Shares held by Senex (being a 19.99% interest in the Company);
(b) reimburse the Company’s previous costs for work associated with the Kingston Rule-1 and Hornet-1 unconventional gas exploration wells in PEL 115;
(c) pay the Company’s 20% share of costs for the completion and initial production test of Fury-1 (being part of the Continued Interest);
(d) pay the Company’s 20% share of costs to drill, case and suspend a proposed horizontal well in the either the Fury or Burruna Block (being part of the Continued Interest);
(e) pay the Company’s share of costs for the current Dundinna 3D seismic survey in PEL 110 (Senex 60% and Operator, Orca 20%);

As part of completion of the Transaction, Mr Denis Patten and Mr Arthur Pitts (together, Interested Directors ) will resign as Director and Alternate Director of the Company (respectively).

The Company will also retain a “back-in” right to participate in any other conventional oil wells proposed by Senex in PEL 115 (outside of the Continued Interest) before the current expiry date of the permit on 12 May 2014. In the event Senex lodges a specific proposal to drill a conventional oil well in PEL 115 (outside the Continued Interest) ( Well Proposal ):

(a) Senex will at that time provide the Company the opportunity to participate in that oil well prior to spudding of the well, to the extent of a 20% interest in the well;
(b) if the Company accepts the opportunity to participate in that oil well, the Company will pay to Senex the nominal amount of $1.00 plus 20% of the costs incurred in preparing the Well Proposal up to the date of transfer of the 20% interest in the well; and
(c) the Company will be responsible for a 20% share of all costs from the date of transfer of the 20% interest in the well.

1.2 Corporations Act

The Corporations Act provides that the rules relating to share buy-backs are designed to protect the interests of shareholders and creditors by:

(a) addressing the risk of the transaction leading to the company’s insolvency;
(b) seeking to ensure fairness between the shareholders of the company; and
(c) requiring the company to disclose all material information.

In particular, Section 257A of the Corporations Act requires that a company may buy back its own shares if:

(a) the buy-back does not materially prejudice the company’s ability to pay its creditors; and
(b) the company follows the procedures laid down in Division 2 of Part 2J.1 of the Corporations Act.

Pursuant to Section 257D(1) of the Corporations Act, a share buy-back must be approved by either:

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(a) a special resolution passed at a general meeting of the Company, with no votes being cast in favour of the resolution by any person whose shares are to be bought back or by their associates; or
(b) a resolution agreed to, at a general meeting by all ordinary shareholders.

Pursuant to Section 257D(2) of the Corporations Act, the Company must include with this Notice of Meeting a statement setting out all information known to the Company that is material to the decision on how to vote on the Resolution. However, the Company does not have to disclose information if it would be unreasonable to require the Company to do so because the Company has previously disclosed information to Shareholders.

1.3 Summary of and Effect of Proposed Share Buy-Back

The overall effect of the Share Buy-Back is as follows:

The overall effect of the Share Buy-Back is as follows:
Current Issued Share Capital Less: Shares subject of the Share Buy-Back (Cancellation Shares) Issued capital upon completion of the Share Buy-Back	Shares 575,033,775 115,000,000
	460,033,775

Pursuant to the Agreement, the consideration paid by the Company in order to affect the Share Buy-Back is the Sale Interest.

The valuation of the Sale Interest (including the effect on the Company’s net assets) is contained in the Independent Expert Report included as Annexure A to this Notice. As no cash consideration will be paid to Senex for the Share BuyBack and the Company will also receive back-costs in respect of certain expenditures already incurred and the benefit of Senex meeting its costs in respect of various project interests and initiatives, the Company is satisfied that there will be no negative impact on the Company’s ability to pay creditors.

The Cancellation Shares the subject of the Share Buy-Back represent 19.99% of the issued capital of the Company as at the date of this Notice.

Prior to the Share Buy-Back, Senex had a 19.99% controlling interest in the Company. Following the Share Buy-Back, Senex will have a nil interest. Accordingly, following the Share Buy-Back, there will not be one single shareholder with effective control over the Company’s issued Share capital. As a result of the Share Buy-Back, the percentage shareholdings in the Company of the remaining Shareholders will increase proportionately to the cancellation of the Cancellation Shares.

By way of example, Shareholders interests in the Company will increase in the following manner:

(a) Shareholder X holds 1,250,000 Shares prior to the Share Buy-Back.
(b) Following approval being given by Shareholders for the Board to affect the Share Buy-Back, 115,000,000 of the Company’s 575,033,775 Shares will be cancelled. Thereby reducing the number of Shares on issue to 460,033,775.
(c) Prior to the Share Buy-Back, Shareholder X would have held a 0.22% interest in the Company’s Shares. On completion of the Share Buy-Back, Shareholder X will hold a 0.27 % interest in the Company’s Shares.

1.4 Listing Rule 10.1

The proposed sale of the Sale Interest by the Company to Senex, and the agreement by the Company to buy back the Cancellation Shares, constitutes a transaction regulated by ASX Listing Rule 10.1.

The purpose of ASX Listing Rule 10.1 is to regulate a transaction between a listed entity and persons in a position to influence the entity, because there is a perceived potential for a transfer of value from the entity to the person in a position of influence to the detriment of the entity’s shareholders.

Senex is a substantial shareholder of the Company, because Senex holds more than 10% of the Company’s shares on issue. As such ASX Listing Rule 10.1 applies to an acquisition by Senex of an asset from the Company where the value of the asset, or the value of the consideration being paid for the asset, exceeds 5% of the consolidated equity interests of the Company in the last financial statements of the Company lodged with ASX. The Expert’s preferred and higher values for the consideration being paid, exceeds 5% of the consolidated equity interests of the Company in the last financial statements of the Company lodged with ASX.

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Accordingly, ASX Listing Rule 10.1 requires the Shareholders to approve the transaction by ordinary resolution, and ASX Listing Rule 10.10 requires Shareholders to receive a copy of an independent expert’s report on the transaction. Pursuant to ASX Listing Rule 10.10A, this Notice of Meeting and the Independent Expert Report will be available on the Company’s website www.orcaenergy.com.au. Shareholders may request a hard copy of the Independent Expert Report to be mailed to them, at no cost, by contacting the Company on +61 8 9488 5220, or by email on [email protected].

In the Report the Expert is required to provide an opinion as to whether the transaction is fair and reasonable to Shareholders other than Senex. The Independent Expert Report commissioned by the Company appears in Annexure A to this Explanatory Statement, and concludes that the transaction is fair and reasonable to the Shareholders who are not excluded from voting on Resolution 1. Shareholders are requested to read the Report before deciding how to vote in relation to Resolution 1.

Resolution 1 is proposed as a special resolution to satisfy the higher voting requirements of the share buy-back provisions under the Corporations Act, notwithstanding that ASX Listing Rule 10.1 only requires an ordinary resolution. The parties to the Agreement and their associates are excluded from voting on Resolution 1.

The Company’s rationale for the transaction is to facilitate a departure of Senex from the Company’s share register, whilst maintaining its strong relationship with Senex. The Company’s retention of the Continued Interest (as well as the back in right for any future conventional oil wells on PEL 115) allows the Company to share in the upside of joint venture work while maintaining the Company’s cash reserves. In addition, the Share Buy-Back will increase the proportionate holdings of all other Shareholders in the Company, by reducing the total number of Shares on issue.

1.5 Advantages and disadvantages of the Share Buy-Back

The Board believes that the Transaction proposed by Resolution 1 will provide the following advantages to Shareholders:

(a) as part of the consideration received for the Sale Interest the Company will be free carried for all of its foreseeable Cooper Basin activities for the next 12 months;
(b) there will be a lesser number of Shares on issue, consequently the ownership interest in the Company of each Shareholder will increase; and
(c) it prevents a large parcel of Shares being disposed on-market which could potentially act to depress the Company’s Share price; and
(d) the Share Buy-Back will assist in achieving a more efficient capital structure for the Company.

The Company is not aware of any disadvantages of the Share Buy-Back.

1.6 Directors’ recommendation and Independent Expert’s finding

The Directors (other than the Interested Directors) believe that the Share Buy-Back is in the best interests of Shareholders. These Directors have determined that the Company has a greater chance of increasing shareholder value by entering into the Transaction and consequently cancelling the Cancellation Shares. For this reason, the Directors recommend that Shareholders vote in favour of the Share Buy-Back. This recommendation is supported by the findings of the independent expert, Stantons International Securities, which has concluded that the proposed Transaction is fair and reasonable to the non-associated Shareholders in the Company.

Mr Dennis Patten is an associate of Senex on the basis that he is a director of Senex. Mr Pitts is the Alternate Director for Mr Patten and is employed on a full time basis as Commercial Manager for Senex. Mr Patten (and Mr Pitts) decline to make a recommendation to Shareholders in relation to Resolution 1.

1.7 Other material information

There is no information material to the making of a decision by a Shareholder whether or not to approve Resolution 1 being information that is known to any of the Directors and which has not been previously disclosed to Shareholders, other than as disclosed in this Explanatory Statement.

Pursuant to Section 257H(3) of the Corporations Act, immediately after the registration of the transfer to the Company of the Shares bought back from Senex, the Shares will be cancelled.

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Responsibility for Information

The information concerning the Company contained in this Explanatory Statement, including information as to the views and recommendations of the Directors has been prepared by the Company and is the responsibility of the Company.

The Explanatory Statement does not take into account the individual investment objectives, financial situation and particular needs of individual Shareholders. If you are in doubt as to what you should do, you should consult your legal, financial or professional advisor prior to voting.

Shareholders are invited to contact the Company on +61 8 9488 5220 if they have any queries in respect of the matters set out in these documents.

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Glossary

In this Explanatory Statement, the following terms have the following unless the context otherwise requires:

ASIC means Australian Securities Investment Commission.

ASX means ASX Limited ABN 98 008 624 691.

ASX Listing Rules or Listing Rules means the listing rules of ASX.

Board means the board of Directors of the company.

Cancellation Shares means the 115,000,000 Shares held by Senex Energy Limited.

Chairman means the Chairman of the Company.

Company means Orca Energy Limited ABN 25 009 121 644.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Equity Securities includes a Share, a right to a Share or Option, an Option, a convertible security and any security that ASX decides to classify as an Equity Security.

Expert or Independent Expert means Stantons International Securities.

Ordinary Securities has the meaning set out in the ASX Listing Rules.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a shareholder of the Company.

Transaction means the transaction between the Company and Senex for the disposal of the Company’s Sale Interest (including completion of the Share Buy-Back).

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PO Box 1908 West Perth WA 6872 Australia

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

3 July 2013

ABN: 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

The Directors Orca Energy Limited Ground Floor 1 Havelock Street WEST PERTH WA 6000

Summary of opinions

The Independent Expert’s Report concludes that the proposals as outlined in Resolution 1 are on balance, fair and reasonable to the shareholders of Orca not associated with Senex. In relation to Resolution 1 specifically, the Independent Expert is also of the opinion that the proposals, in the absence of a superior offer, are on balance in the best interests of Orca and its shareholders other than Senex .

Dear Sirs

RE: ORCA ENERGY LIMITED (“ORCA” OR “THE COMPANY”) (ABN 25 009 121 644) MEETING OF SHAREHOLDERS PURSUANT TO SECTION 257 D (1) OF THE CORPORATIONS ACT 2001 (“TCA”) AND AUSTRALIAN SECURITIES EXCHANGE (“ASX”) LISTING RULE 10.1 ON THE PROPOSAL TO SELL ITS 20% PARTICIPATING INTEREST IN THE SOUTH AUSTRALIAN EXPLORATION LICENCE PEL 115 (EXCLUDING ITS 20% INTEREST IN TWO KEY ASSETS WITHIN PEL 115, NAMELYTHE FURY 1 OIL DISCOVERY AND THE BURRANA OIL EXPLORATION WELL AND THE BLOCKS AROUND THEM) TO A SUBSIDIARY OF SENEX ENERGY LIMITED (“SENEX”) FOR THE CONSIDERATION OF THE CANCELLATION OF 115,000,000 SHARES (“BUYBACK SHARES”) IN ORCA OWNED BY SENEX, REIMBURSEMENT OF CERTIAN COSTS AND HAVING FREE CARRIED INTERESTS AS NOTED BELOW.

1. Introduction

1.1 We have been requested by the Directors of Orca to prepare an Independent Expert’s Report to determine the fairness and reasonableness relating to the proposals pursuant to Resolution 1 as detailed in the Notice of Meeting to Orca Shareholders (the “Notice”) and the Explanatory Statement to Shareholders (“ESS”) accompanying the Notice. In effect, Resolution 1 deals inter-alia with the proposals for Komodo Energy Pty Ltd (“Komodo”), a wholly owned subsidiary of Orca to sell its 20% interest in the South Australian petroleum exploration licence PEL 115 to Senex’s wholly owned subsidiary, Stuart Petroleum Pty Ltd (“Stuart”) (excluding Orca’s 20% interest in two key assets within PEL 115, namely the Fury oil discovery and the Burruna – 1 oil exploration well and the Blocks around them) in exchange for a package of benefits as outlined below. The PER 115 assets to be sold (excludes Orca’s 20% interest in two key assets within PEL 115, namely the Fury oil discovery and the Burruna – 1 oil exploration well) are known in this report as the PEL 115 Sale Assets. For the purpose of this report references to Orca includes Komodo and references to Senex includes Stuart.

The considerations for the sale of the PEL 115 Sale Assets effective, 1 June 2013 (subject to Completion, as defined in the Offer Letter between Senex and Orca and signed on 13 July 2013), encompass a range of operational, financial and corporate benefits for Orca and include:

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Liability limited by a scheme approved under Professional Standards Legislation

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Cancellation of Senex’s approximate 19.99% shareholding interest in Orca (115,000,000 shares in Orca placed to Senex at 3.5 cents per share in January 2012) (deemed to approximate $3,105,000 based on a share price of an Orca share trading on ASX at 2.7 cents). We have provided a range of values for the share buy-back as noted elsewhere in this report;
Reimbursement of Orca’s costs of work associated with the Kingston Rule -1 and Hornet - 1 unconventional gas exploration wells in PEL 115 (deemed to be $1,654,673 and payable on Completion);
Free carry for Orca’s 20% share of costs for the completion and initial production test of Fury -1 (deemed to be valued at $59,458);
Pay on Komodo’s behalf Komodo’s 20% joint venture share of the costs of the current proposal to perforate and complete Fury - 1 (deemed to be valued at $121,812);
Free carry of Orca’s 20% share of costs to drill, case and suspend a proposed horizontal well in the Fury or Burrana Block (estimated deemed cost is $800,000); and
Free carry interest of Orca’s share of costs for the current Dundinna 3D seismic survey in PEL 110 (Senex 60% and Orca, as operator, 20%). The survey commenced in June 2013 as announced to the market on 25 June 2013 (deemed to be valued at $1,251,840).

Orca also retains a “back-in” right to participate in any other conventional wells proposed by Senex in the PERL 115 block (outside of Fury and Burruna) before the current expiry date of the permit on 12 May 2014.

The above cancellation of Buy Back Shares, reimbursement of costs and free carry’s are known in this report as the Consideration. The Company at the time of the announcement on 13 June 2013 believed the approximate Consideration was $7,000,000.

This report outlines below our view of the considerations being provided to Orca as a result of the PEL 115 Transactions.

It is expected that the sale will leave Orca with a cash position of around $3,000,000 and free carried for all currently proposed material aspects of its Cooper Basin activities for the next 12 months.

Resolution 1, inter-alia refers to the selective buy back of the 115,000,000 Buyback Shares (ordinary shares), representing approximately 19.99% of the current issued capital of Orca currently held by Senex so that upon buy back the direct shareholding of Senex in Orca reduces to nil. It also refers to the sale of the PEL 115 Assets to Senex, a substantial shareholder of Orca. This resolution is made in compliance with ASX Listing Rule 10.1 Resolution 1 also requires our conclusion as to whether the Buyback of the Buyback Shares is in the best interests of Orca and the Orca shareholders other than Senex and its associates.

1.2 Section 257D (1) of TCA provides that a company may reduce its share capital in a way that is not otherwise authorised by law if the reduction:
is fair and/or reasonable to the company’s shareholders as a whole; and
does not materially prejudice the company’s ability to pay its creditors; and
is approved by shareholders.

Section 257D (1) of TCA provides that a selective reduction must be approved by either:

a special resolution passed at a general meeting of the company with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

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  - a resolution agreed to, at a general meeting, by all ordinary shareholders.

1.3 Listing Rule 10.1 of the ASX Listing Rules provides that shareholder approval is required before a listed company may sell a substantial asset from various persons in a position of influence. This includes acquiring a substantial asset from a related party or a substantial shareholder. Senex is proposing to acquire the 20% interest in the PEL 115 Sale Assets from Orca for the Consideration noted above that includes the cancellation of 115,000,000 Buyback Shares held by Senex in Orca as noted in paragraph 1.1 above and Resolution 1 in the Notice. The sale of the PEL Sale Assets to Senex is a substantial asset for the purposes of ASX Listing Rule 10.1. The Listing Rule requires an Independent Expert's Report as to whether the relevant transactions are fair and reasonable to non-associated shareholders.
1.4 The proposals under Resolution 1 are for the PEL 115 Sale Assets to be sold to Senex, a substantial shareholder in Orca for the Consideration (including cancellation of the Buy Back Shares) and the PEL 115 Sale Assets being sold represents a sale of a substantial asset as the sale of the PEL 115 Sale Assets represents more than 5% of the Company’s last audited net assets. The consideration for the PEL 115 Sale Assets includes the cancellation of all of the Buyback Shares held by Senex in Orca. The cancellation of the Buyback Shares is deemed to be a selective reduction in capital. The Directors believe that the selective capital reduction is fair and reasonable to shareholders and that the capital reduction will not prejudice the interests of shareholders or the Company’s ability to pay its creditors. For the purposes of this report the proposed cancellation of the Buyback Shares owned by Senex, the reimbursement of costs and allowing Orca a free carry as noted above and the sale of the PEL 115 Sale Assets is known as the PEL 115 Transactions for the purposes of this report.
1.5 In determining the fairness and reasonableness of the PEL 115 Transactions, we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. In this case, there is no offer bid but we have considered other factors in determining whether the proposals are reasonable and these are set out in section 8 of this report.
1.6 The Company has requested Stantons International Audit and Consulting Pty Ltd trading as Stantons International Securities to prepare an Independent Expert’s Report to determine whether the proposals outlined in resolution 1 (“PEL 115 Transactions”) are fair and/or reasonable to the shareholders of Orca (not associated with Senex). Under TCA our opinion on the buy back of the Buyback Shares pursuant to Resolution 1 requires conclusion as to whether the proposal under Resolution 1 is in the best interests of Orca and its shareholders other than Senex and its associates. In our view, all parts of Resolution 1 are interdependent upon each other and we have considered all parts of Resolution 1 as part of the PEL 115 Transactions in arriving at our conclusions.
1.7 Apart from this introduction, this report considers the following:
Summary of opinion;
Implications of the proposals;
Corporate history and nature of business of Orca;
Future directions of Orca;
Basis of valuation of Orca shares;
Basis of valuation of the Consideration ;
Fairness and Reasonableness of the proposals under Resolution 1;

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Conclusion as to fairness and reasonableness;
Sources of information; and
Appendix A and B and our Financial Services Guide.
1.8 In our opinion, the proposals as outlined in Resolution 1 are on balance, fair and reasonable to the shareholders of Orca not associated with Senex. In relation to Resolution 1 we are also of the opinion that the proposals, in the absence of a superior offer, are on balance in the best interests of Orca and its shareholders other than Senex.

The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this Report, including the independent valuation report (the PEL 115 Assets Valuation Report”) on the PEL 115 Assets prepared by AWT International (“AWT”) and included as an Appendix to the Notice.

2. Implications of the Proposals

2.1
As at 1 July 2013 there were 575,033,775 fully paid shares on issue in Orca.
2.2 The Board of Directors as at 1 July 2013 is comprised of Gregory Bandy, Jason Bontempo, Jeremy King and Denis Patten (with Arthur Pitts as his alternative). The Board is expected to change as a result of the PEL 115 Transaction as Denis Patten and his alternative Arthur Pitts plan to retire from the Board following completion of the PEL Transactions.
2.3 The significant ordinary shareholders as at 27 June 2013 and post the selective buy back of the Buyback Shares that is expected to occur in September 2013 are believed to be:

Senex J & J Bandy Nominees Pty Ltd Percy Holdings Limited Seventy Three Pty Ltd	No. of fully paid ordinary shares pre buy back % of issued ordinary shares pre buy back No. of fully paid ordinary shares post buy back % of issued ordinary shares post buy back 115,000,000 19.99 - - 47,750,000 8.30 47,750,000 10.38 42,500,000 7.39 42,500,000 9.24 42,250,000 7.35 42,250,000 9.18
	247,500,000 43.03 132,500,000 28.80

The top 20 shareholders at 27 June 2013 owned approximately 58.54% of the issued ordinary capital of the Company. Subsequent to the selective buy back of the Buyback Shares, there will be 460,033,775 ordinary shares on issue. The percentage interests’ of all other shareholders is thus increased.

2.4 As at 1 July 2013, there were 500,000 unlisted options exercisable at 16 cents and the last date to exercise is 3 December 2014.
2.5 The Orca Group would cease to have a 100% interest in the PEL Sale Assets post the passing and consummation of the proposals under Resolution 1. Refer to section 5.4.1 of this report for the pro-forma statement of financial position of the Orca Group post the PEL 115 Transactions. Orca Group net assets post the sale of the PEL 115 Assets will approximate $10,666,000. The Orca Group will disclose a profit on sale of a 20% interest in the PEL Sale Assets of approximately $3,379,673 (based on a value of 1.5 cents attributable to the cancellation of 115,000,000 Buyback Shares in Orca using the last sale price of an Orca share traded on ASX on 28 June 2013 and assuming the current carrying value of Komodo’s interest in PEL 115 relates to the Fury -1 well). The actual amount will depend on the share price of an Orca share at the date of the selective buy back of the Buyback Shares and the net written down value of the PEL 115 Sale Assets at the date of buy back of the Buyback Shares. The announcement of the proposal to sell a 20% interest in the PEL 115 Assets by way of the buy-back of 115,000,000 Buyback Shares held by Senex in Orca was made to the market on 13 June 2013 and it was then assumed that

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based on share prices around that date, that the sale of a 20% interest in the PEL 115 Asset was worth approximately $7,000,000.

2.6 In the event that the Senex Group, as operator of PEL 115, lodges with the DMITRE, after the Effective Date (as defined) and prior to the current expiry date of PEL 115 on 12 May 2014, a specific proposal to drill a conventional oil well in PEL 115 (other than at Fury or Burunna) (“well proposal”), Senex Group will provide the opportunity for Komodo to participate in the oil well prior to spudding of the well, to the extent of a 20% interest in the well. If Komodo (Orca) accepts the opportunity to participate in the well, it will pay to Senex Group the nominal amount of $1 plus 20% of the costs incurred by Senex Group in preparing the well proposal up to the date of transfer of the 20% interest in the well and Komodo will be responsible for a 20% share of all costs from the date of transfer of the 20% interest in the well.

3. Corporate History and Nature of Business

3.1 Orca is an ASX listed resource company primarily focused on the exploration and development of oil projects centred in the Cooper Basin of South Australia. The Company’s major projects are as follows:
The PEL 115 Oil and Gas Block -The Company’s wholly owned subsidiary, Komodo via a farm-in arrangement has a 20% interest in the PEL 115 Oil Block. The joint venture partner is Senex’s subsidiary, Stuart. The Company (via Komodo), has made an oil discovery called Fury and thus has a 20% interest in the Fury oil discovery and it also has a 20% interest in the Burruna -1 exploration well. Both these interests will not be sold to Senex as part of the PEL 115 Transaction. During the March 2013 quarter, Senex successfully completed a hydraulic fracture simulation on the unconventional gas exploration well, Kingston Rule -1 (Orca 20%), which was drilled in 2012. Orca announced on 11 March 2013 that gas was flowing to surface at Kingston Rule -1 unconventional gas well at a constrained rate of 1.2 mmscfd during clean up and flow back activities. Further testing has confirmed gas flows of up to 1.4 mmscfd with condensate produced at the rate of 10 to 20 barrels per million cubic feet of gas. This well has been suspended and the results of initial flow testing will be incorporated into the completion design for longer term production testing. On 25 March 2013, Orca announced that the joint venture (with Senex) had successfully completed fracture simulation operations at Hornet -1. Two drill test stems were conducted on this well and resulted in gas flowing to the surface. In April 2013, the Company announced that gas was flowing to surface at Hornet -1 unconventional gas well at a constrained rate of 2.0 mmscfd during clean up and flow back activities. This well has been suspended and the results of initial flow testing will be incorporated into the completion design for longer term production testing.
The PEL 110 Oil Block – Orca has a 20% interest in PEL 110. The oil and gas permit is located in the western flank of the Cooper Basin in South Australia. The joint venture partners in June 2103 commenced work on a 176.7km 3D seismic survey.
Seabuscuit (Matagorda) Project in Texas – this area approximates 1,750 acres and is a potential oil and gas project. The joint venture partner is Dan A Hughes Company. Orca has a 20% interest in this joint venture.

4. Future Directions of Orca

4.1 We have been advised by the directors and management of Orca that:

There are no proposals currently contemplated whereby Orca Group will sell any further property or assets to Senex (however Orca will buy back the Buyback Shares as outlined in Resolution 1 and above and transfer the PEL 115 Assets to Senex as noted in Resolution 1);

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The composition of the Board will change in the near future as Mr Denis Patten and his alternate Mr Arthur Pitts will resign from the Board on completion of the PEL 115 Transactions;
The Board of Orca has no formal dividend policy and we are advised by the directors that the Company is in a strong and sustainable cash flow position and future dividends will be under consideration following its full financial year results.
The Company is continually assessing new business and investment opportunities within the oil and gas sector.

5. Basis of Valuation of Orca Shares

5.1 Ordinary Shares

5.1.1 In considering part of the proposals outlined in Resolution 1, we have sought to determine if the Consideration payable by Senex to acquire the PEL 115 Assets for the Consideration including buying back (cancelling) all of the Buyback Shares is fair and reasonable and/or in the best interests of Orca and its shareholders other than Senex and its associates.
5.1.2 The PEL 115 Transactions pursuant to Resolution 1 would be fair to the existing non associated shareholders if the value of the PEL 115 Assets being sold to Senex is less than the implicit value of the Consideration being offered that includes Orca in effect cancelling the Buyback Shares being bought back as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on Orca ordinary shares for the purposes of this report.
5.1.3 The valuation methodologies we have considered in determining a theoretical value of an Orca ordinary share are:
Capitalise maintainable earnings/discounted cash flow;
Takeover bid - the price at which an alternative acquirer might be willing to offer;
Adjusted net backing and windup value; and
The market price of Orca shares.
5.2 Capitalise maintainable earnings and discounted cash flows.

As the PEL 115 Transactions inter-alia involves the buy-back of 115,000,000 ordinary shares in Orca (the Buyback Shares held by Senex) it is arguably not appropriate to value the shares in Orca on a capitalised maintainable earnings or discounted cash flow basis. Due to Orca’s current operations, a lack of a reliable long term profit history arising from business undertakings and the lack of a reliable future cash flow from current business activities, we have considered these methods of valuation not to be relevant for the purpose of this report. Orca made a consolidated loss of $340,441 for the six months ended 31 December 2012 and as at 31 May 2013 (as adjusted as noted below) has unaudited consolidated losses of approximately $23,648,000 as at 31 May 2013.

5.3 Takeover Bid

5.3.1 It is possible that a potential bidder for Orca could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Orca have formed the view that there is unlikely to be any takeover bids made for Orca in the immediate future. Senex’s ordinary shareholders interest in Orca is currently approximately 19.99%. As a result of buying back the 115,000,000 Buyback Shares held by Senex the direct shareholding of Senex in Orca will reduce to nil on the passing and consummation of Resolution 1.

5.4 Net Asset Backing

5.4.1 We set out below an unaudited Consolidated Balance Sheet of Orca as at 31 May 2013 and an unaudited pro-form statement of financial position assuming the sale of the PEL 115 Assets for the Consideration that includes the buy back of the Buyback Shares as envisaged in Resolution 1 at a deemed 1.5 cents per share (using the last share price of an

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Orca share traded on ASX as at 28 June 2013) on the 115,000,000 Buyback Shares (ordinary shares) to be bought back and an estimated profit of around $3,379,763 and allowing for costs of the Notice estimated at $50,000. The deemed cash Consideration (excluding the share buy-back and free carried interests - deemed savings in cash by the Orca Group by not having to pay future costs as noted in paragraph 1.1) is $1,654,673 as this will be a cash payment to Orca on Completion. The 31 May 2013 statement of financial position have been adjusted for losses incurred post 31 May 2013 estimated at 275,000.

Current Assets Cash assets Receivables Other assets Other financial assets Non Current Assets Property, plant and equipment Exploration and evaluation expenditure Total Assets Current Liabilities Trade creditors and accruals Provisions Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Net Equity Number of shares on issue Net book value per share (cents)	Orca Group (as adjusted) (unaudited) 31 May 2013 $000’s Orca Group (unaudited) Pro-Forma 31 May 2013 $000’s 1,396 3,000 37 37 22 22 3 3
	1,458 3,062
	14 14 7,818 7,818
	7,832 7,832
	9,390 10,894
	212 212 16 16
	228 228
	228 228
	9,062 10,666
	30,669 28,944 2,041 2,041 (23,648) (20,319)
	9,062 10,666
	575,033,775 460,033,775 1.62 2.31

5.4.2 Based on the unaudited book values, this equates to a value per fully paid ordinary share of approximately 1.62 cents (ignoring the value, if any, of non-booked tax benefits) and assuming 573,033,775 fully paid ordinary shares are on issue. Post the buy back of the Buyback Shares and sale of the PEL 115 Assets to Senex, the unaudited book net assets approximates $10,666,000 and the book net asset backing per ordinary share (460,033,775) approximates 2.31 cents. In the event that the share price of an Orca share rose or reduced from the last sale price on 28 June 2013 of 1.5 cents, the profit on sale and cancellation of the Buy Back Shares would alter as the issued capital would increase or reduce and the profit would increase or decrease.
5.4.3 No detailed review was made by us on the assets and liabilities disclosed in the unaudited consolidated adjusted statement of financial position as at 31 May 2013. We have been assured, by the management of Orca that they believe the carrying value of all current and non-current assets and liabilities at 31 May 2013 are fair and not materially misstated pending considerations following the value of the PEL 115 Asset following this transaction. The 12/13 June 2013 market capitalisation of Orca (just before the announcement of the Share Buyback) approximated between $12,075,000 and $13,800,000 (and the capitalisation as at 2 July 2013 approximated $8,610,000).

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5.4.4 We also note it is not the present intention of the Directors of Orca to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value, is just that, theoretical. The shareholders, existing and future, must acquire shares in Orca based on the market perceptions of what the market considers an Orca share to be worth.
5.5 Market Price of Orca Fully Paid Ordinary Shares
5.5.1 The shares in Orca have traded in the range of 1.5 cents to 3.8 cents over the period 1 January 2013 to 13 June 2013. Generally, the market is a fair indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher. In the case of Orca, current liquidity over the past 6 months is reasonable for a small cap oil and gas company. We set out below a summary of the fully paid share prices of Orca since 1 January 2013 to the date immediately prior to the announcement of the selective capital reduction and sale of the PEL 115 Assets plus share prices to 2 July 2013.

2013	High Cents	Low Cents	Last Sale Cents	Volume Trade (000’s)
January	2.3	2.1	2.2	2,042
February	2.8	2.2	2.6	3,980
March	3.2	2.5	2.9	15,765
April	3.8	2.5	2.7	24,063
May	3.2	2.5	2.5	18,402
June (to12th)	2.5	2.4	2.4	1,641
June (13th to 30th)	2.4	1.5	1.5	3,712
July (to2nd)	1.5	1.5	1.5	6

Turnover increased substantially after 11 March 2013 following an announcement on that date that Kingston Rule -1 well flowed at 1.2 million cubic feet per day and again on 3 April 2013 following an announcement on that date that Hornet -1 well flowed at over 2 million cubic feet per day. On 15 May 2013, over 7,500,000 shares were traded following an announcement that a new major conventional gas field has been identified at Hornet.

5.5.2 The future value of an Orca ordinary share after the sale of the PEL 115 Assets and the buy-back of 115,000,000 Buyback Shares in Orca held by Senex will depend upon, inter alia:
The successful exploitation of the current and future oil and gas assets of the Orca Group;
The state of the oil and gas markets (and prices) in Australia and overseas;
The cash position of the Company;
The state of Australian and overseas stock markets;
Exchange rates;
Membership and control of the Board and the quality of management
General economic conditions; and
• Liquidity of shares in Orca.
5.5.3 It is noted that over the past several years, the vast majority of oil and gas junior companies listed on the ASX are trading at significant discounts or premiums to appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of Orca, the monthly volume of trades on the ASX, although not large is reasonable and large enough to argue that an orderly market exists for the Company’s shares. The “market” arguably is fully informed of the Company’s activities. It is in our opinion appropriate to use a range of recent pre-announcement trading market values as fair values to attribute to the 115,000,000 Buyback Shares noted in paragraph 1.1 to be cancelled involving Senex. It is noted that the directors of Orca considered that the fair ASX listed market value of a Orca share at the time of discussions with the directors of Senex was in the range of 2.5 cents to 2.9 cents and the headline on the announcement of the proposals involving Senex disclosed a value of approximately $7,000,000 or around 2.7 cents per share for the 115,000,000 shares to be cancelled (refer paragraph 1.1 above). The closing price of an

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Orca share on ASX as at 12 April 2013 was 2.4 cents (the last day of trading of shares in Orca before the announcement of the PEL 115 Transactions). The shares in Orca post the announcement have traded on the ASX at between 1.5 cents and 2.4 cents with a last sale on 28 June 2013 of 1.5 cents. However, during that time, the stock market in general terms has retreated from highs of mid May 2013. Under A-IFRS, the value attributable to the 115,000,000 Buyback Shares to be bought back may be the market value at the time of buyback.

6. Basis of Valuation of a 20% interest in the PEL 115 Assets

6.1 The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market. To estimate the fair market value of the PEL 115 Assets to be sold to Senex, we have considered valuation methodologies recommended by ASIC Regulatory Guide 111 regarding valuation reports of independent experts and common market practices. These are discussed below.

6.2 Market based methods

Market based methods estimate a company’s or assets fair market value by considering the market price of transactions in its shares (where shares are involved) or market value of comparable companies or assets. Market based methods include:

Capitalisation of maintainable earnings;
Discounted cash flows:
Analysis of a company’s recent share trading history (not applicable re the PEL 115 Assets to be sold) on its own; and
Industry specific methods.

The capitalisation of maintainable earnings methods estimates fair market value based upon the company’s future maintainable earnings and an appropriate earnings multiple. An appropriate earnings multiple is derived from market transactions involving comparable companies. The capitalisation of maintainable earnings is appropriate where the company’s earnings are relatively stable. The most recent share trading history provides evidence on the fair market value of the shares in a company where they are publicly traded in an informed and liquid market. Industry specific methods estimate market value using rules of thumb for a particular industry. Generally rules of thumb provide less persuasive evidence on market value of a company, as they may not account for company specific factors.

6.3 Discounted cash flow method

The discounted cash flow method estimates market value by discounting a company’s future cash flows to their present value. This method is appropriate where a projection or forecast of future cash flows can be made with a reasonable degree of confidence. The discounted cash flow method is commonly used to value early stage companies or projects with a finite life.

6.4 Asset based methods

Asset based methods estimate the market value of a company’s shares based on the realisable value of its identifiable net assets. Asset based methods include:

Orderly realisation of assets methods;
Liquidation of assets method; and
Net asset on a going concern basis.

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to shareholders, after payment of all liabilities, including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner. The liquidation method is similar to the orderly realisation of assets

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method except the liquidation method assumes the assets are sold in a shorter time frame. The net assets on a going concern basis, estimates the market values of the net assets of a company but does not take account of realisation costs. These approaches ignore the possibility that a company’s value could exceed the realisable value of its assets. Asset based methods are appropriate when companies are not profitable or a significant proportion of a company’s assets are liquid.

6.5 Selection of Valuation Methodologies

All of the valuation methodologies considered above have significant limitations or restrictions in their application to the PEL 115 Assets. Capitalisation of maintainable earnings is not appropriate as no positive earnings have been achieved from the PEL 115 Assets. Recent share trading is not applicable as no company is being acquired or sold. The asset based method is not relevant in these circumstances. The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market.

6.6 Orca, for the purposes of negotiations with Senex on the PEL 115 Transactions commissioned AWT (Authors of the AWT Valuation Report were Beate Leitner and Ted Surke) to prepare a valuation report of the PEL 115 Assets (to the extent of a 20% interest as 80% of the PEL 115 Block is owned by THE Senex Group). The AWT Valuation Report of 1 July 2013 should be read in its entirety and a full copy of the AWT Valuation Report is attached as an Appendix to the Notice. The AWT Valuation Report ascribes a range of values to the PEL 115 Assets and for the purposes of our report we have used the low, high and preferred range valuations referred to in the AWT Valuation Report.
6.7 We have used and relied on the AWT Valuation Report on the PEL 115 Assets and have satisfied ourselves that:
AWT is a suitably qualified oil and gas consulting firm and has relevant experience in assessing the merits of oil and gas projects and preparing oil and gas asset valuations (also the authors of the report are suitably qualified and experienced);
AWT is sufficiently independent from Orca and Senex; and
AWT has employed sound and recognised methodologies in the preparation of the valuation report on the PEL 115 Assets.
6.8 AWT has provided a range of market values of the interests in the PEL 115 Assets as follows:

PEL 115 Assets (20% interest)	Low $ 1,680,000	Preferred $ High $ 2,800,000 3,920,000

6.9 Summary of valuation methodology and conclusion

Thus we conclude that the assessed fair value of a 20% interest in the PEL 115 Assets lies in the range of $1,680,000 to $3,920,000 with a preferred value of $2,800,000.

7. Conclusion as to Fairness

7.1 The proposals pursuant to Resolution 1 are believed fair to Orca’s non-associated shareholders if the value of the consideration offered (the value of the Buyback Shares, reimbursements and free carried savings) is equal to or greater than the value of a 20% interest in the PEL 115 Assets.
7.2 Due to the nature of the business of Orca valuations are dependent upon the value placed on the oil and gas and other interests of the Company. The valuation of oil and gas interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.

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7.3 We have examined below the values attributable to the Buyback Shares proposed to be bought back and the value of the 20% interest in the PEL 115 Assets being sold to Senex.

Assessed value of a 20% interest in the PEL 115 Assets based on independent valuation (rounded) Value of consideration payable by Orca using apre-announcementmarket based approach (refer below) for the 115,000,000 Share Buyback Shares Share price used (cents)	Low $ 1,680,000 2,760,000 2.4	Preferred $ 2,800,000 3,105,000 2.7	High $ 3,920,000
			3,680,000
			3.2

In addition, Orca is to receive $1,654,673 reimbursement of Orca’s costs of work associated with the Kingston Rule -1 and Hornet -1 unconventional gas exploration wells in PEL 115 (payable on Completion). Furthermore, the Company will not be obligated to spend sums as follows:

Free carry for Komodo’s 20% share of costs for the completion and initial production test of Fury -1 (deemed to be valued at $59,458);
Pay on Komodo’s behalf Komodo’s 20% joint venture share of the costs of the current proposal to perforate and complete Fury -1 (deemed to be valued at $121,812);
Free carry of Komodo’s 20% share of costs to drill, case and suspend a proposed horizontal well in the Fury or Burrana Block (estimated deemed cost is $800,000); and
• Free carry interest of Komodo’s share of costs for the current Dundinna 3D seismic survey in PEL 110 (Senex 60% and Orca, as operator, 20%). The survey commenced in June 2013 as announced to the market on 25 June 2013 (deemed to be valued at $1,251,840).

Thus, taking into account the range of values attributable to an Orca share as noted above, the benefit to Orca may lie in the range of $6,647,673 to $7,567,783 with a preferred value of $6,992,782. Excluding the free carried benefits totalling $2,233,110, the range of values attributable to an Orca share as noted above, the benefit to Orca of the share buyback and reimbursement may lie in the range of $4,414,673 to $5,334,673 with a preferred value of $4,759,673.

As noted above, the shares in the Company have traded post the 13 June 2013 announcement at between 1.5 cents and 2.3 cents (closing sale price on 28 June 2013 was 1.5 cents). If these prices were ascribed to the Buyback Shares (ordinary shares in Orca), the deemed value attributable to the 115,000,000 Buyback Shares would be in the range of $1,725,000 to $2,645,000 ($1,725,000 using the 1.5 cent share price on 28 June 2013). Thus, taking into account the range of values attributable to an Orca share as noted above, the post announcement benefit to Orca may lie in the range of $5,612,783 to $6,532,783 with a 28 June 2013 value of $5,612,783. Excluding the free carried benefits totalling $2,233,110, the range of post announcement values attributable to an Orca share as noted above, the benefit to Orca of the share buyback and reimbursement may lie in the range of $3,379,673 to $4,299,673 with a 28 June 2013 value of $3,379,673.

7.4 On a pre-announcement (and post announcement) market value approach the proposed buyback of the 115,000,000 Buyback Shares for the part consideration of selling a 20% interest in the PEL 115 Assets as outlined in Resolution 1 to the Notice are considered on balance to be fair.

8. Reasonableness of the Proposals under Resolution 1

8.1 We set out below some of the advantages and disadvantages and other factors pertaining to the proposals pursuant to Resolution 1

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Advantages

8.2 The buyback of the Buyback Shares reduces the issued capital from 575,033,775 ordinary shares to 460,033,775 ordinary shares and eliminates a 19.99% shareholding in Orca by Senex (that could be argued to be an overhang in the market). This also increases the shareholding of the non-associated shareholders.
8.3 Based on 31 May 2013 unaudited adjusted book figures, the net asset backing per share rises from approximately 1.62 cents to approximately 2.31 cents (refer paragraph 5.4.1 above).
8.4 The Orca Group avoids paying an estimated $2,233,110 (refer paragraph 7.3 above) in costs as a result of entering into and completing the PEL 115 Transactions. The Company’s cash funds are low and the ability to raise funds to meet such proposed expenditures may have been difficult and may have needed to be undertaken at a discount to market. The extent of any discount cannot be quantified with accuracy but we note that discounts can range between 20% and 50% (but may be less or significantly higher). Issuing new shares at a discount may significantly dilute the existing shareholders interest in Orca not associated with Senex and substantially increase the number of shares on issue in Orca. If Orca had insufficient funds to meet its obligations under the PEL 115 Joint Venture in relation to the PEL 115 Assets being sold, the Orca Group’s interest in such assets may have need to be diluted if Orca failed to pay cash calls.
8.5 By entering into the proposals with Senex, Orca increases its cash reserves (it will receive reimbursement of costs of $1,654,673). Obtaining access to a significant amount of cash funds in the current environment is difficult and thus the Company and its shareholders should benefit. This should alleviate cash flow concerns in the immediate future, and position the Company to fund its continuing operations.

Disadvantages

8.6 There is a risk that the PEL 115 Assets being sold to Senex may eventually be commercially successful in the longer term and by divesting the PEL 115 Assets, Orca may miss out on a positive cash flow. In general terms, investments in oil and gas exploration companies are high risk however for those shareholders who consider that the proposed sale of the PEL 115 Assets have upside potential and wish to continue incurring expenditures on the PEL 115 Assets, then the proposed sale may be unreasonable.

Other Factors and Information

8.7 The book value of the carrying value of the PEL 115 Assets being sold as at 31 May 2013 approximates $nil as all costs of exploration on such assets were written off as incurred. The current net carrying value of PEL 115 approximates $3,451,000 as at 31 May 2013 but all of this has been attributable to Fury - 1. The subsidiary of Orca will disclose a book profit of $4,759,673 if it was assumed the share buyback price relating to the 115,000,000 Buyback Shares was 2.7 cents (the price on the date the Offer Letter was signed) and a profit of $3,379,673 if we used the last sale (28 June 2013) share price of an Orca share of 1.5 cents. No income tax is payable on the profit made due to carry forward tax losses available. The Orca Group will lose tax losses that will probably lie in the range of $3,379,673 to $4,759,673 (depending on the share buyback price used) as a result of the PEL 115 Transaction. Income tax trading losses at 30 June 2013 were estimated at around $10,300,000 and capital losses at around $4,521,000.
8.8 The buyback of the Buyback Shares does not affect the financial viability of the Orca Group other than incurring costs estimated at no more than $50,000 as noted in paragraph 5.4.1 above.

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9. Conclusion as to Reasonableness

9.1 After taking into account the factors referred to in 8 above and elsewhere in this report, we are of the opinion that the proposals as outlined in Resolution 1 may, on balance, be considered reasonable to the non-associated shareholders of Orca. Also, in relation to Resolution 1 specifically, we are of the opinion that the proposals, in the absence of a superior offer, on balance are in the best interests of Orca and its shareholders other than Senex and its associates.

10. Sources of Information

10.1 In making our assessment as to whether the proposals pursuant to Resolution 1 are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company that is relevant to the current circumstances. We have also held discussions with the management of Orca about the present and future operations of Orca. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and consultants of Orca.
10.2 Information we have received includes, but is not limited to:
Draft Notices of General Meeting of Shareholders of Orca and draft Explanatory Statement to Shareholders prepared in July 2013 (to 2July 2013);
Discussions and correspondence with management and a director of Orca;
Shareholding details of Orca as at 16 June 2013 and 2 July 2013;
Share prices of Orca ordinary shares traded on ASX from June 2012 to 2 July 2013;
Offer Letter between Orca and Senex relating to the sale of the PEL 115 Assets and the shares cancellation;
Unaudited statement of financial position of the Orca Group as at 31 May 2013;
Announcements by Orca made to ASX from 1 January 2012 to 2 July 2013;
Annual Report of Orca for the year ended 30 June 2012 and Half Year Report for six months ended 31 December 2012;
The Valuation and Technical Review Report of AWT on the PEL 115 Assets of 1 July 2013;
Announcements by Senex made to ASX from 1 January 2012 to 2 July 2013;
Consolidated work papers of the Orca Group as at 31 May 2013.
11.3 Our report includes Appendix A and our Financial Services Guide attached to this report.

Yours faithfully

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren - FCA Director

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities dated 3 July 2013, relating to the sale of the PEL 115 Assets to Senex and the buyback of 115,000,000 shares in Orca from Senex as outlined in paragraph 1.1 of the report and Resolution 1 and the in the Notice of Meeting to Shareholders and the ESS proposed to be distributed to the Orca shareholders in July 2013.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with Orca and Senex other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. Other than for Stantons International Audit and Consulting Pty Ltd (Trading as Stantons International) being the auditors of Orca, there are no existing relationships between Stantons International Securities and the parties participating in the transactions detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $20,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities does not hold any securities in Orca or Senex. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Australian Financial Services Licence (no 418019) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities. Stantons International Securities has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Orca in order to assist them to assess the merits of the sale of the PEL 115 Assets and the Buy Back of 115,000,000 shares in Orca from Senex as outlined in Resolution 1 in the Notice to which this report relates. This report has been prepared for the benefit of Orca’s shareholders and does not provide a general expression of Stantons International Securities opinion as to the longer term value of the Orca Group and their assets. Stantons International Securities does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of Orca and its subsidiaries (however an audit was conducted of the Orca Group to 30 June 2012 by Stantons International). The audit signing director was not John Van Dieren. Neither the whole nor any part

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

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of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

DUE CARE AND DILEGENCE

This report has been prepared by Stantons International Securities with due care and diligence. The report is to assist shareholders in determining the fairness and reasonableness of the proposal set out in Resolution 1 to the Notice and each individual shareholder may make up their own opinion as to whether to vote for or against Resolution 1.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by Orca and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Orca has agreed:

(a) To make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Orca may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by Orca; and
(b) To indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Orca or any of its officers providing Stantons International Securities any false or misleading information or in the failure of Orca or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.

A draft of this report was presented to Orca directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 3 July 2013

Stantons International Securities ABN 84 144 581 519 and Financial Services Licence 418019 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide (“FSG”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 418019;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

SIS is ultimately a wholly division of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd also trades as Stantons International that provides audit, corporate services, internal audit, probity, Shareholder consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

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Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email [email protected]

ORC 5441A IER re Share Buyback and sale of PEL 115 Assets July 2013

1 July 2013

Attention to: Greg Bandy – Executive Director Orca Energy Ltd Ground Floor, 1 Havelock Street, West Perth, WA, 6005, Australia

Dear Greg,

RE: Valuation of Orca Energy’s PEL115 permit (as at 1[st] July 2013)

On 24 June, 2013, Orca Energy Ltd (Orca) requested that AWT International Pty Ltd (AWT) prepare a valuation of Orca’s Cooper Basin asset, Petroleum Exploration License (PEL) 115 in the Cooper/Eromanga Basin, South Australia, excluding areas associated with the Fury oil discovery and Burruna-1 oil exploration well (ref: Orca Energy ASX Release, 13 June 2013). The valuation, based primarily on recent farm-in deals in analogous acreage, takes into account both conventional and unconventional prospectivity as well as the implications of the Hornet Gas Field contingent resource.

The valuation on Orca’s PEL115 asset has primarily been based on a high level review using AWT’s expertise and general knowledge of the prospectivity in the area of PEL115, both conventional and unconventional.

1.1 PROSPECTIVITY OF PEL115

PEL115 comprises a total of 267.2 km[2] broken into eleven parcels and includes the Hornet Gas Field which lies on trend with the Marama, Kidman Allandri fields within the central permit area.

PEL 115 is located in the southern Cooper Basin and extends from the deeper areas of the Nappamerri Trough in the north to the southern flank of the Tennapera Trough in the south. The eastern part of this permit extends to the Queensland border covering the central Tennaperra Trough. A number of wells are located in the permit, several of which reported oil fluorescence and gas shows. Table 1 provides a well summary. In addition, there are numerous open file wells in adjacent permits for purposes of well correlation and seismic ties.

Oil and gas fields surround the permit and are linked by a series of gas pipelines which provide potential tie-in points for any gas discovered within the permit. An oil pipeline, which runs through the northern area, connects the south western Queensland oil fields to the Dullingari Oil Field and terminates at the Moomba processing plant.

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Seismic coverage is good with a number of 3D seismic surveys together with ample 2D coverage from adjacent areas flanking the permit provides good tie points.

Table 1. Wells located in PEL115


		Depth (m)
Well name	Date Drilled		Status


Hornet-1	24 August 2004	2,727 m	C&S for future testing of untested gas shows
Ventura-1	5 October 2004	1,984 m	Completed as oil producer in McKinlay/Namur
Canberra-1	26 October 2004	924 m	P&A
Canberra-1A	9 November 2004	2,555 m	P&A
Mirage-1	5 December 2004	1,871 m	Completed as oil producer in Murta.
Mirage-2	31 January 2006	1,596 m	Completed as oil producer in Murta.
Mirage-3	27 February 2006	1,601 m	Completed as oil producer in Murta.
Mirage-4	19 March 2006	1,384 m	Completed as oil producer in Murta.
Lightning-1	4 April 2006	1,953 m	P&A
Jindivik-1	3 May 2006	1,646 m	P&A
Lancer-1	29 August 2007	2,113 m	P&A
Fury-1	15 November '09	1,892 m	C&S as potential Murta oil producer.
Airacobra-1	11 December '09	2,113 m	C&S as potential Permian oil producer.
Kingston Rule-1	21 October 2012	TBC	Drilling was still underway as at the end of the current license year.

The permit is surrounded by producing oil and gas fields including the JALBU complex of fields to the west and the Toolachee, Della and Dullingarie fields adjacent to the PEL115 blocks. This acreage is prospective for both oil and gas with the McKinlay, Namur and Hutton formations providing potentially good reservoirs for oil and the Toolachee, Epsilon and Patchawarra formations providing the key reservoirs for gas accumulations. Permian sediments are present across most of the permit. A major portion of the permit, however, covers the lows between the structural highs along which existing fields are situated.

Prospectivity in the permit varies in nature depending on stratigraphic location in respect to the Nappamerri and Tennapera troughs (refer Figure 1). Relevant to PEL115 prospectivity is the Toolachee trend which runs north-south from the Tennapera Trough and is primarily a gas play although oil discoveries have been made in the Murta Formation, Dullingari Field, and the Coorikiana Sandstone, Della Field. Oil has also been discovered in more southerly plays in Jurassic reservoirs which include the Narcoonowie, Ventura, Mirage, Lightning and Fury oil discoveries.

In addition, there are several key unconventional play-types in PEL115. These include: (i) the Roseneath-Epsilon-Murteree (REM) Shale Gas play; (ii) possible basin-centred gas in

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Permian sandstone within the deeper parts of the Tennapera Trough and (iii) CSG potential in Permian coals. These coals have been targeted by other operators for CSG potential, however, to-date, only limited open-file data is available to determine that potential.

In shallower horizons, the Cretaceous Toolebuc Formation is a shale gas/oil play and the Winton Formation contains some coals that may have potential for a CSG play.

PEL115 has good potential for conventional oil and gas as well as for unconventional deep CSG opportunities in the northern blocks.

1.2 HORNET GAS FIELD OVERVIEW

The Hornet and Kingston Rule wells lie on trend with the Marama, Kidman and Allandri fields. Hornet-1, drilled in 2004, reported gas shows in the Epsilon Formation and 28 metres of net gas pay in the Patchawarra Formation. Two drill stem tests resulted in gas flowing to surface.

During drilling operations, the Hornet 1 and Kingston Rule 1 wells flowed gas at stabilised rates of up to 2.2 mmscf/d with low CO2 content from the Patchawarra Formation.*

The multi-stage fracture stimulation of Hornet 1 targeted additional tight gas sands within the Patchawarra Formation, in which a total of six zones have been stimulated.**

Contingent Resources for the Hornet Gas Field in PEL115 were assessed by DeGolyer and MacNaughton (2013). Some relevant components of this report provided to AWT by Orca. Results are summarised in Table 2.

The report also states the potential of the coals within these two wells though resource estimates were not included in the report. The estimated potential value of this resource is, however, included in AWT’s valuation of PEL115.

Local infrastructure, including gas pipelines, at the Kidman (7km west of PEL115) and Allandri fields in an adjoining permit, could provide potential tie-in points back to the Moomba processing plant. Extensive infrastructure is also present at the Toolachee Field, 15km to the south, should the Kidman or Allandri field infrastructure have limitations to increased gas volumes.

Senex Energy Limited, ASX Announcement, 15 May 2013 **Senex Energy Limited, ASX Announcement, 3 April 2013

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Table 2. Raw Gas Contingent Resources; Combined Hornet and Kingston Rule; As at June 30, 2013; (after Table 1: DeGolyer & MacNaughton, 2013)


	Raw Gas Contingent Resources (Bcf)
Reservoir

	1C	2C	3C

Epsilon Tight Sand	11.8	Not provided	Not provided
Patchawarra Tight Sand	141.6	Not provided	Not provided
Total	153.4	Not provided	Not provided

DeHolyer and MacNaughton, 2013, Report as of June 30, 2013 on Contingent Resources in PEL115 of the Cooper Basin, South Australia

1.3 VALUATION BASED ON REVIEW OF MARKET DEALS

Shale Gas (REM play) and deep CSG are regarded as a relatively new play types in the Cooper Basin, with a short history of rapid growth in value. Therefore, the review of current market trends in regard to these assets in PEL115, has a wide range of potential outcomes. Also included in AWT’s valuation of Orca’s interests in PEL115 are market deals on analogous conventional plays which are along similar trends and migration pathways to the permit.

The deals described here are relevant because they lie in the equivalent exploration areas as the PEL115 permit, have similar prospectivity in most cases and are relatively recent. Consequently, AWT believes that they provide a reasonable basis for valuation of PEL115.

October 2012: Drillsearch buyout of Acer Energy
July 2012: Bridgeport recommended Cash Offer from New Hope
February 2012: Senex Energy farmin to Orca Energy, PEL115
September 2011: Drillsearch for Real Energy ATP927P and ATP932P
March 2011: GB Energy for Cooper Energy interests PEL 93 and PEL 100
December 2010: Victoria Petroleum for Traditional Oil interest in PEL88 and PEL100.
April 2010: Mosaic Oil entered into a farm-in agreement with Discovery Geo Corp Tamark and CG Operating to earn a 40% interest in ATP 1056P.

AWT’s estimated fair and reasonable valuation of Orca’s PEL115 assets and potential resources, noted in Sections 1.1 and 1.2 above, is listed in Table 3, and is between A$3.92million and A$1.68million, with a mid range value of A$2.8million, as determined as at 27 June 2013. The valuation does not include any other assets or liabilities that Orca may or may not have.

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Table 3. Estimated Acreage Valuation of Orca’s Interest in PEL115:

				Value of PEL115 Net to Orca (A$mm)*	Value of PEL115 Net to Orca (A$mm)*
	Orca’s Interest (%)	Permit Area (Km2)
			Primary Valuation Method
Permit

				High	Low


PEL 115	20	267.2	Farmin/Sales / Transactions	3.92	1.68

A$mm = millions of Australian dollars.

The valuation in this report has relied primarily on an analysis of farm-in deals and interest sales in surrounding permits and analogous trends. The unconventional unrisked contingent resource in the Hornet - Kingston Rule area is not, as yet, a commercial reserve. Consequently, no value has been estimated for this field. The inherent potential value of this resource has been included in the assessment of value derived from the analysis of relevant farm-in deals and interest sales.

Also note that some Cooper Basin shale gas deals, for example, Chevron Corp’s purchase of part of Beach Energy assets (ATP855 and PEL218) and the BG Group offer for QGC have not been used in this review as a basis for valuation. AWT considers that such deals are not representative of the current market trends as some core areas which are the basis of these transactions are located within the REM shale gas “sweet spots” in the Cooper Basin. PEL115, however, lies on the fringe of the REM wet gas play which is not directly analogous.

1.4 VALUATION METHODOLOGY

The principals conveyed in the Valmin Code, Revised Edition April 2005 (Valmin, 2005), and in the ASIC Regulatory Guide 111 and 112 have been applied by AWT. Reserve concepts follow the definitions as laid down by the Society of Petroleum Engineers (SPE) Inc. (SPE PRMS, 2007and Guidelines for Application of the Petroleum Resources Management System, November 2011).

1.4.1 Fair Market Value

The Valmin Code, 2005 (part D43) (Section 8) was applied. A number of valuation methods were investigated. AWT prefers to use farm-in deals and asset sales to gauge value in exploration permits. It departs from this method only in the absence of relevant and recent farm-ins and sales or on occasions where it believes that a more accurate value can be determined by another method. This has not been the case for the Orca valuation.

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1.4.2 Conventional Valuation Concept

Exploration farm-in deals relating to conventional oil and gas potential were reviewed and a value on an A$/1% basis derived. The prospectivity of the permit was investigated and appropriate value metric applied.

1.4.3 Unconventional valuation concept

An estimation of exploration A$ value on a 1% basis and on a km[2] basis (A$/1%/km[2] ) has been developed in the report. There are several unconventional play-types in Orca’s permit that can be considered, which are outlined in more detail section 1.1 on the prospectivity of PEL115.

AWT believes the values shown in Table 3 to be a fair and reasonable estimate of the probable valuation range.

Please contact Beate Leitner or Ted Surka if you have any further queries regarding this valuation.

1.5 CONSENT FOR USE

AWT has given and not withdrawn its written consent to the inclusion of this report in Orca’s Notice of Meeting.

1.6 PERSONS COMPILING INFORMATION ABOUT HYDROCARBONS

Pursuant to the requirements of the ASX Listing Rules 5.11, 5.11.1, 5.12 and 5.13, the technical information included in this report has been compiled by Beate Leitner. Ms Leitner has more than 20 years’ experience in applied geophysics. She received a B.Sc degree (physics), and M.Sc degree (geophysics) in Geophysics in Germany, and a PhD degree in Applied Geophysics from Oregon State University, USA. In the last 14 years Beate has worked in oil and gas exploration, development, and production focusing on prospect evaluation and generation utilising seismic interpretation and integration of quantitative tools for DHI and AVO analysis. Beate has completed the planning and QC of seismic acquisition, processing and inversion projects for various clients. Ms Leitner is a full time employee of AWT International and has consented to inclusion of the information in this report in the form and context in which it is included.

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Dr Beate Leitner Technical Director and Business Manager Geoscience

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Figure 1 PEL115 Structural Elements

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AI assistant

FIN RESOURCES LIMITED — Proxy Solicitation & Information Statement 2013

64920_rns_2013-07-07_edf505e8-9314-4d29-a07b-e8c3edefe36c.pdf

Contents Page

Important Information

Time and Place of Meeting

Your Vote Is Important

Voting Eligibility

Voting in Person

Voting by Proxy

Proxy vote if appointment specifies way to vote

Transfer of non-chair proxy to chair in certain circumstances

Notes:

Business of the Meeting

Agenda

Ordinary Business

1. RESOLUTION 1 – APPROVAL OF SELECTIVE BUY BACK AND SALE OF 20% JOINT VENTURE INTEREST TO SENEX ENERGY LIMITED

1. RESOLUTION 1 – APPROVAL OF SELECTIVE BUY BACK AND SALE OF 20% JOINT VENTURE INTEREST TO SENEX ENERGY LIMITED

1.1 Transaction

Conditions

Consideration

1.2 Corporations Act

1.3 Summary of and Effect of Proposed Share Buy-Back

1.4 Listing Rule 10.1

1.5 Advantages and disadvantages of the Share Buy-Back

1.6 Directors’ recommendation and Independent Expert’s finding

1.7 Other material information

Summary of opinions

1. Introduction

2. Implications of the Proposals

3.

Corporate History and Nature of Business

4. Future Directions of Orca

5. Basis of Valuation of Orca Shares

5.1 Ordinary Shares

5.3 Takeover Bid

5.4 Net Asset Backing

6. Basis of Valuation of a 20% interest in the PEL 115 Assets

6.2 Market based methods

6.3 Discounted cash flow method

6.4 Asset based methods

6.5 Selection of Valuation Methodologies

7. Conclusion as to Fairness

8. Reasonableness of the Proposals under Resolution 1

Advantages

Disadvantages

Other Factors and Information

9. Conclusion as to Reasonableness

10. Sources of Information

Yours faithfully

AUTHOR INDEPENDENCE AND INDEMNITY

QUALIFICATIONS

DECLARATION

DUE CARE AND DILEGENCE

DECLARATION AND INDEMNITY

FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 3 July 2013

2. Financial Services Guide

3.

Financial services we are licensed to provide

4. General Financial Product Advice

5. Benefits that we may receive

6. Remuneration or other benefits received by our employees

7. Referrals

8. Associations and relationships

9. Complaints resolution

9.2

Referral to External Dispute Resolution Scheme

Dear Greg,

RE: Valuation of Orca Energy’s PEL115 permit (as at 1[st] July 2013)

1.1 PROSPECTIVITY OF PEL115

1.2 HORNET GAS FIELD OVERVIEW

Table 2. Raw Gas Contingent Resources; Combined Hornet and Kingston Rule; As at June 30, 2013; (after Table 1: DeGolyer & MacNaughton, 2013)

1.3 VALUATION BASED ON REVIEW OF MARKET DEALS

1.4 VALUATION METHODOLOGY

1.4.1 Fair Market Value

1.4.2 Conventional Valuation Concept

1.4.3 Unconventional valuation concept

1.5 CONSENT FOR USE

1.6 PERSONS COMPILING INFORMATION ABOUT HYDROCARBONS

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FIN RESOURCES LIMITED Proxy Solicitation & Information Statement 2013