XSTATE RESOURCES LIMITED — Capital/Financing Update 2022

Apr 25, 2022

ABN 96 009 217 154

Electronic lodgement

Announcement to ASX

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26 April 2022

CANADIAN DEVELOPMENT UPDATE

• Taber Development wells (2) being connected for production

• Third Oil Development Wells to be drilled

• Drilling program funded by Canadian cashflow

• Targeting 10% increase in oil production from 3 well program

• XST share of Production in Canada is 572 BOEPD‐ ~ 150% of the 2021‐year‐ end production rate

Xstate Resources Limited (ASX: XST) (“Xstate”, “XST” or “the Company”) is pleased to provide its shareholders and the market with an update on the oil development wells in Alberta, Canada.

The Taber new drills have been completed with pump, tubing, rods, and surface drivers. The pipelines are currently being trenched and pressure tested.

It is expected the surface piping and coating to be completed and installed shortly. A temporary generator will be installed until the power company can upsize the transformer.

The third well, Killam 16‐34‐41‐13, drilling rig expected to be on location in approximately two weeks depending on weather.

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Level 1, 31 Cliff Street, Fremantle WA 6160 | Tel + 61 8 9435 3200 | www.xstateresources.com.au

2

The drilling program will be funded from the net cashflow resulting from production in Canada.

The development wells are:

1. Tabers 16‐2‐8‐17: Drilled to Produce Proved Undeveloped Reserves 2. Tabers 1‐2‐8‐17: Drilling ahead – target Probable Undeveloped Reserves 3. Killam 16‐34‐41‐13: Targeting Probable Undeveloped Reserves

The wells are considered independent of each other.

The cost of the 3 well development program is estimated at A$2.7 milliion (gross), which will be circa A$945,000 net to Xstate. The operator anticipates a gross increase in production of 200 BOPD, which is 70 BOPD net to Xstate. Given the current benchmark oil price of around US$100/bbl, these wells are projected to pay back the capital expenditure in less than 12 months.

The Alberta Plains Working Interests are:

Xstate Group (ASX:XST) 35% Sacgasco Group (ASX:SGC) 20% Blue Sky Resources 45%

Xstate Executive Chairman Mr Andrew Childs commented :

“ These three wells represent an opportunity to increase production and revenues for Xstate during the current period of high oil prices.

We are pleased to report that the drilling of the first and second wells, including a second lateral in Tabers 1‐2‐8‐17 well to drain the sand reservoir more efficiently, proceeded according to plan.

The production from these wells is anticipated to supplement the 30% improvements in production rates achieved already this year from our Canadian oil and gas fields.

Xstate’s most recent reported production are 572 BOEPD still ~50% or . ~150% of year end number.

We believe further production increases are possible as our Operator Blue Sky seeks and implements field work programs ”.

This release was approved by the Board of the Company

Andrew Childs

Executive Chairman

Xstate Resources Limited Tel Office: +61 8 9435 3200

About Xstate Resources Limited:

Xstate Resources (ASX Code: XST) is an ASX listed company focused on the oil and gas sector. The Company has existing gas exploration assets located in the Sacramento Basin, California and associated gas production interests together with production interests in Alberta, Canada. Xstate is presently pursuing new opportunities in the oil and gas sector globally.

Level 1, 31 Cliff Street, Fremantle WA 6160 | Tel + 61 8 9435 3200 | www.xstateresources.com.au