XSTATE RESOURCES LIMITED — Capital/Financing Update 2024

Feb 28, 2024

ABN 96 009 217 154

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29 February 2024

Announcement to ASX

Electronic lodgement

ASSET DIVESTMENT – RED EARTH, CANADA

HIGHLIGHTS

• Xstate disposes its Red Earth assets for US$2.73m cash

Xstate Resources Limited ( ASX:XST ) ( Xstate or the Company ) is pleased to advise that its wholly owned

Canadian subsidiary, Xstate Energy Limited ( Xstate Energy ), has entered into an agreement to sell its 25% working interest in the Red Earth Assets in Alberta, Canada ( the Project ) to Blue Sky Resources Limited ( Blue Sky ) for cash considera�on of US$2.73m (approximately A$4.17m) ( Agreement ).

The sale considera�on will be paid as follows:

• US$100,000 non-refundable cash deposit paid on signing of sale agreement;

• US$300,000 paid on 29 March 2024;

• US$1,000,000 paid within 10 days of shareholder approval;

• US$1,327,273 paid 60 days a�er the third tranche payment of US$1,000,000.

29 March 2024. The agreement was entered into a�er close of trading on 26 February 2024.

Xstate will be retaining its 25% Working Interest in the Crest Jinn assets, which were acquired in early 2023 and re-entered during Q2 2023[1] . The Company considers these assets prospec�ve for further development and intends to work with the operator on poten�al explora�on programs in the Keg River area.

The Agreement is subject to the Company receiving shareholder approval under ASX Lis�ng Rule 11.2 for disposal of a main undertaking. Xstate has consulted with ASX on this divestment and will be holding a Shareholder mee�ng as soon as possible for Shareholders to vote on the transac�on.

Under sec�on 4.7 of ASX Guidance Note 12, Xstate has an ongoing obliga�on to sa�sfy ASX that its level of forward opera�ons and its financial condi�on is sufficient to warrant the con�nued lis�ng and quota�on of its securi�es. ASX generally con�nues quota�on of an en��es securi�es for a period of up to six months from the date of agreement to dispose of its main undertaking. The ASX has advised that Xstate has un�l 26 August 2024 from the date of the sale agreement to ensure it is compliant with this Guidance Note.

1 Refer to ASX announcements 3 February 2023 and 26 April 2024

www.xstateresources.com.au

sufficient via the suite of projects being assessed by the Board at present, comprising:

• Con�nued Californian explora�on opportuni�es being operated by Sacgasco Limited;

• Con�nuing oil prospect explora�on in Austria by operator ADX Energy Limited;

• Further assessment and poten�al explora�on and appraisal work on the Company’s Crest Jinn assets; and

• Assessment of poten�al asset acquisi�ons for explora�on advancement during 2024.

posi�on from cash flows that will be received from this asset divestment and es�mated con�nuing cash flows from the Company’s Crest Jinn and Anshof Opera�ons.

The Company intends to u�lise the funds received in progressing explora�on opportuni�es within its exis�ng por�olio of assets, for poten�al asset acquisi�ons for explora�on advancement, and for working capital purposes.

Blue Sky is a privately owned Canadian en�ty that owns and operates various oil and gas assets located in Alberta and Bri�sh Columbia, Canada, including its 40% working interest and operatorship of Red Earth. Blue Sky presently produces close to 8,500 boe/d from its assets. Xstate has been engaged with Blue Sky since acquisi�on of Red Earth back in 2020/2021, and as such, this tenure of rela�onship with the operator has been considered a factor of due diligence efforts performed on the capacity to perform their obliga�ons in rela�on to the transac�on.

Xstate’s Chairman Andrew Childs commented:

“ The timely sale of Red Earth has enabled the recapitalisation of the Company without incurring any additional shareholder dilution.

The proceeds from this transaction are intended to be deployed to prosecute the acquisition and ” advancement of high-impact exploration and appraisal opportunities.

This release was approved by the Board of the Company

Andrew Childs Executive Chairman

Xstate Resources Limited

About Xstate Resources Limited:

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