Bounty Oil & Gas NL : Interim Financial Report December 2021

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Bounty Oil & Gas N.L. - Interim Financial Report - 31 December 2021

BOUNTY OIL & GAS NL

(ABN 82 090 625 353)

INTERIM FINANCIAL REPORT

Interim Financial Report for the half-year ended 31 December 2021

(Including Directors' Report and Financial Report)

Contents	Page
Directors' Report	1 - 6
Auditor's Independence Declaration	7
Consolidated Statement of Profit or Loss and other Comprehensive Income	8
Consolidated Statement of Financial Position	9
Consolidated Statement of Changes in Equity	10
Consolidated Statement of Cash Flows	11
Notes to the Consolidated Financial Report	12 - 18
Interim Financial Report Directors' Declaration	19
Independent Auditor's Review Report to the Members	20 -21

For personal use only

Bounty Oil & Gas N.L. - Interim Financial Report - 31 December 2021

DIRECTOR'S REPORT

For the Half Year Ended 31 December 2021

The directors of Bounty Oil & Gas NL ("Bounty" or "the company") submit the interim financial report of Bounty and its subsidiaries ("the Group") for the half year ended 31 December 2021. The attached Bounty Interim Financial Report forms part of this report. In order to comply with the provisions of the Corporations Act 2001, the directors report as follow:

Directors

The following persons were directors of the Company during the whole of the half-year and up to the date of this report:

Graham Charles Reveleigh	(Non-Executive Chairman)
Roy Payne	(Non-Executive Director)
Charles Ross	(Non-Executive Director)

Mr Graham C Reveleigh was re-elected as a director of the company at the Annual General Meeting on 26 November 2021.

Review of Operations

For Bounty's schedule of permits, interests and acreages (see Bounty's 2021 Annual Report and Bounty's website: www.bountyoil.com).

1. Highlights

Group Petroleum Sales

• Petroleum revenue (mainly crude oil) for the half year to 31 December 2021 was $0.82 million on sales of 7,254 barrels of crude oil.
• Petroleum revenue for 12 month calendar year to 31 December 2021 was: $1.59 million.

Oil development

• Bounty expects to increase its oil production volumes in 2022 and with stronger A$ oil prices resulting in $1.8 million sales for the year ended 30 June 2022.
• Naccowlah Block, South-west Queensland: Oil appraisal drilling was deferred in 2022 due to drilling schedules and COVID related delays. A further two (2) appraisal/development wells are programmed for 2022. Naccowlah drilling is expected to maintain Block oil reserves.
• Bounty is planning to resume oil production at PL2 in the Surat Basin now there is some clarity on crude oil marketing and with higher oil prices expected to continue will upgrade its oil resources at PL2.

Oil/Gas exploration

• Cerberus Project; Carnarvon Basin, West Australia: On 7 October 2021 Bounty entered a farmin agreement with Coastal oil Pty Ltd. (Coastal) to earn a 25% interest in the Cerberus Project a 600 mmbbl potential oil exploration project, in four offshore permits Carnarvon Basin, West Australia.

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Bounty Oil & Gas N.L. - Interim Financial Report - 31 December 2021

• Petroleum Exploration Permit 11 (PEP 11) Offshore Sydney Basin: At the end of the period Bounty maintained its 15% interest in PEP 11 and was waiting for clarification on continuation of the title from the National Offshore Petroleum Titles Administrator ("NOPTA"). A final decision on this application is anticipated in the next 3 months and there is material uncertainty on the investment (see para 5 below).
• There were no exploration impairments during the period.

2. Overview

The principal activity of the group during the 6 months to 31 December 2021 was oil production and oil and gas exploration and development. Bounty's secondary activity is investment in listed securities. No significant change in the nature of these activities occurred during the financial half year.

During the period the economic entity made a net loss after tax of $493,000 (31 December 2020 half year loss: $594,000).

The operating loss was determined after taking into account the following material items:

• Petroleum revenue of $816,000
• Direct petroleum operating expenses of $464,000
• All other general administration, expenses, share issue expenses and employee benefits of $739,000
• Group net loss before non-cash items of $294,000.
• Non cash amortisation, rehabilitation and depreciation expenses of $199,000.

Revenue from continuing operations for the period was $816,000 (December 2020 HY: $700,000).

Petroleum revenue for 12 month calendar year to 31 December 2021 was: $1.59 million.

In the half year to 31 December 2021 Bounty invested total capital expenditure of $332,000.

Details of exploration and development operations and cash flows for the half year ended 31 December, 2021 have been reported by the company to the Australian Securities Exchange in the Quarterly Activity Reports and Appendix 5B for each of the quarters ended 30 September and 31 December 2021 and in additional announcements on particular items.

3. Production Operations - ATP 1189P Naccowlah Block and Associated PL's; SW Queensland.

Revenue from production operations for the period was $ 0.82 million up 17% on the previous half year (HY: December 2020: $ 0.70 million). Revenue was derived only from crude oil produced from Bounty's production joint venture interest in ATP 1189 Naccowlah Block. At the end of the period Bounty's oil production averaged 38 bopd.

Oil Production

Revenue for the period was accrued from production of 6,886 bbls of oil and sales of 7,254 bbls.

Gas Production

There was no gas production in the period.

Production Facilities

During the period Bounty participated in installing pipelines and other production infrastructure in Naccowlah Block to lift oil from prior period discoveries and to move produced oil to the transportation system.

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Bounty Oil & Gas N.L. - Interim Financial Report - 31 December 2021

Production optimisation is ongoing and contributes significantly to maintaining production. The pace of further development drilling is reviewed in the light of oil price movements.

4. Oil Development Drilling Operations

Any drilling or production optimisation / well workover expenses have been classified under production operations. During the period, Bounty also expended $58,000 (December 2020 HY: $70,000) on other development operations.

Cased oil discovery wells from the financial year ended 30 June 2021 and prior periods were progressively placed on production during the period. In the period from July 2021 to the end of the reporting period Bounty had 1 well from prior period drilling awaiting tie-in.

Following recommendations from the Block operator; Santos Limited; Bounty will in 2022 participate in at least two (2) Birkhead Zone development and appraisal wells at Cooroo NW Field and installing new production infrastructure.

During the period Bounty held 100% of the Alton Block JV (including the Alton Oilfield) Surat Basin, SE Queensland and an 81.75% interest in the surrounding PL 2 Alton Kooroon JV Blocks A and B. It held other development permits in the Surat Basin and is undertaking reservoir studies and well integrity system work as a prelude to commencing oil production from PL 2 Alton in the 2022 period.

5. Exploration and Evaluation Operations

During the period, Bounty expended $29,000 on exploration and evaluation in connection with its other wholly owned and joint venture interests located in Queensland, New South Wales and Western Australia, both onshore and offshore.

Major Growth Project:

Cerberus Project Offshore Carnarvon Basin WA - Bounty earning 25%

Location: 70 km. East of Barrow Island WA

Titles: EP 475, 490 and 491, TP 27 totalling 3,759 km2

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Bounty Oil & Gas N.L. - Interim Financial Report - 31 December 2021

Background:

On 7 October 2021 Bounty entered a farmin agreement with Coastal Oil Pty Ltd (Coastal) to earn a 25% interest in this 600 mmbbl potential oil project, offshore Carnarvon Basin, West Australia. The project is right in the heart of Australia's most active oil production area and offers a large number of prospects and leads, many drill ready, with prospective resources of over 600 million barrels.

Bounty is earning its 25% by paying A$6 million towards the cost of drilling 3 wells and retains an option for six months to earn two additional tranches of 25% each by pro rata contributions to the well costs or finding farmin partners. The project is principally targeting oil in a lower Triassic source rock and reservoir sequence at the base of the Locker Shale, in lookalikes to the highly successful Dorado Project (2C reserves of 344 MMboe) being developed by Santos Limited and Carnarvon Petroleum Ltd in the Browse Basin to the northeast.

The attraction of this area is twofold, excellent prospective volumes offering reserves greater than Bounty's onshore projects, and shallow water jack up drilling with abundant opportunities to achieve economies of scale by participating in drilling groups, resulting in costs only a few times more than onshore but with huge rewards.

The main focus is on four targets with the best chance of success with Prospective Resources as follows:

Prospective Resource MMbo (1)	Mean	1U Low	2U Best	3U High	Reservoir Age
Honey Badger Prospect - EP 491	294	13	102	814	Triassic
Stork Prospect - EP 475	228	14	94	620	Triassic
Parrot - EP 491	105	14	61	262	Triassic
Gallant - EP 490	44	6	26	108	Cretaceous
(1) Million bbls of oil

Cerberus Activities - Early 2022

• Bounty is jointly operating the project with Coastal. The primary prospects of interest for drilling are the Triassic stratigraphic plays outlined above. Coastal and Bounty are aiming for the commencement of the Drilling Program in late 2022 subject to regulatory approvals. Since executing the farmout agreement, Bounty and Coastal have acquired recently reprocessed 3D seismic over the main areas of prospectivity to lock down 3 target locations by the end of March 2022.
• Drilling slots are available in late 2022 on two jackup offshore drill rigs which will be active in the area throughout 2022. Bounty and Coastal are in continuing discussions with both rig contractors.

PEP 11 Offshore Sydney Basin - Material matter

During the prior period the PEP 11 joint venture operator lodged two applications with NOPTA for suspension and extension of the PEP 11 permit offshore Sydney Basin. Advent has an 85% interest in the PEP 11 Joint Venture, the other 15% being held by Bounty Oil & Gas NL.

The first application was lodged in January 2020 and the second in February 2021. In December 2021 NOPTA served a notice of intention to refuse the January 2020 application which was lodged on the basis of Force Majeure. The NOPTA notice only referred to the first application.

The second application was made under a COVID application process and was accepted but not dealt with pending an outcome on the January 2020 application. NOPTA is seeking additional information from the operator in respect of the second application.

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