Gas2Grid : June 2017 Activities and Cash Flow Reports

31st July, 2017

ACTIVITIES REPORT QUARTER ENDED 30 JUNE, 2017 SUMMARY Philippines

• SC 44: Awaiting a decision from the Philippine Department of Energy ("DOE") to a request for extension of time under "Force Majeure" following the expiry of the technical moratorium on the 27th January, 2017.

  France

• St Griede:

  • Awaiting Tribunal decision on the appeal lodged by the French Government in January 2017 against the decision handed down in the Company's favour by the Tribunal in November 2016.

  • Awaiting Tribunal decision on the Company's request for payment of €3,000/day penalties from 3rd December 2016 imposed on the French Government by the Tribunal for delay in granting the permit.

• Mirande permit application: Tribunal hearing held on 30th June 2017 and decision handed down on 21st July 2017 on the grant of the Mirande application. The Minister is directed to decide within 3 months on the application and any delay is subject to a penalty to the Government of €300/day.

• Tartas and Eauze permit applications: No update has been received. French press reported in June 2017 that the new Minister of Energy is proposing to amend the Mining Act to stop the granting of new petroleum exploration permits in France and its territories.

PHILIPPINES: SERVICE CONTRACT 44 (100%), Onshore Cebu

The Philippine Department of Energy ("DOE") had approved a 2 year technical moratorium under the terms of the Service Contract 44 ("SC 44") in order to provide sufficient time to complete studies and establish the appropriate drilling and completion technology for maximising sustainable oil production that if successful would lead to full oil field appraisal/development.

The Drilling Proposal for the Nuevo Malolos-1 Deepening was submitted to the DOE for their approval in March 2016. Approval was not received by the Company until mid-September 2016.

Gas2Grid Limited	Level 2, 22 Pitt Street	PO Box R1911	T [phone]
ABN 46 112 138 780	Sydney NSW 2000	Royal Exchange NSW 1225	F [phone]
www.gas2grid.com	Australia	Australia	[e-mail]

The late approval did not allow sufficient time to complete the drilling operations, conduct a long term oil production test of the well and if successful, submit an application for a 25 year production term prior to the expiry of the technical moratorium on 27 January 2017. The Company's application to the DOE for additional time in which to complete the proposed operations was denied.

The Company has been in discussions with the DOE and has lodged an application under "Force Majeure", as provided for under the Service Contract terms. A meeting was held last week with the DOE and a further meeting is planned for the Company to outline the details of the proposed work program. The timing for an outcome is not known.

The Company has put operations in SC 44 on hold until security of title has been established as under the current situation, security of title is not guaranteed. Minimum expenditure is being incurred to maintain security of equipment and well site.

Nuevo Malolos-1 Deepening well location and well track SC 44 Location on Cebu Island, Philippines FRANCE: ST. GRIEDE (100%), Onshore Aquitaine Basin

The St Griede permit (100% working interest) located within the Aquitaine Basin, France was due for its first renewal in May 2013 after an initial 5 year term. With the terms and conditions of the work and expenditure commitments having been met for the first 5 year term, a renewal application for a second 5 year term was submitted in January 2013 in order to continue the work program towards the drilling of a well. Normally, a first renewal is expected as a matter of course if the initial commitments have been met. That application was processed by French Government officials who recommended renewal and submitted it to the Minister of Energy for signature and issue.

In October 2015, the Company was formally advised by the French Government that it has decided not to grant the renewal. The decision not to renew the permit is based solely on local elected members and "public disorder risk" considerations within the area where the permit is located. We note an inconsistency with approval being granted earlier in 2015, by local authorities, for the

Company to conduct a seismic acquisition survey with the aim to define a well location in the same area.

In November 2015, the Company lodged an action in the French tribunal for the suspension and annulment of the decision by the French Government to cancel the permit on the grounds of it being unlawful.

On 29th December 2015, the judge hearing the matter determined in the Company's favour and suspended the French Government's decision not to renew the St Griede permit. The judge concluded that the St. Griede permit itself cannot cause risks to public order and that there had been an error of law in the decision of the Ministers. The relevant Ministers were given 2 months to reconsider the St. Griede permit renewal.

On 28th January 2016, the Company received notice that the French Minister of Energy had lodged with the "Conseil d'Etat" (a high court for legal affairs of the state) an appeal for the annulment of the ruling made on 29th December 2015 by the judge at the Tribunal. That appeal was not admitted, as advised to the Company in August 2016, on the grounds that the Minister had not presented any valid argument. This decision affirmed the Company's legal rights to renewal of the permit.

On 11th October 2016, a full hearing of the licence cancellation dispute was held in front of three judges of the Administrative Tribunal of Pau. In the process an independent magistrate presented his assessment of the facts and the applicable law as well as his opinion on a solution to the dispute. He concluded that the decision made by the Ministers in refusing an extension to the St Griede permit is not valid.

In early November 2016, the Administrative Tribunal of Pau handed down a judgement that fully supports the Company as follows:

1. Annulment of the decision of the French Ministers made in September 2015 to refuse the renewal of St Griede permit;

2. Instruction to the Ministers to grant, within 30 days, a 5 year extension to the St Griede permit commencing from 3rd November 2016; and

3. A penalty, to the French Government, of €3,000 for each day that the grant of the permit extension is delayed.

On 3rd January 2017, the French Government lodged an appeal against the decision of the Administrative Tribunal of Pau. To date no notice has been received on whether the appeal will be admitted.