Pilot Energy Limited and Triangle Energy (Global) Limited announced that they have reached agreement on the key principles to restructure the existing joint venture ownership arrangements for the Cliff Head Joint Venture (CHJV) and the proposed Cliff Head Carbon Capture and Storage Project (CH CCS Project). Pilot has been undertaking feasibility studies into the potential for carbon capture and storage and blue hydrogen production focussed on the Cliff Head oil field, which have confirmed a significant CCS resource in WA-31-L. The binding Cliff Head re-alignment Term Sheet paves the way for Pilot and Triangle to progress an application to the National Offshore Petroleum Titles Administrator (NOPTA) to have the Cliff Head Oil Field reservoir declared a Greenhouse Gas Storage formation (Milestone 1) and to pursue the CH CCS Project once economic oil production has finished. Following a Declaration, the CHJV anticipates making an application to NOPTA for the grant of a Greenhouse Gas Injection Licence for the injection and permanent sequestration of a minimum of 500,000 tonnes of CO2 per annum into the Cliff Head Oil Field reservoir.

Receipt of this Injection Licence (Milestone 2) will enable the CHJV to commence the implementation of the CH CCS Project with the project anticipated to be operational by 2025. The key terms of the binding Cliff Head Re-Alignment Term Sheet ­ entered into between Pilot and Triangle and which are conditional upon initially Milestone 1 are: Pilot and Triangle (via their wholly owned subsidiaries) will restructure their interests in the WA-31-L Cliff Head project resulting in Pilot holding a direct 57.5% participating interest share in CHJV (oil project) and the CH CCS Project and Triangle holding a direct 42.5% interest in both projects; Pilot will become operator of both the CHJV and the CH CCS JV, although Triangle will continue technical operatorship of the CHJV through its oil production life; The parties will co-operate and participate in an application to NOPTA for the declaration of a greenhouse gas storage formation under the Offshore Petroleum and Greenhouse Gas Storage Act of 2006 (OPGGSA). In summary, Milestone 1, the approval of the Declaration by NOPTA, which will facilitate the progression of the CH CCS project, is a determination by NOPTA that the specified Cliff Head oil field reservoir is a suitable and approved greenhouse gas storage formation pursuant to the OPGGSA.

Pilot is currently progressing the application for the Declaration which it anticipates will be submitted to NOPTA in the next quarter. Milestone 2 will see the parties being granted a GHG Injection Licence. Once approved (anticipated by mid 2023) the grant of the GHG Injection Licence will provide a clear pathway for the development of the CH CCS Project including an endorsement of the project by the offshore regulator, NOPTA and the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

Both of NOPTA and NOPSEMA currently regulate the existing Cliff Head oil field operations pursuant to the WA-31-L production license. This will be the first offshore CCS development in Mid West WA and one of the first CCS projects to be implemented in Australia. Additionally, and of key importance, the implementation of the CH CCS Project will likely significantly extend the working life of substantially all of the CH JV facilities and defer material decommissioning costs well into the future.