Pilot Energy : PGY Appendix 4G and 2021 Corporate Governance Statement

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Pilot Energy Limited

ABN: 86 115229 984

2021 CORPORATE GOVERNANCE STATEMENT

The Board is responsible for the overall corporate governance of Pilot Energy Limited (Company) including adopting appropriate policies and procedures designed to ensure that the Company is properly managed to protect and enhance shareholder interests.

This Corporate Governance Statement (Statement):

• reports against the 4th edition of the Corporate Governance Principles and Recommendations issued by the ASX Corporate Governance Council (Governance Principles) and the practices detailed in this Statement are current as at 1 October 2021; and

has been approved by the Board and is available on the Company's website under Corporate Governance at https://www.pilotenergy.com.au/corporate-governance.

Consistent with the Company's commitment to transparency in its dealings with stakeholders, this Statement has been prepared by reference to each recommendation contained in the Governance Principles.

PRINCIPLE 1. - LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT

Recommendation 1.1

A listed entity should disclose:

1. the respective roles and responsibilities of its board and management; and
2. those matters expressly reserved to the board and those delegated to management.

Complies

The Company has a Board Charter which is available on the Company's website at [insert link], which formally sets out the functions and responsibilities of the Board and those tasks delegated to management.

Recommendation 1.2

A listed entity should:

1. undertake appropriate checks before appointing a person, or putting forward to securityholders a candidate for election, as a director; and

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1. provide security holders with all material information in its possession relevant to a decisionon whether or not to elect or re-elect a director.

Complies

The Company has committed to undertake appropriate checks before appointing a person or puttingforward to shareholders a candidate for election, as a Director.

All material information relevant to a decision whether or not to elect or re-elect a Director of the Company will be made available to shareholders.

Recommendation 1.3

A listed entity should have a written agreement with each director and senior executive setting out theterms of their employment.

Complies

The Company has entered into agreements with each Director and senior manager, which outlines the terms of their appointment. Each of the Company's Directors has a signed letter of appointment and each of the Company's senior managers is engaged under an employment or contractor agreement.

Recommendation 1.4

The Company Secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

Complies

The Company Secretary has a direct reporting line to the Chairman and all Directors have direct access to the Company Secretary, who is appointed by, and accountable to, the Board on all governance matters and the proper functioning of the Board.

Recommendation 1.5

A listed entity should:

1. have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to assess annually both the objectives and the entity's progress in achieving them;
2. disclose that policy or a summary of it; and
3. disclose as at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant committee of the board in accordance with the entity's diversity policy and its progress towards achieving them, and either:

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1. the respective proportions of men and women on the board, in senior executive positions and across the whole organization (including how the

entity has defined "senior executive" for these purposes); or

1. if the entity is a "relevant employer" under the Workplace Gender Equality Act, the entity's most recent "Gender Equality Indicators" as defined in and published under that Act.

Partially Complies

The Company has established a Diversity Policy (which is available on the Company website), which states that diversity not only refers to gender but extends to age, ethnicity, religious or cultural background, language, marital or family status and disability.

The Diversity Policy does set out a requirement to set measurable objectives and to assess annually both the objectives and the entity'sprogress in achieving them. During the reporting period the Company has not formally set measurable objectives for achieving gender diversity in accordance with the Diversity Policy, primarily due to the age and stage of maturity of the Company.

The Company is not a relevant employer under the Workplace Gender Equality Act.

The Company defines "senior executive" as a person that has overall responsibility for one or more business functions.

As at 30 June 2020, the proportion of women and men across the levels of Board, senior management and total employees were as follows:

• The proportion of female directors: 0%
• The proportion of female employees who are senior managers / executives: 50%
• The proportion of female employees in the whole organisation: 37.5%

Given the current size and stage of development of the Company, the Board has not considered it necessary to formally set measurable objectives for achieving gender diversity. However, the Company is committed to an inclusive workplace that embraces and promotes diversity as part of its corporate culture.

The Company does not believe this departure from recommendation 1.5 to be detrimental to

shareholders.

Recommendation 1.6

A listed entity should:

1. have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and
2. disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in accordance with the process.

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Partially Complies

The Board is currently developing a process for evaluating and assessing the Board's performance on an annual basis. The performance evaluation was not undertaken during the reporting period. The Company notes that half of the Board are new appointees, having joined the Board at the end of May 2021. One other member joined in September 2020.

Recommendation 1.7

A listed entity should:

1. have and disclose a process for periodically evaluating the performance of its senior executives; and
2. disclose, in relation to each reporting period, whether a performance evaluation was undertaken inthe reporting period in accordance with that process.

Complies

The Company has a process for evaluating the performance of senior executives. The Company sets annual reviews with senior executives and performance is measured against various performance metrics. An evaluation was undertaken during the reporting period.

PRINCIPLE 2 - STRUCTURE THE BOARD TO ADD VALUE

Recommendation 2.1

The board of a listed entity should:

1. have a nomination committee which:

1. has at least three members, a majority of whom are independentdirectors;
2. is chaired by an independent director, and disclose:
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the number of times the committee met throughout theperiod and the individual attendances of the members at those meetings; or

1. if it does not have a nomination committee, disclose that fact and the process it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge experience, independence and diversity to enable it to discharge its duties and responsibilities effectively.

Does not Comply

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Due to the size and nature of the existing Board, the Company currently has no Remuneration or Nomination Committee, and the full Board currently carries out the duties that would ordinarily be assigned to the Remuneration and Nomination Committee.

Recommendation 2.2

A listed entity should have and disclose a board skills matrix setting out the mix of skills and diversity that the board currently has or is looking to achieve in its membership.

Complies

The Board aims to ensure that it is comprised of Directors with different skills and experience appropriate for the Company. The Board has developed a formal Board skills matrix to document this process.

Recommendation 2.3

A listed entity should disclose:

1. the names of the directors considered by the board to be independent directors;
2. if a director has an interest, position, association or relationship of the type described in Box 2.3 but the board is of the opinion that it does not compromise the independence of the director, the nature of the interest, position, association or relationship in question and an explanation of why the board is of that opinion; and
3. the length of service of each director.

Complies

Mr. Brad Lingo

Executive Chairman of the Board appointed 12 May 2020. Brad Lingo is not considered to be

an Independent Director.

Mr. Daniel Chen

Director appointed 15 September 2020.

Daniel Chen is considered to be an Independent Director.

Mr Tony Strasser

Managing Director appointed 28 May 2021.

Tony Strasser is not considered to be an Independent Director.

Mr. Bruce Gordon

Non-Executive Director appointed 28 May 2021.

Bruce Gordon is considered to be an Independent Director.