Senex Energy : June 2017 Quarterly Report

Senex Energy (Senex, the Company, ASX:SXY) made material progress on existing gas projects during the final quarter of FY17, and recently announced an oil discovery on the western flank:

• Senex drilled the first of 30 wells as part of the Phase 2 work program on the Western Surat Gas Project, a significant investment in the project expected to deliver material gas by mid-2018

• Senex commenced an infrastructure project to bring the Vanessa gas field online during FY18, which will connect the field to the Santos-operated Moomba processing plant. Senex is currently in discussions with potential domestic customers for these gas volumes

• Senex drilled the high impact gas well Silver Star-1 to target depth of around 5,000 metres during the quarter, intersecting gas saturated sandstones. Mechanical issues were encountered while running casing through the Patchawarra coal measures, and the joint venture is evaluating the forward work program

• Net production for the June quarter was approximately 170,000 bbls, with a full quarter of contribution from the Spitfire-8 oil appraisal well and the impact of successful well workovers. FY17 annual production was 0.75 mmboe, in line with guidance
• Capital expenditure for full year FY17 was $62.3 million, in line with guidance. Capital investment accelerated in Q4 FY17 as Phase 2 works commenced on the Western Surat Gas Project

• Senex is in a strong financial position with $135 million in cash at 30 June 2017, up from $102 million at the commencement of the year

  Senex Managing Director and CEO Ian Davies commented on the result: "Senex exits FY17 strongly positioned to take advantage of opportunities in the east coast gas market.

  During the final quarter of the year we commenced a capital investment program on the Western Surat Gas Project with several progress milestones already met. This project represents a near term opportunity to develop a major new revenue stream for Senex, delivering new molecules into the structurally short east coast gas market. We also moved forward our gas projects in the Cooper Basin, which represent material uncontracted volumes of gas that could flow to domestic customers on the east coast.

  More recently, I was delighted to announce an oil discovery on the prolific western flank of the Cooper Basin.

  We continue to see substantial untapped potential on the western flank and this area will be the focus for much of the FY18 exploration, appraisal and development program in our oil business."

  KEY PERFORMANCE METRICS	June Quarter Q4 FY17	March Quarter Q3 FY17	Quarter on Quarter change	June Quarter Q4 FY16	Full year FY17
  Net Production (mmboe)	0.17	0.17	-	0.22	0.75
  Net Sales volumes (mmboe)	0.16	0.17	(6%)	0.21	0.72
  Sales revenue ($ million)	9.9	11.0	(10%)	15.7	43.6
  Cash ($ million)	134.8	156.9	(14%)	102.4	134.8
  Average realised oil price (A$ per barrel)	62	65	(5%)	75	61

  Senex also released its Annual Reserves Statement to the ASX today, reporting:

• Increased net proved (1P) reserves driven by appraisal activity in the Surat Basin

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• Stable net proved plus probable (2P) reserves, with reductions from oil production and revisions in the Cooper Basin more than offset by reserve increases in the Surat Basin

  FINANCIAL SUMMARY Sales revenue was $9.9 million for the quarter, on 160,000 barrels of oil sold

• Sales volumes for the June quarter were 160,000 barrels, down marginally on the prior quarter and in line with production. The impact of several successful workovers combined with the first full quarter of contribution from the Spitfire-8 well largely offset the impact of natural field decline during the period

• The average realised oil price for the June quarter was A$62 per barrel. Senex hedged the majority of its production for the second half of FY17, with swaps providing downside protection below US$55 per barrel (A$73 per barrel). The average price received for oil sales is a function of the hedged price, adjusted for the call premium and for the timing impacts of oil sales revenue recognition

• Sales revenue for the full year FY17 was $43.6 million, down from $69.3 million in full year FY16, reflecting lower sales volumes and a lower realised price of A$61 per barrel on oil sales, compared to A$71 per barrel in FY16

  SALES	June Quarter Q4 FY17	March Quarter Q3 FY17	Quarter on Quarter change	June Quarter Q4 FY16	Full year FY17
  Net sales volumes (mmboe)	0.16	0.17	(6%)	0.21	0.72
  Sales revenue ($ million)	9.9	11.0	(10%)	15.7	43.6
  Average realised oil price (A$ per barrel)	62	65	(5%)	75	61

  Capital expenditure of $25.0 million was incurred in the quarter, with increased investment in the Surat Basin

• Capital expenditure for the quarter mainly related to the Phase 2 work campaign on the Western Surat Gas Project, which saw the first of 30 wells drilled along with the majority of spend on surface facilities (civil construction, well head facilities and gathering lines). In the Cooper Basin, the third oil exploration well in the PEL182 campaign was drilled, and workovers were completed on several wells

• Senex continued work on the plug and abandonment of wells on the Eos block during the quarter, expending

  $3.1 million (not included in capital expenditure). During FY17, Senex spent $12.3 million on these activities, for which it received $20 million from QGC in 2014 to complete

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• Full year FY17 capital expenditure was $62.3 million, in line with guidance

Production was in line with the prior quarter, with the impact of a full quarter's contribution from Spitfire-8 and successful workovers on several wells largely offsetting natural field decline.

Total full year oil production was 0.75 mmboe compared to

1.01 mmboe delivered in FY16. Consistent with Senex's strategy to minimise capital expenditure in a significantly lower oil price environment, a limited number of new wells have been brought online over the past two years.

Overall, Senex's base oil portfolio continues to perform strongly, with

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production in line with expectations and operating efficiencies delivering strong cost control.

SURAT BASIN

GAS | Western Surat Gas Project

The Phase 2 work program was sanctioned in February 2017, and involves a 30 well drilling campaign across the Glenora and Eos blocks. The first of the wells were drilled during the quarter on the Eos block, with the campaign to continue throughout the remainder of calendar 2017.

In parallel, Senex made material progress on civils and gathering lines, and commenced construction of a production facility and flare on Eos, as well as the refurbishment of the existing dam. The Eos and Glenora wells will be brought online in pods of between five and

ten wells throughout the remainder of calendar 2017.

Further east, production is continuing at the Glenora pilot, with raw gas being delivered and sold to GLNG. Gas produced is continuing to increase slowly as the reservoir pressure reduces towards levels of critical desorption.

The Company continued to make good progress in the plug and abandonment of legacy QGC wells on the Eos block during the quarter, with the majority of the work now complete. Excellent safety and cost performance has been achieved to date.

During the quarter, planning work continued on the staged development of the project

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acreage, including on the next phase of drilling. Senex also commenced a competitive tender process for sales gas compression infrastructure to enable the company to consider investment in further key infrastructure by the end of calendar 2017.