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Target Energy : Quarterly Activities and Cashflow Report 31 March 2017

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05/01/2017 | 04:25am CEST
Quarterly Report for the quarter ending 31 March 2017

1. Operations Texas

Fairway Project - Howard & Glasscock Counties (Target 35% ‐ 60% WI)
  • Divestment Program

    In 2016 Target Energy Limited engaged global investment bank CanaccordGenuity ("Canaccord") as adviser to the divestment of the Fairway Project ("Fairway") in the Permian Basin, Texas. The Fairway properties were later included in a larger combined package, improving the overall marketability of the aggregated properties.

    A number of bids and indicative bids have been received, however no offer has been accepted by Target and its divesting partners at this stage.

  • Drilling / Workovers

No new drilling operations were undertaken in the Quarter.

Louisiana

East Chalkley, Cameron Parish (Target 35% WI)

The Pine Pasture #3 well remained shut in during the reporting period. The Operator has secured an extension from the Louisiana Department of Natural Resources for the proposed timing of a work‐over program to bring the well back on‐line.

Target has secured an in‐principle agreement with project operator Blue Ridge Mountain Resources (formerly Magnum Hunter Resources) to take over their interests in the properties at no cost. Discussions with the mineral owners regarding future appraisal and development of the field are underway.

TARGET ENERGY LIMITED Address 6 Richardson St (Suite 5), West Perth WA 6005

Mailing Address PO Box 140 West Perth WA 6872 | ABN 73 119 160 360 | Ph +618 9476 9000

Fax +618 9476 9099 | email [email protected] | www.targetenergy.com.au

Quarterly Report for the quarter ending 31 March 2017
  1. Production (1 January - 31 March 2017)

    Project

    TEX WI

    Gross Gas Prodn in Period (mmcf)

    Cumulative Gross Gas Prodn (mmcf)

    Net Gas Prodn in Period (mmcf)

    Cumulative Net Gas Prodn (mmcf)

    Gross Oil Prodn in period (BO)

    Cumulative Gross

    Oil Prodn (BO)

    Net Oil Prodn in Period (BO)

    Cumulative Net Oil Prodn (BO)

    E. Chalkley

    35%

    61

    22

    115,834

    40,542

    Fairway

    33%‐60%

    19

    462

    10

    255

    7,149

    233,704

    3,341

    126,416

    Total

    19

    523

    10

    277

    7,149

    349,537

    3,341

    166,958

    Net Production is scaled to Target's Working Interest, before royalties; mmcf = million cubic feet; mmcfgd = million cubic feet of gas per day; BO = barrels of oil, BOPD = barrels of oil per day, BOEPD = barrels of oil equivalent per day (Target reports a thermal equivalent when combining gas and oil production, where 1BOE = 6 mcf).

  2. Lease Holdings

    Target Energy Leaseholdings

    County / Ph Description

    Depth Limits

    TEX WI

    Gross acres

    Net acres

    Lease Name

    Fairway

    BOA

    Howard

    S12 S/2 , Block 33 T‐2S, A‐1353, T&P RR Survey

    None

    50.00%

    320.0

    160.0

    BOA North #4

    Howard

    S12 N/2 , Block 33 T‐2S, A‐1353, T&P RR Survey

    None

    50.00%

    160.0

    80.0

    BOA North #5

    Howard

    S12 N/2 , Block 33 T‐2S, A‐1353, T&P RR Survey

    None

    55.56%

    160.0

    88.9

    Darwin N/2

    Howard

    S44 N/2, Block 33, T‐1S, A‐1292, T&P RR Survey

    None

    50.00%

    320.0

    160.0

    Darwin SW/4

    Howard

    S44 SE/4, Block 33, T‐1S, A‐1292, T&P RR Survey

    None

    60.00%

    160.0

    96.0

    Ballarat

    Glasscock

    S 184 and 185, Bl 28, A‐815 and A‐A483, W&NW Survey

    None

    55.56%

    160.0

    88.9

    Taree

    Glasscock

    W/2 S193, Bl 28, A‐815 and A‐A483, W&NW Survey

    None

    60.00%

    *320.0

    192.0

    Sydney #1

    Glasscock

    NW/4 S 188 Block 29 A‐170 W&NW Survey

    None

    43.13%

    160.0

    69.0

    Sydney #2

    Glasscock

    E/2 S 188 Block 29 A‐170 W&NW Survey

    None

    33.75%

    320.0

    108.0

    "Section 4"

    Howard

    S4, Block 32, T‐2‐S, A‐1354 T & P RR Co Survey

    None

    60.00%

    440.0

    264.0

    Wagga Wagga #1

    Glasscock

    NE/4 S221, Block 29, A‐496; W&NW RR Co Survey

    None

    35.00%

    160.0

    56.0

    Wagga Wagga #2

    Glasscock

    SE/4 S221, Block 29, A‐496; W&NW RR Co Survey

    None

    38.89%

    160.0

    62.2

    Ballarat West

    Glasscock

    part NW/4 of S185, Bl 29, W&NW RR Co. Survey

    None

    50.00%

    123.9

    62.0

    East Chalkley

    Unit Agreement: CK W RA SU

    Cameron Ph

    S11, 13, 14 &15, T12S‐R6W

    8,000 ft ‐

    10,000 ft

    35.00%

    714.9

    250.2

    *subject to completion of lease extensions Total 3678.8 1732.2

    Quarterly Report for the quarter ending 31 March 2017
  3. Corporate
  4. Re‐Capitalisation

    On 16 March 2017 the Company advised the market that it had reached agreement with a key investor to secure additional funding as part of the Company's planned recapitalisation program.

    Target has executed a Terms Sheet with Perth‐based InvestMet Ltd ("InvestMet"), whereby InvestMet will provide a debt facility of up to $1,000,000, with an option to extend the facility by a further $1,000,000. In addition, InvestMet will participate in and underwrite a proposed share placement at no less than $0.0025 per share to raise a further $645,000. This placement is to be completed under Target's placement capacity and does not require shareholder approval.

    The InvestMet debt facility will carry a 10% per annum interest rate, payable quarterly in arrears. Payment of interest may be made in shares at the Company's election and as required, subject to shareholder approval. Target will also issue to InvestMet 25 million options at $0.0025 (1‐year term) and 25 million options at

    $0.0035 (2‐year term), subject to shareholder approval. The InvestMet debt facility will be secured.

    The Company completed the first stage of the recapitalisation program following the passing of all resolutions at a meeting of Convertible Noteholders held in West Perth on 29 March 2017. Amongst other matters, the resolutions passed included approval to defer the Maturity Date of the notes for 12 months to 31 March 2018 and to allow the proposed InvestMet Ltd ("InvestMet") debt facility security to rank ahead of Noteholders.

    Furthermore, existing secured lenders, including the Company's directors, have agreed to defer the Maturity Date of the secured loans with an aggregate balance owing of $450,000 for 12 months to 31 March 2018.

    Both the InvestMet debt facility and the placement are subject to documentation and final approvals and are expected to be drawn in early May 2017.

  5. Financial Position
  6. The Company has reduced corporate overheads to a minimum level whilst the sale process is underway. Amongst other cost reductions, the Managing Director has agreed to a 60% reduction in his fees for the time being and the other directors have agreed to defer any fees owed to them for the time being.

    The Company had cash resources at 31 March 2017 of $4,000. At this time, the most likely source of additional funding is the Recapitalisation Program which is underway and also the sale of the Company's remaining interests in Fairway. If the Recapitalisation Program does not complete successfully or if a favourable outcome from the sale process cannot be achieved in the short term, the Company will be required to seek additional financing and/or seek to restructure the existing

    Quarterly Report for the quarter ending 31 March 2017

    convertible notes. There is no certainty that either an additional financing or a restructuring of the existing convertible notes would be successful, should they become necessary.

    In the interests of providing a more complete summary of the Company's financial position than can be provided by the Appendix 5B cashflow statement, the Company provides the following summary of movements on the Joint Interest Billing statement by the Operator of the Fairway project.

    Fairway Joint Interest Billing Statement Balance

    All in USD

    Mar 2017 quarter

    Dec 2016 quarter

    Opening Balance of JIB

    (772,264)

    (770,041)

    Revenues credited

    158,750

    129,269

    Expenditure debited

    (175,322)

    (131,492)

    Remittances to Target

    Payments by Target

    Closing Balance of JIB, owed to project operator

    (788,836)

    (772,264)

    For further information, please contact the company at [email protected].

    Yours sincerely,

    Laurence Roe Managing Director

    NOTE: In accordance with ASX Listing Rules, any hydrocarbon reserves and/or drilling update information contained in this report is based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr Laurence Roe, B Sc, Managing Director and an employee of Target Energy Limited, who is a member of the Society of Exploration Geophysicists and has over 30 years experience in the sector. He consents to the reporting of that information in the form and context in which it appears.

Target Energy Limited published this content on 28 April 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 01 May 2017 02:25:17 UTC.

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