Key Petroleum : Half Year Financial Report to 31 December 2021

only4 March 2022

useThe Manager

The Australian Securities Exchange The Announcements Office Level 4/20 Bridge Street SYDNEY NSW 2000

personalKey Petroleum Limited attaches herewith the Company's Half Year Report for the period ended 2021.

This announcement has been authorised by the Board of Directors.

For more information please contact:

IAN GREGORY

Company Secretary

Key Petroleum Limited

Telephone: +61 (0) 8 6160 6022

Email:investors@keypetroleum.com.au

For

ABN: 50 120 580 618

31 December

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KEY PETROLEUM LIMITED

ABN 50 120 580 618

INTERIM FINANCIAL REPORT

FOR THE HALF YEAR ENDED

31 DECEMBER 2021

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Your directors submit their report on the consolidated entity consisting of Key Petroleum Limited ("Key", "the Company" or "the Group") and the entities it controlled at the end of, or during, the half-year ended 31 December 2021.

DIRECTORS

The names of the directors who held office during or since the end of the half-year are:

Geoffrey Baker

Louis Chien, appointed 1 October 2021

Dennis Wilkins

Min Yang

Dongmei (Yvonne) Ye, resigned 30 September 2021

REVIEW AND RESULTS OF OPERATIONS

A summary of consolidated revenues and results for the half-year is set out below:

During the half year ended 31 December 2021, the Company received confirmation that the application for Project Status for Authority to Prospect (ATP) Number 783, ATP 920 and ATP 924 lodged with the Queensland regulator, Department of Natural Resources, Mines and Energy (DNRME), was approved. This allows the transfer of commitments between the ATPs, enabling the Company to focus its efforts on the most prospective areas.

In parallel, the Company completed a detailed review of its Cooper Eromanga Basin exploration portfolio of ATPs 783, 920 and 924. High quality 3D seismic shows data which indicates an early formed structure, commonly regarded as an important success factor for Permian level prospects in the Cooper Eromanga Basin. Conventional sandstone reservoirs within the regionally productive Toolachee Formation are expected. The Prospective Resources for recoverable gas are estimated to range from: P90 33.9 Bcf / P50 97.1 Bcf / P10 227.4 Bcf, and Mean 122.5 Bcf*. Additional Prospective Resources can be ascribed within the prospect to prominent, overlying (shallower) closures at secondary objectives levels that include the Hutton Sandstone.

Due to a number of delays, Key and Triangle have agreed twice, during the half year, to extend the proposed Cut Off date for the Sale and Purchase Agreement for Key's remaining equity in EP 437 and L7 (Sale Agreement) to Triangle Energy, to end of January 2022. A non-refundable upfront payment of $200,000 was received by Key from Triangle with two follow on payments totalling A$300,000 also received. The remaining $100,000 of the balance owing to Key will be paid by Triangle at completion. After completion, Key retains a 5% gross overriding royalty payable on production from L7 and EP 437.

Meanwhile, work continues with the Western Australia regulator, Department of Mines, Industry Regulation and Safety (DMIRS), to complete the Sale and Purchase Agreement. Completion of the agreement requires DMIRS to approve the transfer of title. The team has been addressing DMIRS Environment Dept queries regarding the Environmental Plan, and completion of the clean-up work for L7.

Key and Triangle entered into a Management Services Agreement (MSA) to further the required work programs for L7/EP437 titles while waiting for the completion of the Sale and Purchase Agreement. The MSA stipulates that Triangle will provide all operational services in relation to the L7/EP437 titles. This includes the preparations for the Bookara 3D Seismic Survey.

Preparations for the Bookara 3D Seismic Survey are at an elevated level. During the half year, various Access and Compensation Agreements have been executed with others in execution phase. Work has been completed in respect to geological correlation, geological modelling for the Permian, Triassic and Jurassic formations.

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Corporate

At the end of the interim period the Group had $221,433 cash on hand. Exploration costs for the period were $46,248 and comprised technical work related to drilling preparations in EP 437, 3D seismic preparations on the Bookara Shelf Oil Project and prospect evaluation in the Cooper Eromanga Basin.

The suspension of trading in the securities of Pilot Energy Limited ('PGY'), in which Key held 21 million ordinary fully paid Pilot Energy shares at the beginning of the half year, was lifted on 12 August 2021. During the half year, Key divested 8 million shares of Pilot Energy in two 4.0 million share tranches at an average price of $0.059 per share and an average price of $0.07 per share which netted A$233,796 and A$277,536 respectively. Key has repaid the ASF loan of $250,000. The remaining 13 million shares at $0.055 per share is valued at A$715,000 as of 31 December 2021.

At the start of October, Key appointed Louis Chien as Managing Director. Yvonne Ye resigned as a Non- Executive Director of Key and Ric Jason resigned as interim Chief Executive Officer and Exploration Manager.

EVENTS SUBSEQUENT TO REPORTING DATE

As at the closing price on 3 March 2022, the market value of the Group's financial assets at fair value through profit or loss held at the reporting date was $624,000, a decrease of $91,000 from the market value at the reporting date.

Key and Triangle have agreed to further extend the proposed Cut Off date for the Sale and Purchase Agreement for Key's remaining equity in EP 437 and L7 (Sale Agreement) to Triangle Energy for the end of March 2022. The remaining $100,000 and a 5% overriding production royalty in each permit will be received once the sale is completed.

No other matter or circumstance has arisen since 31 December 2021, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.

SIGNIFICANT CHANGE IN THE STATE OF AFFAIRS

In the opinion of the Directors, there were no significant changes in the state of affairs of the Company that occurred during the interim period not otherwise disclosed in this report and the interim financial report.

AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5.

This report is made in accordance with a resolution of directors.

Louis Chien

Managing Director

Dated 4 March 2022