Pilot Energy : Annual Report 2023

ANNUAL REPORT 2023

FOR THE YEAR ENDED 30 SEPTEMBER 2023

handling infrastructure (illustration only)

Leading the clean energy transition

Kwinana Carbon Solutions marine transport - Conceptual CO 2

CORPORATE

ACTIVITIES

A. Capital Raising

During the 2023 year, and since the date of the 2022 Annual Report, the Company has raised the following amounts:

• In April 2023, a placement raising $1.7 million;

B. 8 Rivers Capital

During the 2023 year, 8 Rivers Capital, LLC (www.8rivers. com) (8RC), a subsidiary of SK Materials of Korea, cemented its relationship with Pilot as follows:

• In November 2023, a placement raising $2.4 million;
• In December 2023, a placement raising $1.3 million;
• In December 2023, a further $3.5 million by way of
  Convertible Note syndicate, with $1 million to be advanced in December 2023. The balance is to be received following the Company's AGM scheduled to be held in February 2024.

The equity placements were to sophisticated and professional investors and all equity raisings were oversubscribed.

The Convertible Notes were arranged by an investor Syndicate led by Mr Greg Columbus. Mr Columbus has over 30 years of experience in the Energy and Oil & Gas industries including technical, commercial, executive and non-executive roles and is also an experienced investor in listed companies. Currently Mr Columbus is Non-executive Chairman of ASX listed Talon Energy and previously,

he was also the Non-executive Chairman of ASX listed Warrego Energy Limited, both developers of natural gas resources in the Perth Basin, Western Australia. Talon Energy is currently completing a Scheme of Arrangement with Strike Energy and Warrego Energy was taken over by the Hancock Prospecting Group in March 2023.

• Provision of technical services - commencing in
  November 2022, 8RC assigned key personnel to the MWCEP to undertake work focusing on the preparation of a basis of design for the MWCEP hydrogen production facilities. The basis of design was required to support the CO2 Storage FEED and Pre-FEED for the hydrogen and ammonia facilities.

In consideration of the provision of these services, 8RC was issued shares in Pilot to the value of $500,000 over two instalments as per the Subscription Agreement.

• Ammonia Rights Agreement

As previously announced, in further consideration of 8RC entering into the Subscription Agreement, 8RC was granted (or it's nominee, a member of the SK Inc. group of companies) a priority right to enter into an ammonia supply agreement to purchase up to 50% of the blue ammonia output (subject to a cap of 250,000 tonnes per annum).

C. Shares and Options Issued

A summary of all shares and options issued during the year is set out in the Notes to the Financial Statements.

D. ASX Recompliance

The Company continues to engage with the ASX in respect of the requirement to comply with Chapters 11, 1 and

2 of the Listing Rules in relation to preliminary activities connected to renewable energy that exceed a certain scale relative to Pilot's core oil and gas activities and noting that ASX may consider such activities, at certain thresholds, to constitute a change in nature and scale of Pilot's activities in terms of Listing Rules Chapter 11.

E. Corporate Governance

The Board is committed to operating in accordance with the highest standards of corporate governance. To the extent appropriate for the Company, given its size and stage of development, the Company has adopted the fourth edition of the Corporate Governance Principles and Recommendations released by the ASX Corporate Governance Council on 27 February 2019. The Company's corporate governance statement for the financial year ending 30 September 2023 was approved and adopted by the Board on 13 December 2023. This document sets out in summary the Company's governance policies and the extent to which it has met the Corporate Governance Council's Principles and Recommendations and, where they have not been met, explains why. The Corporate Governance Statement is available on Pilot's website, under the "Company" heading.

1. Environmental, Social and Corporate Governance (ESG)

Pilot is committed to the principles of ESG as the most effective means of creating long-term enterprise value and addressing the societal priorities enshrined in the United Nations' Sustainable Development Goals.

In November 2023, the Company made a commitment to commence reporting on the Environmental, Social, and Governance (ESG) disclosures of the Stakeholder Capitalism Metrics (SCM) of the World Economic Forum (WEF). The Company is in the process of making ESG disclosures in the form of a set of universal, comparable ESG metrics focused on people, planet, prosperity and principles of governance that organisations can report on regardless of industry or region.

By integrating ESG metrics into the Company's governance, business strategy, and performance management process, Pilot diligently consider all pertinent risks and opportunities in running its business. Pilot continues to look for opportunities for further transparency on the topics which are material to its business.

The Company has entered into an agreement with Socialsuite, to utilise Socialsuite's ESG reporting disclosure platform. This platform will enable Pilot to demonstrate

its ongoing commitment to ESG by providing a dedicated solution to track, report, and share its ESG disclosures. With Socialsuite, the Company has started the journey of building robust ESG credentials and is working towards releasing its inaugural ESG report in December 2024.

PILOT ENERGY

ANNUAL REPORT 2023

B. Carbon Management Services

Pilot's feasibility studies and ongoing market engagement highlight the significant opportunity to provide carbon management services to domestic and international emitters. Following the entry into arrangements with the two CO2 capture technology partners, Svante and KC8 and international CO2 marine transportation and storage solution provider KNCC.

Pilot has led engagement with a number of emitters focusing on industries operating in the Mid West and Kwinana regions of Western Australia. Engagement activities include direct engagement with emitters, Kwinana Industries Council and Pilot presenting to the Kwinana Major Projects conference (August 2023) on the Kwinana to Cliff Head Seaborne CO2 export and permanent offshore storage opportunity (refer to Kwinana Major Projects Conference - Kwinana to Cliff Head presentation dated 21 August 2023 - pilotenergy.com.au/presentations). The Pilot, KNCC and Svante teams also participated in the Gastech 2023 conference in Singapore broadening the potential scope of customers for the project's carbon management service.

1. Pilot (via its 100% subsidiary, Royal Energy) holds a 50% interest in Triangle Energy (Operations) Pty Ltd ("TEO") which itself holds a 42.5% direct interest in WA -31 L and the Cliff Head Oil Field project. In accordance with applicable accounting standards, Pilot accounts for this investment on an equity accounting basis.

CORPORATE AND

OPERATIONS REVIEW

C. Oil and Gas Operations

1. Cliff Head Oil field, Perth Basin,
   Western Australia

The Cliff Head Oil Field (Cliff Head) ) is located approximately 270km north of Perth and 10km off the coastal town of Dongara in Western Australia at a water depth of 15-20m. The Production Licence WA-31-L covers 72km² and the oil field covers 6km². It was the first commercial oil discovery developed in the offshore Perth Basin with first oil production commencing in May 2006.

The Cliff Head Joint Venture is effectively held by the following group entities:

• Triangle Energy (Global) Limited (ASX: TEG)
  ("Triangle"): 78.75%
• Pilot Energy Limited: 21.25%