Senex Energy : Scheme Meeting - Chairman's Address

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Senex Energy Limited

Scheme Meeting - Chairman's Address

Tuesday, 15 March 2022 - 9.00 am (Brisbane), 10.00 am (Sydney, Melbourne)

Good morning and welcome to this Scheme Meeting of Senex Energy Limited. My name is Trevor Bourne and I have the privilege of being the Chairman of your company and will be chairing today's Scheme Meeting.

Today's Scheme Meeting has been convened pursuant to an order of the Federal Court of Australia made on 7 February 2022.

As the COVID-19 pandemic still poses ongoing health risks, the Scheme Meeting is being held in person at Pullman Hotel King George Square, Connaught Room, Corner Ann & Roma Street, Brisbane and virtually through Computershare's online meeting platform.

Before we begin today, I would like to acknowledge the traditional owners of the country on which we meet today, and we pay our respects to their Elders past, present and emerging.

As it is now just after 9.00 am in Brisbane, where I am facilitating this meeting, and our Company Secretary has informed me that a quorum is present, I declare the Senex Scheme Meeting open.

On behalf of the Senex Board, I'd like to welcome Senex Shareholders, their proxies, attorneys or representatives present - thank you for attending today.

SENEX DIRECTORS

I would like to begin by introducing my fellow directors who are joining us today:

• with me in person, are my fellow independent non-executive directors: o Dr Ralph Craven;
  o Margaret Kennedy;
  o Glenda McLoughlin; and o Dr John Warburton.
• Tim Crommelin is joining the Scheme Meeting online
• Also with me in Brisbane is our:

1. Chief Executive Officer and Managing Director Ian Davies, o Chief Financial Officer Simon Ellinor and
   o Company Secretaries, David Pegg and Tara Hogan.

I would also like to welcome Jessie Yerma from Computershare who will be the Returning Officer for this meeting. Finally, we have representatives from our financial advisors, Macquarie Capital, Rothschild and legal advisors, Clayton Utz joining us online.

PROCEDURAL MATTERS

Before commencing the business of the formal procedures of the Scheme Meeting, I would like to explain the logistics of today's meeting, including how to ask questions and vote.

If you need any assistance during today's meeting, please call Senex's registry, Computershare Investor Services on +61 03 9415 4024. You can also refer to the 'Online Meeting Guide' prepared by Computershare for the Scheme Meeting which is available on the online platform to download.

HOW TO ASK A QUESTION

Senex Shareholders and their proxies, attorneys or representatives are entitled to ask questions at today's Scheme Meeting. If you have a question that you would like to ask today, there are two ways to do so.

When we issued the notice of meeting we also invited shareholders to submit their questions before the Scheme Meeting. We thank all shareholders who submitted questions for their interest and engagement. Those questions will be addressed at the relevant time.

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Asking a question online

You may submit questions through the online platform. To do this, select the Q&A icon and type your question into the text box. Once you have finished typing, please hit the send button.

Questions received through the platform will be put to the meeting during question time later in today's proceedings. Written questions may be moderated or amalgamated to avoid repetition, and if questions are particularly lengthy, we may need to summarise them in the interest of time.

Asking a question verbally

For online attendees, you may also ask a verbal question by following the instructions written below the broadcast. Please note you will not be able to see the speaker or the presentation slides while you are queuing to ask your question. You will however still be able to listen to the meeting.

For those shareholders in the room in Brisbane, we ask that you raise your hand if you would like to ask a question and we will provide you with a microphone.

We will take any questions or comments from our shareholders; firstly from the floor, then via phone calls and finally questions submitted online. Questions must be relevant to the business of today's meeting, being the approval of the Scheme. Please ask one question at a time and keep your questions brief so that as many people as possible have the chance to ask a question.

HOW TO VOTE

Voting today will be conducted by way of a poll. To provide you with enough time to vote, I will shortly open voting.

If you are eligible to vote at this meeting, once I declare voting open, press the vote icon on the resolution and they will be activated with voting options. To cast your vote simply select one of the options. There is no need to press submit or press enter as the vote is automatically recorded.

You can change your vote up until the time I declare voting closed.

If there is someone at the meeting in person in Brisbane who believes they are entitled to vote but has not registered to vote, please see a member of the Computershare team at the registration desk.

I now declare voting open. The polling icon will soon appear. Please submit your votes at any time. I will give you a warning before I move to close voting.

Jessie Yerma from Computershare Investors Services will act as the Returning Officer for the purposes of conducting and determining the results of the poll, and the results will be communicated to the ASX as soon as available today.

With that explanation, I will now move on to provide an overview of the Scheme.

OVERVIEW OF THE SCHEME

The purpose of today's meeting is for Senex Shareholders to consider and, if thought fit, approve a scheme of arrangement under which K-A Energy 1 Pty Ltd, the subsidiary nominated by POSCO INTERNATIONAL Corporation, which I will now refer to as "K-A Energy", will acquire all of the issued capital of Senex (which I will now refer to as the Scheme).

K-A Energy is a company owned 50.1% by POSCO INTERNATIONAL Corporation and 49.9% by Hancock Energy Corporation Pty Ltd, a wholly owned subsidiary of Hancock Prospecting Pty Limited. Further information about K-A Energy is contained in Section 9 of the Scheme Booklet which is available on the online platform.

The cash amount payable by K-A Energy for each Senex Share under the Scheme is $4.60, in the context of shareholders also receiving the dividend of $0.05 per Senex Share for the half year ended 31 December 2021, which was paid on 10 March 2022.

Directors' Unanimous Recommendation

As set out in the Scheme Booklet, your directors unanimously recommend that shareholders vote in favour of the resolution at today's meeting. This recommendation is made in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude the Scheme is fair and reasonable and therefore in the best interests of Senex Shareholders.

The key reasons for the Senex Board's unanimous recommendation to vote are set out in detail in the Scheme Booklet and are summarised on screen. They include:

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• The Scheme Consideration of $4.60 per Senex Share represents a premium to the recent trading price of Senex Shares.
• The Independent Expert has concluded that the Scheme Consideration is fair and reasonable and therefore in the best interests of Senex Shareholders.
• If the Scheme proceeds, you will receive a certain cash price for your investment in Senex and will avoid ongoing risks and uncertainties involved in Senex's operations and future developments.

The Scheme Booklet also identifies some reasons why you may wish to vote against the Scheme. These include that:

• you may prefer the opportunity to participate in any future value creation of the Senex business and consider that the Scheme does not adequately compensate you for that opportunity;
• you may disagree with the Senex Board and the opinion of the Independent Expert and consider that the Scheme is not in your best interests;
• the tax consequences of the Scheme may not be suitable for you; and/or
• you may believe there is potential for a Superior Proposal to emerge.

I would like to emphasise that the Senex Board, in making its recommendation, considered a broad range of matters and its overarching responsibility to act in the best interests of all Senex Shareholders. Throughout our discussions with POSCO INTERNATIONAL Corporation, the Senex Board was focused on maximising value for Senex Shareholders and the Scheme reflects an attractive value for Senex and the opportunity for Senex Shareholders to realise a certain cash price for their shares.

I would also note that the Senex Board's recommendation has always been subject to any Superior Proposal which may be received from a third party. However, no such proposal has been received and the Senex Board is not aware of any competing proposal.

Uplift in value over prior proposals

The Senex Board notes that the offer from POSCO INTERNATIONAL Corporation at $4.60 per Senex Share in November 2021, which led to the Senex Board entering into the Scheme Implementation Agreement with POSCO INTERNATIONAL Corporation in December 2021, had followed three prior earlier offers from POSCO INTERNATIONAL Corporation. The first of these was in July 2021 at $4.00 per Senex Share; the second was in August 2021 at $4.20 per Senex Share and the third was in September 2021 at $4.40 per Senex Share. At the time of the third offer the Senex Board decided the price had reached a point where it was in Senex Shareholders interest to allow POSCO INTERNATIONAL Corporation a period of exclusivity to enable it to submit a further improved proposal.

Ultimately, at POSCO INTERNATIONAL Corporation's revised proposal of $4.60 per Senex Share, the Senex Board came to the view that the offer was strong, credible and worthy of shareholder consideration. The $4.60 offer represents a 25% premium to the 30-day VWAP and a 34% premium to the 90-day VWAP up to and including 15 October 2021, the last trading day before the offer was announced.

Independent Expert's Report

The Senex Board's view is supported by the Independent Expert's Report, which was prepared by Lonergan Edwards & Associates Limited. A copy of the Independent Expert's Report is included as Appendix B to the Scheme Booklet. The Independent Expert's Report concluded that the Scheme is fair and reasonable and therefore in the best interests of Senex Shareholders in the absence of a superior proposal. In that Report, the expert assessed the value of Senex Shares to be between $4.17 and $4.92 per Senex Share. The Scheme Consideration of $4.60 per Senex Share is within this range.

Status of Conditions and Indicative Timetable

The Scheme was subject to two regulatory approvals - being Foreign Investment Review Board approval and Korean foreign exchange approval - which have both now been obtained. If the Scheme is approved at today's meeting, Senex will then seek approval of the Federal Court of Australia to implement the Scheme. If that approval is obtained, the Scheme will be unconditional.

The indicative timetable for implementation of the Scheme, if it is approved at this meeting and by the Court on the Second Court Date, is shown on the slide. The Second Court Hearing is scheduled for this Friday, 18 March 2022 and, if the Court approves the Scheme, the trading of Senex Shares on the ASX

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will be suspended from close of trading on that date. The record date for participation in the Scheme is Friday, 25 March 2022.

The Implementation Date, being the date on which the Scheme Consideration of $4.60 per Senex Share will be paid by K-A Energy to Senex Shareholders is anticipated to be Friday, 1 April 2022.

Recent events overseas

Since the announcement of the scheme implementation agreement on 13 December, there has been an increase in energy spot prices due to the war in Ukraine. The long term forward oil prices have also increased between $7 to $10. There is turmoil in European gas markets and the prices of Australian oil & gas company stocks have also increased. We have given these issues careful consideration.

The recent events overseas, as well as causing commodity price increases (certainly in the short-term) also come with higher volatility and uncertainty. It would be a brave person who would predict where the global oil and gas prices might settle in the medium to longer term. This uncertainty and volatility goes to the heart of the decision before shareholders about whether to accept the proposal from POSCO INTERNATIONAL Corporation OR choose to leave Senex as a stand-alone entity and remain exposed to market forces and the risks outlined in the Scheme Booklet.

Specifically, in relation to our domestic gas production from Atlas, which is sold into the Australian east- coast gas market: In the short term, production is largely contracted at fixed prices and the east coast gas market is more closely tied to local factors than to overseas markets. Our Roma North production is sold to GLNG. About 30% of Senex's revenue portfolio is exposed to oil prices and for the rest of this year is largely offset by Senex's hedge position.

All four proxy advisors, who provide their independent advice to institutional shareholders, have recommended their clients vote in favour of the Scheme, notwithstanding the macroeconomic changes that I've just referred to. The Independent Expert, Lonergan Edwards continues to be of the view that the Scheme remains "fair" and "reasonable" to Senex Shareholders in the absence of a superior proposal. Your directors unanimously recommend you vote for the Scheme in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude the Scheme is fair and reasonable and therefore in the best interests of Senex Shareholders.

Whether you consider the Scheme Consideration reflects fair value, all things considered, is a judgement call for each shareholder to make. The decision, outlined extensively in the Scheme Booklet, is between a cash certain amount now, at fair value, versus remaining as a shareholder of a standalone business subject to the risks and uncertainties the business will be exposed to (some of which relate to commodity prices). The Board considered the offer by POSCO INTERNATIONAL Corporation was sufficient in value and certainty, to put to our shareholders for their consideration. We, as a Board, think it is a fair and reasonable proposal, however it is your view and your vote that counts today.

FORMAL BUSINESS

We will now proceed the formal business of today's Scheme Meeting. The sole item of business today is the Scheme Resolution.

Scheme Resolution

The Scheme Resolution is also now shown on screen and is as follows:

"That, pursuant to and in accordance with section 411 of the Corporations Act, the proposed scheme of arrangement between Senex and the holders of its fully paid ordinary shares, the terms of which are contained and more particularly described in the Scheme Booklet of which this Notice of Scheme Meeting forms part, is approved (with or without modification as approved by the Federal Court of Australia)."

The Scheme Resolution must be approved by:

• a majority in number (i.e. more than 50%) of Senex Shareholders present and voting at the Scheme Meeting (whether in person or by proxy, attorney or, in the case of a body corporate, corporate representative); and
• at least 75% of the votes cast on the Scheme Resolution (again whether in person or by proxy, attorney or, in the case of a body corporate, corporate representative).

Proxy Results

The proxy votes received prior to the relevant cut off time are on the screen before you. You can see that on the basis of votes lodged and proxies received the resolution is supported. However, the final outcome will be determined by the votes cast in the poll at this meeting by the shareholders and proxy holders online, including the proxy holder votes shown on the screen.