Cooper Energy : December Quarterly Report 25 January 2017

25 January 2017

Key features:

• Production: 97 kbbl in the 3 months to 31 December; up 6% on previous quarter of 92 kbbl and compared to the pcp of 122 kbbl
• Revenue: $6.1 million; up from $4.9 million in previous quarter due to higher prices and volumes. Average oil price of A$63.16/bbl, up 16% on previous quarter
• Transformational gas transaction: acquisition of Santos Limited's Victorian gas assets adds gas producing assets, reserves, resources and 100% ownership of Sole Gas Project and Orbost Gas Plant
• $63 million capital raising completed
• Sole gas sales contracts: agreements with EnergyAustralia and AGL take Sole contracted gas to 20 PJ pa. Pre-FID gas sales target achieved
• Sole Gas Project: on schedule and moving towards FID in March quarter with first gas March quarter 2019

• Production guidance and reserves upgraded: FY17 production expectations upgraded from 0.3 MMboe to approximately 1MMboe; Australia 2P reserves upgraded from 1.3 MMboe at 30 June 2016 to 10.5 MMboe1 at 1 January 2017

Managing Director's comments

"This has been a landmark and transformational period for Cooper Energy. We now have a cash-generating gas business in place, our current year production has been upgraded more than three times, our 2P reserves upgraded 8 times and our production outlook has a clear 5 year growth profile. We are ideally placed to increase gas supplies to south east Australia gas customers.

"The pace is continuing and we expect the current quarter to be equally significant. We are now producing gas from Casino-Henry. The Sole Gas Project continues to move forward with threshold gas sales in place, our work on equity and financing structures advancing and we are on track for the final investment decision by the end of the quarter."

Further comment and information:
David Maxwell [phone]	Don Murchland [phone]
Managing Director	Investor Relations

1 refer discussion on reserves on page 3 for information on basis of reserve upgrade calculation

During the quarter Cooper Energy entered into a transaction to acquire the Victorian gas assets of Santos Limited (Santos) which comprised:

• a 50% interest in the producing Casino-Henry gas project in the offshore Otway Basin;

• a 50% interest in retention licences VIC/RL11 and VIC/RL12 in the offshore Otway Basin;

• a 50% interest in the VIC/P44 exploration acreage, offshore Otway Basin;

• a 50% interest in the Sole Gas Project in the Gippsland Basin, taking Cooper Energy equity in this project to 100%;

• a 50% interest in the Orbost Gas Plant in the Gippsland Basin, taking Cooper Energy to 100% ownership of the plant;

• a 100% interest in the depleted Patricia Baleen gas field in the Gippsland Basin; and

• a 10% interest in the producing Minerva Gas Project (VIC/L22) and Minerva gas plant.

The acquisition of these assets, excluding Minerva, was completed on 10 January 2017, with the payment of $61.0 million and working capital adjustments of $2.5 million to Santos. The acquisition of the Minerva asset is expected on the fulfilment of conditions precedent. Further conditional consideration of $20 million is payable on the earlier of the Final Investment Decision for the Sole Gas Project or a sell-down by Cooper Energy of an interest in the Victorian gas assets.

The acquisition is effective from 1 January and has resulted in upgrades to the company's reserves and production expectations reported on page 3 of this report.

The acquisition was funded through a 1 for 2 entitlement offer to institutional and retail shareholders which introduced a number of new institutional holders to the register and resulted in a substantial increase to the company's issued share capital, which was 659.6 million shares at 31 December compared with 435.2 million shares at the beginning of the quarter.

International assets

Consistent with the previously announced strategy of concentrating capital and effort on the company's growth projects in Australia, the company announced the sale of its remaining Indonesian asset and agreements to effect the completion of its withdrawal from Tunisia.

In Indonesia, an agreement was signed for the sale of the company's 55% interest in the Tangai- Sukananti KSO to Bass Strait Oil Company Limited (Bass) for total consideration of $5.7 million comprising: initial cash consideration of $500,000 on completion plus shares in Bass equating to

$270,000; further cash of $2.27 million payable 12 months from completion of the sale agreement; and $2.7 million of working capital to be collected as receivables, including Value Added Tax.

Regulatory approval for Bass' acquisition of the asset has been granted, leaving the sole remaining condition precedent to completion being approval by Bass shareholders, which is to be sought at a general meeting on 13 February. The sale to Bass, once unconditional, will be effective from 1 October 2016.

Cooper Energy has continued to recognise its share of production, revenue and expenditure from the KSO, pending the sale becoming unconditional. Cooper Energy will retain revenue and production from the KSO within its results for the period from 1 October to completion with the trading within this period being recognised through a working capital adjustment.

In Tunisia, the company assigned its sole remaining licence interest (the Bargou permit), and settled the legal dispute with the Hammamet joint venture. Further details are provided on page 11 of this report.

Production

Expectations of total production for FY17 have been upgraded to incorporate production anticipated from the interests in Casino-Henry and Minerva gas fields from 1 January.

Total production of approximately 1 million boe is now anticipated for FY17, which compares with previous guidance range of 240,000 - 280,000 barrels of oil from Australian interests. The revised guidance is solely attributable to the acquisition, with Cooper Basin oil production expectations being unchanged.

Reserves

The company's reserves, which were assessed to be 3.0 MMboe at 30 June 2016, will be impacted by:

1. the divestment of the 55% interest in the Tangai-Sukananti KSO, where the company's equity share of proved and probable reserves was 1.7 MMboe at 30 June 2016; of which 0.06 MM barrels of oil was produced in the period to 31 December; and

2. the acquisition of Victorian gas assets described previously on page 2.

Cooper Energy commenced the process of determining its own detailed assessment of the reserves attributable to the assets it has acquired following completion of the acquisition. A preliminary estimate of the likely addition to the company's reserves can be made from information previously announced and quarterly production data. On this basis, proforma Australian 2P reserves at 1 January 2017 are estimated to be 10.5 MMboe.

Cooper Energy plans to issue a reserves statement update incorporating its determination of the reserves acquired when its detailed analysis is complete.

December quarter

Sales revenue for the 3 months to 31 December 2016 (the December quarter) was $6.1 million compared with $4.9 million in the previous quarter and $7.0 million in the December quarter 2015 (the previous corresponding period; "pcp").

The increase in quarterly revenue is primarily due to higher prices. The average oil price received in the December quarter of A$63.16/bbl was higher than both the previous quarter (A$54.45/bbl) and the pcp (A$58.63/bbl). The December quarter revenue and average oil price are inclusive of a realised hedge loss of $0.2 million (September quarter: $0.1 million). Sales volume of 96.6 kbbl was 7% higher than the previous quarter's sales of 90.0 kbbl.

Discussion of production results by region is included under the heading 'Production, Exploration & Development' later in this report.

Capital expenditure rose from $4.2 million in the September quarter to $9.2 million, largely due to expenditure on the Sole Gas Project.

Direct production costs, including transport and royalties, were A$30.81/bbl compared with A$28.47/bbl in the previous quarter. The increase can be attributed to higher royalties brought by higher oil prices and the impact on production costs of greater use of trucking whilst facilities upgrading was conducted.

Year to date

Sales revenue for the six months to 31 December 2016 was $11.0 million compared with $14.6 million in the previous corresponding period. The movement is due to lower prices and sales volumes. The average oil price for the period was A$58.95/bbl compared with A$60.61/bbl in the pcp and direct production costs of $29.68 was 4% below the pcp. Sales volume of 187 kbbl was

23% lower than the pcp sales of 241 kbbl due to lower production from the Cooper Basin and Indonesia for the half year.

Capital expenditure for the six months to 31 December was $13.5 million compared with $15.3 million in the pcp. The movement is due to higher development expenditure in Indonesia in the six months to December 2015.

Cash and investments

Cash at 31 December was $90.5 million compared with $39.3 million at the beginning of the quarter. The increase in cash balance is due to proceeds from the $62.6 million capital raising completed in November 2016 to fund the Victorian gas asset acquisition. As discussed on the preceding page, payment for all but one of these assets and working capital was made on 10 January 2017, reducing cash balances by $63.5 million. The company also had investments of $0.8 million at 31 December 2016.

Hedging

Cooper Energy uses hedging to protect against downside oil price scenarios and retain partial exposure to higher oil prices. The company realised a hedging loss of $0.2 million from its participating swaps and collar options during the quarter. The table below summarises the hedging in place as at 31 December 2016:

Hedge arrangements (bbls remaining as at 31 December 2016):	H2 FY17	H1 FY18	Total
A$57.00 - A$69.70: zero cost collar options	30,000	-	30,000
A$54.45 floor + 50% above floor: zero cost participating swap	30,000	30,000	60,000
Total	60,000	30,000	90,000