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1 A.C.N Level 2, 5 Ord Street Telephone: West Perth WA 6005 Facsimile: PO Box 690 West Perth WA September 2012 ASX Market Announcements Australian Securities Exchange Ltd 20 Bridge Street SYDNEY NSW RESULTS FOR THE SIX MONTHS TO 30 JUNE 2012 Please find attached Antares Energy Limited s Half Year Financial Report for the half year to 30 June Yours faithfully Vicky McAppion Company Secretary

2 HALF-YEAR FINANCIAL REPORT For the half year ended 30 June 2012

3 DIRECTORS' REPORT The Directors of Antares Energy Limited ( Antares or the Company ) present their report and the financial statements of Antares and its wholly owned controlled entities (collectively the Entity or "the Group") for the halfyear ended 30 June DIRECTORS The names of the Company's directors in office during the half-year and until the date of this report are as below. All Directors were in office for this entire period unless stated otherwise: James Andrew Cruickshank Matthew David Gentry Gregory David Shoemaker Vicky Ann McAppion Kelli Roach Mark Gerard Clohessy Executive Chairman Director & COO Director & Chief Scientist Director & Company Secretary Director & General Counsel & Chief Administrative Officer Non Executive Director REVIEW AND RESULTS OF OPERATIONS Antares during the period has maintained its operational focus upon its three projects located in the Permian Basin, West Texas, USA being Southern Star, Big Star and Northern Star in keeping with company presentations. Antares has reported a net loss for the period of $1,174,000. AUDITOR'S INDEPENDENCE DECLARATION Section 307C of the Corporation Act 2001 requires Antares' auditors, Ernst and Young, to provide the directors of the Company with an Independence Declaration in relation to the review of the half year financial statements. This Independence Declaration is included at Page 2 and forms part of this Directors Report. ROUNDING The amounts contained in this report and in the half-year financial statements have been rounded to the nearest $1,000 (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/0100. The company is an entity to which the Class Order applies. Signed in accordance with a resolution of the directors. J. A. CRUICKSHANK Executive Chairman Perth, 13 September

4 Auditor s Independence Declaration to the Directors of Antares Energy Limited In relation to our review of the financial report of Antares Energy Limited for the half-year ended 30 June 2012, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. Ernst & Young R J Curtin Partner 13 September 2012 RC:DR:ANTARES:027 Liability limited by a scheme approved under Professional Standards Legislation

5 Statement of Comprehensive Income For the Half Year Ended 30 June 2012 Note 30 June June 2011 Revenue 3 10,755 3,478 Cost of goods sold (6,432) (438) Gross profit 4,323 3,040 Other expenses excluding finance costs 3 (5,551) (2,568) Finance costs (795) (2,362) Loss before income tax (2,023) (1,890) Income tax benefit 849 2,690 Net (loss)/profit for the period (1,174) 800 Other comprehensive loss Exchange differences on translation of foreign operations (164) (5,942) Other comprehensive loss net of tax (164) (5,942) Total comprehensive loss for the period (1,338) (5,142) (Loss)/earnings per share (cents per share) Basic (loss)/earnings per share for the period (0.5) 0.3 Diluted (loss)/earnings per share for the period (0.5) 0.3 The statement of comprehensive income is to be read in conjunction with the notes to the financial statements. 3

6 Statement of Financial Position As at 30 June 2012 Note 30 June December 2011 CURRENT ASSETS Cash and cash equivalents 4 5,329 5,648 Trade and other receivables 4,943 3,431 Prepayments 4, Inventories Current tax assets 3,476 3,488 Total current assets 18,508 12,981 NON-CURRENT ASSETS Property, plant and equipment Oil and gas properties 103,650 83,645 Deferred exploration and evaluation expenditure 22,898 26,576 Total non-current assets 126, ,569 TOTAL ASSETS 145, ,550 CURRENT LIABILITIES Trade and other payables 2,845 5,182 Interest-bearing loans and borrowings 5 26,759 23,825 Provisions Total current liabilities 30,254 29,595 NON-CURRENT LIABILITIES Interest-bearing loans and borrowings 5 24,670 1,004 Deferred tax liabilities 914 1,751 Provisions 2,546 2,513 Total non-current liabilities 28,130 5,268 TOTAL LIABILITIES 58,384 34,863 NET ASSETS 86,970 88,687 EQUITY Contributed equity 6 90,193 90,892 Reserves (6,824) (6,980) Retained earnings 3,601 4,775 TOTAL EQUITY 86,970 88,687 The statement of financial position is to be read in conjunction with the notes to the financial statements. 4

7 Statement of Changes in Equity For the Half Year Ended 30 June 2012 CONSOLIDATED Ordinary Share Capital Retained Profits Foreign Currency Reserve Convertible Note Premium Reserve Share Option Reserve Total 30 June 2011 Balance at 1 January ,368 8,509 (13,887) 1,755 3, ,696 Profit for the period Other comprehensive income Exchange differences on translation of foreign operations - - (5,942) - - (5,942) Total comprehensive income for the period (5,942) - - (5,142) Transactions with owners in their capacity as owners: Shares bought back during the period (6,435) (6,435) Share based payments Balance at 30 June ,933 9,309 (19,829) 1,755 4,559 91, June 2012 Balance at 1 January ,892 4,775 (13,903) 1,755 5,168 88,687 Loss for the period - (1,174) (1,174) Other comprehensive income Exchange differences on translation of foreign operations - - (164) - - (164) Total comprehensive income for the period - (1,174) (164) - - (1,338) Transactions with owners in their capacity as owners: Shares bought back during the period (699) (699) Share based payments Balance at 30 June ,193 3,601 (14,067) 1,755 5,488 86,970 The statement of changes in equity is to be read in conjunction with the notes to the financial statements. 5

8 Statement of Cash Flows For the Half Year Ended 30 June 2012 Note 30 June June 2011 Cash flows from operating activities Receipts from customers 9,233 1,168 Payments to suppliers and employees (4,870) (1,888) Interest received 2 65 Interest paid (744) (2,343) Income taxes paid - (8,169) Payments of franchise taxes (641) - Net cash inflows/(outflows) from operating activities 2,980 (11,167) Cash flows from investing activities Payments for property, plant and equipment (6) (140) Exploration, evaluation and development expenditure (29,442) (80,186) Proceeds from sale of oil and gas properties - 54,519 Net cash outflows from investing activities (29,448) (25,807) Cash flows from financing activities Payments for share buy-back (600) (8,503) Proceeds from borrowings 29,658 - Repayments of borrowings (3,047) - Net cash inflows/(outflows) from financing activities 26,011 (8,503) Net decrease in cash and cash equivalents held (457) (45,477) Cash and cash equivalents at the beginning of the period 5,648 77,443 Effects of exchange rate changes on cash 138 (4,094) Cash and cash equivalents at the end of the period 5,329 27,872 The cash flow statement is to be read in conjunction with the notes to the financial statements. 6

9 Notes to the Financial Statements For the Half Year Ended 30 June 2012 NOTE 1 BASIS OF PREPARATION AND ACCOUNTING POLICIES Basis of preparation and going concern These general purpose condensed financial statements for the interim half-year reporting period ended 30 June 2012 have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act The half-year financial report does not include all notes of the type normally included within the Annual Financial Report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial statements. The half-year financial report should be read in conjunction with the Annual Financial Statements of Antares Energy Limited as at 31 December It is also recommended that the interim half-year financial statements be considered together with any public announcements made by Antares Energy Limited during the half-year ended 30 June 2012 in accordance with the continuous disclosure obligations arising under the ASX Listing Rules. Going Concern The financial report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. For the half-year ended 30 June 2012, the Group has incurred a consolidated loss of $1,174,000 and generated operating cash inflows of $2,980,000. As at 30 June 2012 the Group has cash and cash equivalents of $5,329,000 and net current liabilities of $11,746,000. Current liabilities include convertible notes of $14,984,000 and interest bearing borrowings from Macquarie Bank Limited of $11,775,000. The convertible notes may be redeemed on 31 October It is the expectation of the Directors that the majority of noteholders will not seek redemption of the notes on 31 October The Directors are assessing the avenues available to them to raise any additional funds required to redeem any notes not rolled over. These avenues include but are not limited to equity raising, asset sales or replacement debt financing. Should the Directors not be able to achieve the matters set out above, there is significant uncertainty as to whether the Company and the Group will be able to continue as going concerns. The financial statements do not include any adjustments relating to the recoverability and classification of recorded amounts, or to the amount and classification of liabilities that might be required should the Company and the Group not be able to achieve the matters set out above and thus be able to continue as going concerns. Adoption of new or revised Standards Apart from the adoption of new or revised accounting standards noted below, the accounting policies and methods of computation are the same as those adopted in the most recent annual financial report. All new and amended Standards and Interpretations effective from 1 January 2012 have been adopted, including: AASB 1054 Australian Additional Disclosures: This standard is as a consequence of phase 1 of the joint Trans-Tasman Convergence project of the AASB and FRSB. This standard, with AASB relocates all Australian specific disclosures from other standards to one place. AASB Amendments to Australian Accounting Standards Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7]: The amendments increase the disclosure requirements for transactions involving transfers of financial assets. Disclosures require enhancements to the existing disclosures in IFRS 7 where an asset is transferred but is not derecognised and introduce new disclosures for assets that are derecognised but the entity continues to have a continuing exposure to the asset after the sale. Adoption of these Standards and Interpretations did not have any effect on the financial position or performance of the Group. The Group has not elected to early adopt any new standards or amendments. 7

10 Notes to the Financial Statements For the Half Year Ended 30 June 2012 NOTE 2 SEGMENT REPORTING For management purpose, the Company is organised into one main operating segment, which involves oil and gas exploration, development and production in the USA. All the Company's activities are interrelated, and discrete financial information is reported to the Executive Chairman and the management team (Chief Operating Decision Makers) as a single segment. Accordingly, all significant operating decisions are based upon analysis of the Company as one segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. The Group derives its revenue primarily from the sale of oil and gas produced in the USA. During the interim halfyear reporting periods ended 30 June 2012 and 30 June 2011 external sales of oil and gas were made to customers solely located in the USA. 30 June June 2011 Analysis of external sales: Oil 8,369 3,222 Gas 2, ,753 3, June December 2011 Geographical split of non-current assets: USA 127,843 82,335 Australia ,843 82,335 8

11 Notes to the Financial Statements For the Half Year Ended 30 June 2012 NOTE 3 REVENUE, INCOME AND EXPENSES 30 June June 2011 a) Revenue Sale of product 10,753 3,413 Interest Revenue ,755 3,478 b) Other expenses: Operating lease payments General and Administrative expenses 420 1,029 Foreign exchange loss Impairment of oil & gas properties 3,583 - Employee benefits 1,424 1,363 Exploration expenditure written off 18-5,551 2,568 c) The following item is included in the Cost of Sales: Amortisation of oil and gas properties 2, NOTE 4 CASH AND CASH EQUIVALENTS 30 June December 2011 For the purposes of the half-year cash flow statement, cash and cash equivalents are comprised of the following: Cash at bank and on hand 5,329 27,872 5,329 27,872 9

12 Notes to the Financial Statements For the Half Year Ended 30 June 2012 NOTE 5 INTEREST-BEARING LOANS AND BORROWINGS 30 June December 2011 Current US$200 million term debt facility 11,775 8,862 Convertible notes 14,984 14,963 26,759 23,825 Non-Current US$200 million term debt facility 24,670 1,004 Convertible notes ,670 1,004 Convertible Notes On 31 October 2009, 7,500,000 new unsecured convertible notes were issued at $2.00 each, to replace the notes that were expiring on that date. The convertible notes are a compound financial instrument comprising both an equity component and a debt component. Based on estimated interest rates for similar debt without conversion options of 10.7% per annum, the convertible notes were classified $14,879,724 as debt component and the balance of $120,276 as equity component. Interest is recognised using the effective interest method over the period to the next reset date of 31 October 2012 at which time noteholders can elect to redeem their notes for $2 each. The effective interest rate on the convertible notes is 10.7%. As at 30 June 2012 there was a total of 7,500,000 notes on issue (31 December 2011: 7,500,000). The terms of the notes are as follows: Interest Rate: 10% per annum (payable quarterly in arrears) Conversion Rate: 1:1 (each note is convertible into one fully paid ordinary share) Next reset date: 31 October 2012 US$200 Million Tem Debt Facility The Group has established a US$200 million three year term debt facility at an interest rate of LIBOR plus 4.0% with Macquarie Bank Limited. The facility has been secured by fixed and floating charges over all the assets and undertakings of the Company and all its subsidiary companies. Repayments of US$3 million are payable every three months commencing six months from the first drawdown with a final repayment thirty six months after the first drawdown. The first drawdown was made in December June December 2011 Facility used at reporting date 36,445 9,866 Facility unused at reporting date 159, ,914 10

13 Notes to the Financial Statements For the Half Year Ended 30 June 2012 NOTE 6 CONTRIBUTED EQUITY 30 June December 2011 Issued and paid up capital Fully paid ordinary shares 90,193 90,892 Movement in ordinary shares on issue No. of shares At 1 January ,000,000 90,892 Shares bought back on market (1,815,664) (699) At 30 June ,184,336 90,193 NOTE 7 COMMITMENTS AND CONTINGENCIES The only changes to the commitments and contingencies disclosed in the most recent annual financial statements are specified below. (a) Exploration Commitments At 30 June 2012 there are no commitments for exploration expenditure that are not provided for in the financial statements. (b) Operating Lease Commitments Entity as a Lessee Minimum lease payments 30 June December 2011 Not later than one year Later than one year but not later than 5 years NOTE 8 EVENTS AFTER THE BALANCE SHEET DATE No matter or circumstance has arisen since 30 June 2012 that has significantly affected or may significantly affect the operations, results or state of affairs of the Entity in the following or future years. 11

14 DIRECTORS DECLARATION In accordance with a resolution of the directors of Antares Energy Limited, I state that: In the opinion of the Directors: (a) The financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including: (b) (1) giving a true and fair view of the financial position as at 30 June 2012 and the performance for the half-year ended on that date of the consolidated entity; and (2) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and Subject to the matters set out in Note 1, there are reasonable grounds to believe the Company will be able to pay its debts as and when they become due and payable. On behalf of the Board J. A. CRUICKSHANK Executive Chairman Perth, 13 September

15 To the members of Antares Energy Limited Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of Antares Energy Limited, which comprises the statement of financial position as at 30 June 2012, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors declaration of the consolidated entity comprising the company and the entities it controlled at the half-year end or from time to time during the half-year. Directors Responsibility for the Half-Year Financial Report The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity s financial position as at 30 June 2012 and its performance for the halfyear ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the auditor of Antares Energy Limited and the entities it controlled during the half-year, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act We have given to the directors of the company a written Auditor s Independence Declaration, a copy of which is included in the Directors Report. RC:DR:ANTARES:028 Liability limited by a scheme approved under Professional Standards Legislation

16 Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Antares Energy Limited is not in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the consolidated entity s financial position as at 30 June 2012 and of its performance for the half-year ended on that date; and b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Material Uncertainty Regarding Continuation as a Going Concern Without qualification to the conclusion expressed above, we draw attention to Note 1 in the financial report. As a result of the matters described in Note 1, there is significant uncertainty whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not continue as a going concern. Ernst & Young R J Curtin Partner Perth 13 September 2012 RC:DR:ANTARES:028