For personal use only

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1 1 For personal use only Half-year 2013 Results Briefing Delivering on a focused strategy. 21 FEBRUARY 2013

2 2 Growth platform and strategy Brad Lingo Managing Director

3 Highlights 3 69% increase in total 2P Reserves to 18.7 mmboe 859% uplift in total production 429% uplift in oil production 708% uplift in cash flow 448% increase in total revenue Successful takeover of Acer Increase to Western Flank Oil & Wet Gas footprint Increasing Reserves, Production and Cash Flow 30 Jun Jun Jun Jun 2012 Half Year 31 Dec 2012 Reserves 2P Net mmboe Production (boe) 182, , , , ,315 Net operating cash flow $2.2m ($3.7m) $5.2m $10.0m $10.2m

4 Growth Platform and Strategy 4 NEAR TERM Western Flank and Inland-Cook Oil Fairways Develop new oil discoveries Accelerate 3D seismic-based exploration Expand production capabilities MID TERM Western and Northern Wet Gas Project Areas Expand development & production from existing discoveries Prove up Reserves through expanded exploration Deliver additional growth from multiple production satelites LONG TERM Central and Western Unconventional Fairways Explore, appraise & delineate unconventional potential Continuing interest from major international petroleum companies

5 HY 2013 Overview 5 117% increase in 2P Reserves to 7.8 mmboe 7 oil discoveries in the Western Flank Oil Fairway 3 oil discoveries in the Eastern Margin Oil Fairway Confirmation Bauer is the largest oil discovery on the Western Flank Construction of the Bauer-to- Lycium Pipeline commenced in December 2012 Increase in daily oil production rate from ~90 bopd to over 2,300 bopd net to DLS and growing 47% increase in 2P Reserves to 11.0 mmboe Expansion of Wet Gas Project with the tie-in of Canunda Advanced negotiations with SACBJV with regard to Gas Sales Agreements Active exploration program with extensive 3D seismic operations Expanded Wet Gas Project base with Acer Energy acquisition forming Northern Wet Gas project Completed the largest onshore 3D seismic acquisition in Australia Drillsearch/QGC Joint Venture Agreed two well locations, Anakin-1 and Charal-1 Western Cooper drilling & coring completed with fraccing & testing program pending 2013 a year of delivery - Increasing Reserves, Production and Cash flow

6 HY 2013 Overview Reserves Growth 6 69% uplift in total 2P Reserves for HY 2013 to 18.7 mmboe. Key drivers were; - Appraisal drilling at Bauer Oil Field in PEL 91 - Pennington-1 oil discovery in PEL 91 - Production results prove increased wet gas Reserves at Brownlow field - Development of additional high liquids wet gas discoveries Canunda and Coolawang *The 31 December 2012 Independent Audit Reserves have been conducted by RISC for PEL 91 and the new Acer assets and DeGolyer and MacNaughton for PEL 106A, 106B and 107 assets

7 HY 2013 Overview - Production 7 Total HY2013 production of 318,563 boe an increase of 859% (HY 2012 of 33,217 boe) Current Drillsearch daily net oil production of over 2,300 bopd increasing to roughly 6,000 bopd FYE Anticipated raw gas production with potential to increase to 35 mmscf/d (gross) after re-start of Western Wet Gas Project Revised FY2013 production guidance to a range of 1.1 to 1.3 mmboe from previous range of 1.3 to 1.5 mmboe. Key drivers of revised guidance are: - Continuing shut in of PEL 106B Wet Gas production - Delay in original completion date for the Bauer to Lycium pipeline

8 8 Ian Bucknell Chief Financial Director

9 Financial Highlights 9 Significant increase of 448% in total revenue 1113% increase in Gross Profit to $12.1m Positive EBITDAX $3.0m Successful Acer Acquisition & associated $100m debt facility Significant cash position bolstered by $100m of Capital Raising

10 Financial Overview 10 HY12 HY11 Delta % Sales volume (Mmboe) 0.4mboe 0.1mboe 482% Sales Revenue ($m) % Cash flow from operations ($m) % Gross Profit ($m) % EBITDAX ($m) 3.0 (0.6) n/m Net profit/(loss) after tax excluding costs related to Acer Energy Limited ($m)* 4.9 (1.3) n/m Net profit/(loss) after tax (3.4) (1.4) (143%) n/m not meaningful 448% increase in Sales Revenue for the first half driven by increased production *Included is the cost relating to acquisition of Acer Energy Limited of $3.7 million incurred by Drillsearch, $2.5 million relating to costs incurred by Acer Energy in its takeover defence and $2.1m contributed to the loss of the Group for the period.

11 Profit Overview 11 Significant increase of 448% in HY 2013 Sales Revenue HY 2013 Gross Profit margin of 48% compared to 36% in FY 2012

12 Operating Results % increase to year-on-year gross profit as a result of increased production, steady average realised oil price and successfully control of operating costs

13 Cash Position and Funding 13 Cash reserves at 31 December 2013 of $83.3m including Debt Service Reserve of $20m Cash flow generated by operations increased 1,503% to $10.2m from HY 2012 ($0.6m) Successful completion of two $50m capital raisings to: Accelerate Western Flank oil production; Expand the Wet Gas Pilot Project; and Acquire Acer Energy Limited Effected a $100m debt facility to support the Acer Energy Acquisition

14 Balance Sheet 14 December 2012 June 2012 Delta $000 $000 % Cash and bank balances 63,270 45,611 39% Debt Service Reserve 20,000 - n/m Trade and other receivables 10,188 3, % Exploration and evaluation assets 149,730 23, % Oil and gas assets 90,364 54,773 65% Deferred tax assets 33,506 11, % Borrowings 100,000 - n/m Trade and other payables 29,202 12, % Provisions 11,331 3, % Net assets held for sale 2,488 15,546 n/m Net other assets 8,107 3, % Net assets 236, ,992 67% n/m not meaningful The Acer Acquisition has had the largest impact on the Financials in the half year Strengthened cash position as a result of capital raising and debt Continued growth through expansion and investment in Exploration and Evaluation and Oil and Gas assets Deferred tax asset brought to account in respect of carried forward losses, temporary differences and in response to PRRT relating to the Acer acquisition Borrowings increased as $100m debt facility was established to finance the Acer Acquisition. This is offset by the Debt service Reserve

15 Acer Energy Transaction Impact on Cash Flow 15 The net cash utilised by Drillsearch in completing the Acer Energy transaction to December 2012 was $12.0m A further $7.0m was paid in January 2013 in respect of the compulsory acquisition of any outstanding shares

16 Acer Energy Transaction Impact on Balance Sheet 16 Other than cash (already discussed) the main impact on the Drillsearch balance sheet from the Acer transaction was on exploration and evaluation assets This has seen an increase of $94.1m to the exploration and evaluation assets including fair value adjustments

17 Acer Energy Transaction Impact on Profit & Loss 17 Excluding Acer Energy, Drillsearch would have made an after tax profit of $4.0m Including Acer Energy, Drillsearch has made an after tax loss of $4.3m

18 18 Outlook and work program FY 2013 Brad Lingo Managing Director

19 Outlook and Work Program FY Bring new discoveries into production Development drilling targeting further upgrades in Reserves Construct oil pipeline to improve production reliability Significant growth in production and cash flow generation Accelerate Western Flank Oil exploration in 3D seismic areas Inland-Cook 3D seismic acquisition and subsequent drilling Expand and extend Wet Gas Pilot Project Complete and test Wet Gas discoveries Expand Wet Gas exploration and development in Drillsearch 100% owned and operated permit areas Prove up existing Wet Gas 2C Resources to 2P Reserves Case and test Western Cooper unconventional targets in Wet Gas drilling program Central Cooper shale gas 3D seismic program Drill, core, test and complete first Central Cooper shale and tight gas wells Commence production testing Book unconventional Resources and Reserves Already delivered 69% Reserve growth in FY 2013 and accelerating daily production rate

20 20 For personal use only Half-year 2013 Results Briefing Appendix 21 FEBRUARY 2013

21 Financial Highlights 21 Financial Highlights December 2012 December 2011 Delta Delta % Sales Revenue ($000) 25,427 4,641 20, % Gross Profit ($000) 12, , % Loss after tax ($000) (3,370) (1,257) (3,036) 168% Production Volumes (boe) 318,563 33, , % Average Realised Oil Price ($/boe) (4.7) -4% Production Costs ($/boe) (22.3) -42% Depreciation & Amortisation ($/boe) (32.2) -75% Exploration and Development expenditure ($000) 50,662 23,093 27, % Exploration and evaluation costs expensed ($000) (195) n/m Operating Cashflow ($000) 10, , % Cash and cash equivalents ($000) 63,270 33,664 29,606 88% n/m not meaningful

22 Profit Overview 22 December December Delta Delta $000 $000 $000 % Sales Revenue 25,427 4,641 20, % EBITDAX 2,966 (554) 3,520 n/m EBIT (430) (2,321) 1,891 81% Finance costs (2,104) (240) (1,864) 777% Loss before tax (1,148) (1,257) 109 9% Income tax expense (3,145) - (3,145) n/m Loss after tax (3,370) (1,257) (2,113) 168% Exploration and evaluation costs expensed (195) n/m Impairment of oil and gas assets (147) n/m n/m not meaningful

23 Operating Results 23 December 2012 December 2011 Delta Delta Production Volumes boe boe boe % Eastern Margin Oil (Tintaburra) 24,561 32,108 (7,547) -24% Western Flank Oil 151,293 1, , % Western Cooper Wet Gas 142, ,619 n/m Revenue and Cost Profile $/boe $/boe $/boe % Average Realised Oil Price (4.7) -4% Operating Costs (22.3) -42% Depreciation & Amortisation Expense (32.2) -75% Gross Margin % Corporate Costs (50.0) -56% n/m not meaningful

24 Cash Position and Funding 24 December December Delta Delta $000 $000 $000 % Opening Cash 45,695 50,259 (4,564) -9% Cash generated from operations 11, , % Exploration and evaluation expenditure (36,133) (12,579) (23,554) 187% Development expenditure (22,187) (5,243) (16,944) 323% Business Acquisitions (112,045) - (112,045) n/m Net proceeds from issues of equity shares 97, ,041 n/m Proceeds from borrowings 100, ,000 n/m Interest paid (910) (134) (776) 579% Income taxes paid (125) - (125) n/m Other Net Receipts (10) n/m Closing Cash Position* 83,270 33,664 49, % *Includes debt service cash reserve of $20 million

25 Strong management team and board 25 Through FY 2013 the Company has continued to build a robust technical and operational team capable of delivering on the large work program planned for FY 2013 Brad Lingo Managing Director Brad has more than 25 years of oil and gas experience. Ian Bucknell Chief Financial Officer Ian is a Certified Practicing Accountant with over 15 years upstream oil and gas accounting experience. John Whaley Chief Operating Officer John has extensive experience across upstream and downstream sectors of the oil and gas industry. David Evans Chief Technical Officer David has over 25 years of upstream oil and gas exploration experience including over 15 years in Australia. Jim McKerlie Chairman Extensive experience as a Director and Chairman of private and public companies. Brad Lingo Managing Director More than 25 years of oil and gas experience. Fiona Robertson Non-Executive Director More than 30 years experience in the corporate finance and resources sectors. Ross Wecker Non-Executive Director More than 35 years experience in the oil and gas industry. Choo Beng Kai Non-Executive Director Extensive experience in developing and implementing innovative business solutions. Jean Moore Company Secretary Extensive experience in corporate law and corporate governance

26 Disclaimer and Important Notice 26 This presentation does not constitute investment advice. Neither this presentation nor the information contained in it constitutes an offer, invitation, solicitation or recommendation in relation to the purchase or sale of shares in any jurisdiction. Shareholders should not rely on this presentation. This presentation does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this presentation are not intended to represent recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. The information set out in this presentation does not purport to be all inclusive or to contain all the information which its recipients may require in order to make an informed assessment of Drillsearch. You should conduct your own investigations and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this presentation. To the fullest extent permitted by law, the Company does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this presentation. No responsibility for any errors or omissions from this presentation arising out of negligence or otherwise is accepted. This presentation may include forward looking statements. Forward looking statements are only predictions and are subject to risks, uncertainties and assumptions which are outside the control of Drillsearch. These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this presentation. Given these uncertainties, readers are cautioned not to place reliance on forward looking statements. Any forward looking statements in this presentation speak only at the date of issue of this presentation. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Drillsearch does not undertake any obligation to update or revise any information or any of the forward looking statements in this presentation or any changes in events, conditions or circumstances on which any such forward looking statement is based. The Reserves and Resources assessment follows guidelines set forth by the Society of Petroleum Engineers - Petroleum Resource Management System (SPE-PRMS). The Reserves estimates used in this presentation were compiled by Mr David Evans, Chief Technical Officer of Drillsearch Energy Ltd, who is a qualified person as defined under ASX Listing Rule 5.11 and has consented to the use of the Reserves figures in the form and context in which they appear in this presentation.

27 Competent Person Statements 27 RISC Qualifications RISC is independent with respect to DLS as provided in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. RISC has no pecuniary interest, other than to the extent of the professional fees receivable for the preparation of this report, or other interest in the assets evaluated, that could reasonably be regarded as affecting our ability to give an unbiased view of these assets. The assessment of petroleum assets is subject to uncertainty because it involves judgments on many variables that cannot be precisely assessed, including reserves, future oil and gas production rates, the costs associated with producing these volumes, access to product markets, product prices and the potential impact of fiscal or regulatory changes. It should be understood that our above-described audit does not constitute a complete reserve study of the oil and gas properties of DLS. The statements and opinions attributable to RISC are given in good faith and in the belief that such statements are neither false nor misleading. In carrying out its tasks, RISC has considered and relied upon information obtained from DLS as well as information in the public domain. The information included well reports, seismic data, maps, interpretation reports, production and well completion data, budgets and previous analyses. The material was reviewed for its quality, accuracy and validity and was considered to be acceptable. RISC believes that that full disclosure has been made of all relevant material in DLS's possession and that information provided, is to the best of its knowledge, accurate and true. The information provided to RISC has included both hard copy and electronic information supplemented with discussions between RISC and representatives of DLS. Whilst every effort has been made to verify data and resolve apparent inconsistencies, we believe our review and conclusions are sound, but neither RISC nor its servants accept any liability, except any liability which cannot be excluded by law, for its accuracy, nor do we warrant that our enquiries have revealed all of the matters which a more extensive examination may disclose. In particular, we have not independently verified property title, encumbrances, regulations, oil and gas production, product prices, agreements relating to current and future operations and sales of production and historical and future costs that apply to these assets. We have, however, specifically identified to you the information and data upon which we so relied so that you may subject such to those procedures that you consider necessary. Furthermore, if in the course of our examination something came to our attention which brought into question the validity or sufficiency of any of such information or data, we did not rely on such information or data until we had satisfactorily resolved our questions relating thereto or had independently verified such information or data. RISC has not made a physical inspection of the property as this was not considered necessary for our assessment. Our assessment was carried out only for the purpose referred to above and may not have relevance in other contexts. The estimates contained in our assessment may increase or decrease and RISC s opinions may change as further information becomes available. The evaluation has been carried out by Mr Nick Hall and Mr David Capon under the supervision of Mr Geoffrey J Barker, RISC Partner. Mr Hall is a Principal Geoscience Advisor with RISC. He has a BSc (Hons) Geology, University of Durham, UK and over 30 years of international experience as a geoscientist, gained from operating, consulting and service company environments. He has extensive experience with clastic, carbonate and CBM sequences in the UK, North Sea, South America, Middle East, Africa, India and Australia. Nick has held various technical and leadership positions in multiple disciplines (subsurface, projects, legal and commercial) and project teams involved in development planning, reservoir management plus equity and reserves determination. Nick also has a specialization in tight gas reservoir characterisation and 3D reservoir modelling including CO2 storage site exploration. Mr Capon is a Principal Reservoir Engineer with RISC. He has a BSc (Hons) Geophysics and BSc Applied Mathematics from the University of Adelaide and is a Member of the Society of Petroleum Engineers. He has over twenty-five years of international experience in reservoir engineering the oil and gas industry in operating companies and as a consultant working on conventional petroleum, tight gas and CBM properties. He has prepared numerous reserve evaluations and reports in Australasia and SE Asia. Mr Barker has a B.Sc. from Melbourne University and a M.Eng. (Pet. Eng) from Sydney University. He has over 30 years experience in the oil and gas industry, has been a partner of RISC since 1996, is the Partner in charge of RISC s unconventional gas practice and served on the SPE s Oil and Gas Reserves Committee from He has been responsible for company and property valuations, independent expert reports, reservoir studies, reserve assessments, business and project development plans for oil and gas properties in more than 50 countries

28 Competent Person Statements 28 DeGolyer and MacNaughton The information contained in our report entitled Report as of December 31, 2012 on Reserves and Contingent Resources of Certain Fields in the PEL 106A, 106B, and 107 Permits of the Cooper Basin with interests owned by Drillsearch Energy Limited has been prepared under the supervision of R. Michael Shuck, Senior Vice President of DeGolyer and MacNaughton. Mr. Shuck holds a Bachelor of Science degree in Chemical Engineering from the University of Houston, has in excess of 35 years of relevant experience in the estimation of reserves and contingent resources, is a member of the Society of Petroleum Engineers, and is a Registered Professional Engineer in the State of Texas. Mr. Shuck is a qualified person as defined in the ASX Listing Rule 5.11.