Sacgasco Limited ABN Unit 14, 210 Bagot Road, Subiaco, WA, T E

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1 Sacgasc Limited ABN Unit 14, 210 Bagt Rad, Subiac, WA, T E inf@sacgasc.cm Annuncement t ASX 31 Octber 2018 PRODUCTION: SEPTEMBER 2018 QUARTERLY ACTIVITY REPORT Multi-well wrkver prgram t grw natural gas prductin ready fr implementatin. Net Prductin in line with prir quarter. Natural Gas prices up almst 30% since June Dempsey well t be wrked ver t resume prductin. Sacgasc s 27 well prtfli, with 11 wells prducing gas in the quarter, prvide multiple pprtunities t bring additinal wells back int prductin. ALVARES AND ANZUS: Preparatins fr re-entry activities t cmmence shrtly. Anzus well t be permitted fr drilling. STRATEGY and PROSPECTS PORTFOLIO: SGC Strategy is t find and explre under-valued and under-evaluated (and verlked) pprtunities cnnected t materially under-supplied il and gas markets. Evaluatin f Gelgic and Gephysical data cntinues t reveal ptential reservir sweet spts in the Sacrament Basin, Califrnia. A preferred lcatin t drill Anzus Prspect is being selected and will be permitted with regulatr. Leases ver mapped high ptential prspects cntinue t be maintained fr prductin, rewrk, appraisal and explratin pprtunities. New venture pprtunities and acquisitins are being reviewed in Califrnia and elsewhere cnsistent with the Cmpany s Strategy. Sacrament Basin-fcused natural gas develper and prducer Sacgasc Limited (ASX: SGC) ( Sacgasc r the Cmpany ) is pleased t prvide its Quarterly Activities Reprt fr the perid ended 30 September Explratın, appraısal and new ventures Extensive explratin leases have cntinued t be maintained within the Sacrament Basin during the quarter. SGC has a wrking interest (WI) f between apprximately 30% and 100% in these leased lands which cver Sacgasc interpreted Natural Gas prspects. 1

2 Sacgasc is leading the way in the evaluatin f the high ptential lder sediments f the Nrthern Sacrament Basin. The sediments f interest are a series f deepwater depsited Cretaceus sandstnes that have flwed clean natural gas t surface frm multiple znes in Sacgasc s Dempsey well and tw ther wells in the Sacrament Basin in 100 years f explratin. The results f Dempsey 1-15 well, including sales gas flws frm lder reservirs fr the first time in 100 years f explratin in the Sacrament Basin reinfrced SGC s belief that wrld-class, multi-tcf prspects exist in the Sacrament Basin. Cmpilatin and imprvement f technical data have identified ptential areas f better reservir and prvided additinal prspects fr explratin and appraisal drilling. Mapping cmpleted t date has resulted in the identificatin f a prtfli f gas prspects and leads, with grss unrisked best estimate recverable Prspective Resurces f Natural Gas ranging frm a few Bcf t ver 250 Bcf with multi TCF ptential upside SEPTEMBER QUARTER PRODUCTION UPDATE Cmbined Prductin September 2018 Quarter June 2018 Quarter Grss mcf * (100%) 74,909 80,783 Net SGC mcf (after Ryalty) 28,572 30,435 *mcf Thusand Cubic feet gas SGC s Operated Sacrament Basin Natural Gas Assets 2

3 The Anzus Prspect n the Dempsey Trend is being reviewed t assess the ptimum lcatin fr drilling. The Anzus well lcatin will test the refined depsitinal mdel invlving sand-filled turbidite channels similar t thse reserviring prlific il and gas fields ffshre West Africa. The presence f multiple stacked seismic amplitude anmalies are seen as enhancing the prspectivity at Anzus. The winter wet seasn in the Sacrament Basin defines a preferred drilling perid fr the Anzus well t be frm May t Octber. ONSHORE CALIFORNIA Activities t Increase Operated Natural Gas Prductin Opprtunities have been identified in the Sacgasc prtfli f wells fr multiples f current prductin levels. Prductin fr the quarter was in line with the prir quarter with revenues increased by imprved natural gas sales prices that are up almst 30% since June 2018 with benchmark gas price currently clse t US$4 (A$5.50) per mcf. Sacgasc has identified additinal wrkver and equipment relcatin and refurbishment activities in its prtfli that prvide pprtunities fr increases in prductin in the near future. Scaling up prductin frm the cmpany s prtfli f 27 wells is a fcus, while Sacgasc als wrks n bringing larger ptential prjects int prductin acrss its five gas fields and explratin acreage. Prductin facilities als prvide ready access pints fr future explratin success frm Sacgasc s appraisal and explratin activities. The Dempsey 1-15 well cmmenced flwing during the reprting quarter, but is currently shut-in due t an inflw f reservir prduced water that resulted in reduced gas flw. Wrk is underway t change the cmpletin cnfiguratin in the well bre t assess the best way t vercme the water ingress and resume gas flws frm the well. This wrk will be dne in cnjunctin with ther imminent well wrkver peratins in the area. Alvares Natural Gas Prject Appraisal stage (SGC 39% WI) The Alvares natural gas prject is lcated nly 9 miles frm large natural gas pipelines and n trend 35 miles frm the similarly structured Sites Anticline n which the 1948 Shell James 1 well flwed gas t surface frm reservirs f similar age t thse f interest at Alvares. Planning is prceeding fr the Alvares well bre t be assessed fr its suitability as the basis fr reevaluating the prspectivity f extensive high-pressure gas shws discvered while drilling fr il in The initial task will be t refurbish the well pad and re-establish access t the well bre and then t test the integrity f the existing casing and if safe, test varius znes f gas saturated reservirs in the well, including cnventinal reservirs and fractured reservirs ptential. State-f-the-art thrughcasing gas detectin lgs, and high penetratin perfrating tls are planned t be used fr testing. These peratins at Alvares are due t cmmence shrtly and will prgress methdically as cnditins allw, which are dependent n findings in the wellbre at each stage, and given sme unseasnably early rain in the area. The Alvares 1 well is ne f nly three n-structure wells (Dempsey 1-15 and James 1 are the thers) in the under-explred part f the Nrthern Sacrament Basin that flwed pipeline quality natural gas t the surface n test. 3

4 Additinal prspects and leads have been mapped in the nrthern Sacrament Basin and leasing activity, cnsistent with the Cmpany s grwth strategy, cntinued during the reprting perid. Figure 1: Alvares lcatin in rlling rangeland EXPLORATION, APPRAISAL AND NEW VENTURES Explratin leases have been maintained and acquired within the Sacrament Basin during the quarter. SGC has a net wrking interest (WI) f between 33% and 100% in il and gas leases which cver natural gas prspects ranging in size frm 5-20 Bcf t ver 2 Tcf f recverable prspective reserves f natural gas. Review f Sacrament Basin activity including drilling n the Dempsey and Tulainy Prjects has reinfrced the belief that SGC has significant expsure t wrld-class, multi-tcf natural gas prjects. Technical data and nging analysis cntinues t be used t identify and upgrade additinal prspects fr leasing and future explratin drilling. Prject Prtfli As utlined abve, SGC s current fcus is unlcking the underlying value frm its natural gas prspects in the under-explred parts f the Sacrament Basin and elsewhere as pprtunities arise. Prjects are cntinuusly reviewed fr their strategic fit and are expected t be mdified ver time t reflect industry cnditins and results f peratins. Sacgasc is the Operatr f all but ne f its WI wells: 4

5 PROJECT NAMES All lcated in the Sacrament Basin Onshre nrthern Califrnia LEASES; RELATED GAS FIELD (HBP LEASES); OR KEY WELL PROJECT TYPE TOTAL OPERATED WELLS GAS PRODUCING WELLS WORKING INTEREST (WI)* Dempsey Prject Ranch Capay and Rice Creek East Gas Fields HBP Leases; Explratin, Appraisal & Rewrk % Oil and Gas Mineral Leases Alvares Prject Oil and Gas Mineral Leases; Alvares 1 well (P&A Reentry) Explratin & Appraisal 1-39% Dempsey Trend Prjects (3) Oil and Gas Mineral Leases Explratin % Ls Medans Prject Ls Medans Gas Field HBP Leases Appraisal & Rewrk % Maltn Prject Maltn Gas Field HBP Leases and Oil and Gas Mineral Leases Explratin, Appraisal & Rewrk % Dutch Slugh Gas Prject Dutch Slugh Gas Field HBP Leases Explratin, Appraisal & Rewrk 4-69% Denvertn Creek Gas Prject Denvertn Creek Gas Field HBP Leases Gas flw & Rewrk % Willws Gas Fields (Nn-perated) Willws Gas Fields HBP Leases Gas flw & Rewrk % TENEMENT LIST (as 30 th September 2018) PROJECT NAME LOCATION WORKING INTEREST (WI)* Dempsey Prject Sacrament Basin Onshre Nrthern Califrnia 50% Alvares Prject Sacrament Basin Onshre Nrthern Califrnia 39% Dempsey Trend Prspects Sacrament Basin Onshre Nrthern Califrnia 36% Ls Medans Gas Field Sacrament Basin Onshre Nrthern Califrnia 90% Maltn Gas Field Sacrament Basin Onshre Nrthern Califrnia 35-69% Dutch Slugh Gas Field Sacrament Basin Onshre Nrthern Califrnia 69% Denvertn Gas Field Sacrament Basin Onshre Nrthern Califrnia 70% Ranch Capay Gas Field Sacrament Basin Onshre Nrthern Califrnia 33-50% East Rice Creek Gas Field Sacrament Basin Onshre Nrthern Califrnia 50% Nte: WI* Apprximate numbers represent pst farmut wrking interests 5

6 CORPORATE Graeme Clatwrthy jined the Sacgasc Bard n the 2 nd August 2018 fllwing the resignatin f Philip Hayden-Slater due t his additinal wrk cmmitments in Lndn. The SGC June 2018 Interim Financial Reprt was issued n 5 September 2018 and a cpy is available n ur website In additin, SGC Managing Directr Gary Jeffery presented t sharehlders and investrs at the annual Gd Oil Cnference held in Perth, Western Australia (refer ASX release dated 13 September 2018). NEAR TERM OBJECTIVES Sacgasc s pririty is t wrk-ver and tie in several wells that have been identified fr immediate prductin. Prgressing Alvares testing is als a pririty. Annuncements n these develpments will be made prgressively thrughut the quarter, as will significant updates n existing prducing wells and ther field develpment activities. Sacgasc has an active furth quarter planned. SACGASCO CAPITAL STRUCTURE ISSUED CAPITAL at 31st Octber 2018 Ordinary Shares 259,780,949 Unlisted Optins 10 cents 30 September 2019 Unlisted Optins 5 cents 30 December 2019 Unlisted Optins 15 cents 31 December 2019 Fr and n behalf f the Bard f Sacgasc Limited. 10,000,000 6,000,000 27,000,000 Nte: In early July 2018, 937,500 shares as part payment f directr s fees and 1,102,576 shares as payment f cnsulting fees as apprved by sharehlders were issued. In early Octber 2018, 812,500 shares as part payment f directr s fees, and 1,177,500 shares in lieu f cnsulting fees were issued as apprved by sharehlders. Gary Jeffery Ben Jarvis Managing Directr Six Degrees Investr Relatins (0) Abut Sacgasc Limited (ASX. SGC) Sacgasc Limited (ASX: SGC) is an Australian-based energy cmpany fcused n natural gas explratin and prductin in the Sacrament Basin, nshre Califrnia. SGC has an extensive prtfli f gas prspects at bth explratin and appraisal stages, including multi-tcf pprtunities. The Cmpany is targeting gas supply t the lcal Califrnian gas market and burgening LNG market in Nrth America. Sacgasc s strategy is t find and develp pprtunities in areas that have been verlked in recent times, but are clse t under-supplied il and gas markets with attractive prduct prices. 6

7 Leases: US explratin is cnducted n leases grant by Mineral Right wners, in SGC s case primarily private individuals r grups. Leases can vary in size frm very small parcels (part f an acre) t large landhldings (cvering a few square miles). Leases generally are fr 5 years and rentals are paid annually. There are n firm wrk cmmitments assciated with the leases. Sme leases are Held By Prductin and ryalties, are paid t mineral right wners in lieu f rentals. SGC has nt listed all it leases as it is impractical and nt meaningful fr ptential prject value assessment in a cnventinal natural gas play. A detailed listing f leases may als lead t a lss f cmpetitive advantage and cnsequent reduced value t SGC sharehlders. Cmpetent Persns This dcument cntains frward lking statements that are subject t risk factrs assciated with the il and gas industry. It is believed that the expectatins reflected in these statements are reasnable, but they may be affected by many variables which culd cause actual results r trends t differ materially. The technical infrmatin prvided has been reviewed by Mr Gary Jeffery, Managing Directr f Sacgasc Limited. He is a qualified gephysicist with ver 45 years technical, cmmercial and management experience in explratin fr, appraisal and develpment, and transprtatin f il and gas. Mr Jeffery cnsents t the inclusin f the infrmatin in the frm and cntext in which it appears. The timing f future events is subject t the nrmal industry vagrancies f peratinal matters and equipment availability which are utside the cntrl f Sacgasc and its suppliers. Facilities depicted in images n the Sacgasc website are nt necessarily assets f Sacgasc. Sme f the images used represent aspects f the il and gas industry in which Sacgasc is invlved r images f equipment wned by cmpanies prviding services t Sacgasc. Befre investing it is recmmended that investrs cnduct their wn due diligence and cnsult financial and technical advisrs. 7

8 Appendix 5B Mining explratin entity and il and gas explratin entity quarterly reprt Appendix 5B +Rule 5.5 Mining explratin entity and il and gas explratin entity quarterly reprt Intrduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16 Name f entity SACGASCO LIMITED ABN Quarter ended ( current quarter ) SEPTEMBER 2018 Cnslidated statement f cash flws 1. Cash flws frm perating activities 1.1 Receipts frm custmers 1.2 Payments fr (a) explratin & evaluatin Current quarter Year t date (9 mnths) (435) (1,535) (b) develpment - - (c) prductin (144) (1,448) (d) staff csts (17) (40) (e) administratin and crprate csts (215) (1,114) 1.3 Dividends received (see nte 3) Interest received Interest and ther csts f finance paid - (5) 1.6 Incme taxes paid Research and develpment refunds Other (Net JV Receipts) 550 1, Net cash frm / (used in) perating activities (117) (1,828) 2. Cash flws frm investing activities 2.1 Payments t acquire: (a) prperty, plant and equipment - - (b) tenements (see item 10) - - (c) investments (shares in /s cmpany) - - (d) ther nn-current assets (DOGGR Bnd) See chapter 19 fr defined terms 1 September 2016 Page 1

9 Appendix 5B Mining explratin entity and il and gas explratin entity quarterly reprt Cnslidated statement f cash flws 2.2 Prceeds frm the dispsal f: (a) prperty, plant and equipment Current quarter Year t date (9 mnths) - - (b) tenements (see item 10) - - (c) investments (shares in /s cmpany) - - (d) ther nn-current assets (Refund f Bnd) Cash flws frm lans t ther entities Dividends received (see nte 3) Other (Cash held n acquisitin f subsidiary) Net cash frm / (used in) investing activities Cash flws frm financing activities 3.1 Prceeds frm issues f shares Prceeds frm issue f cnvertible ntes Prceeds frm exercise f share ptins Transactin csts related t issues f shares, cnvertible ntes r ptins (3) (30) 3.5 Prceeds frm brrwings Repayment f brrwings (14) (50) 3.7 Transactin csts related t lans and brrwings Dividends paid Other (prvide details if material) Net cash frm / (used in) financing activities Net increase / (decrease) in cash and cash equivalents fr the perid 4.1 Cash and cash equivalents at beginning f perid 4.2 Net cash frm / (used in) perating activities (item 1.9 abve) 4.3 Net cash frm / (used in) investing activities (item 2.6 abve) 4.4 Net cash frm / (used in) financing activities (item 3.10 abve) 4.5 Effect f mvement in exchange rates n cash held 4.6 Cash and cash equivalents at end f perid 831 2,005 (117) (1,828) See chapter 19 fr defined terms 1 September 2016 Page 2

10 Appendix 5B Mining explratin entity and il and gas explratin entity quarterly reprt 5. Recnciliatin f cash and cash equivalents at the end f the quarter (as shwn in the cnslidated statement f cash flws) t the related items in the accunts Current quarter Previus quarter 5.1 Bank balances Call depsits Bank verdrafts Other (prvide details) Cash and cash equivalents at end f quarter (shuld equal item 4.6 abve) Included in the abve balance is $680,000 f cash held by PEOCO LLC, a whlly wned subsidiary f Sacgasc, which represents cash calls made by PEOCO LLC fr explratin expenditure. This includes amunts paid by Sacgasc. 6. Payments t directrs f the entity and their assciates Current quarter $A' Aggregate amunt f payments t these parties included in item Aggregate amunt f cash flw frm lans t these parties included in item Include belw any explanatin necessary t understand the transactins included in items 6.1 and 6.2 Includes salaries and fees paid t Directrs f the cmpany Payments t related entities f the entity and their assciates Current quarter $A' Aggregate amunt f payments t these parties included in item Aggregate amunt f cash flw frm lans t these parties included in item Include belw any explanatin necessary t understand the transactins included in items 7.1 and See chapter 19 fr defined terms 1 September 2016 Page 3

11 Appendix 5B Mining explratin entity and il and gas explratin entity quarterly reprt 8. Financing facilities available Add ntes as necessary fr an understanding f the psitin Ttal facility amunt at quarter end Amunt drawn at quarter end 8.1 Lan facilities Credit standby arrangements Other (please specify) Include belw a descriptin f each facility abve, including the lender, interest rate and whether it is secured r unsecured. If any additinal facilities have been entered int r are prpsed t be entered int after quarter end, include details f thse facilities as well. Unsecured lan frm a directr earning interest at 10% pa, repayable within six mnths unless extended by mutual agreement. 9. Estimated cash utflws fr next quarter 9.1 Explratin and evaluatin (net) Develpment Prductin Staff csts Administratin and crprate csts Other Ttal estimated cash utflws Changes in tenements (items 2.1(b) and 2.2(b) abve) Tenement reference and lcatin Nature f interest Interest at beginning f quarter Interest at end f quarter 10.1 Interests in mining tenements and petrleum tenements lapsed, relinquished r reduced N/A 10.2 Interests in mining tenements and petrleum tenements acquired r increased N/A + See chapter 19 fr defined terms 1 September 2016 Page 4

12 Cmpliance statement Appendix 5B Mining explratin entity and il and gas explratin entity quarterly reprt 1 This statement has been prepared in accrdance with accunting standards and plicies which cmply with Listing Rule 19.11A. 2 This statement gives a true and fair view f the matters disclsed. Sign here: Date: 31 Octber 2018 Cmpany Secretary Print name: David M McArthur Ntes 1. The quarterly reprt prvides a basis fr infrming the market hw the entity s activities have been financed fr the past quarter and the effect n its cash psitin. An entity that wishes t disclse additinal infrmatin is encuraged t d s, in a nte r ntes included in r attached t this reprt. 2. If this quarterly reprt has been prepared in accrdance with Australian Accunting Standards, the definitins in, and prvisins f, AASB 6: Explratin fr and Evaluatin f Mineral Resurces and AASB 107: Statement f Cash Flws apply t this reprt. If this quarterly reprt has been prepared in accrdance with ther accunting standards agreed by ASX pursuant t Listing Rule 19.11A, the crrespnding equivalent standards apply t this reprt. 3. Dividends received may be classified either as cash flws frm perating activities r cash flws frm investing activities, depending n the accunting plicy f the entity. + See chapter 19 fr defined terms 1 September 2016 Page 5