Investor Presentaiton

Armour Energy and controlled entities Chairman's report armourenergy.com.au Dear Shareholders, Whilst the last 12 months have presented Armour Energy with a range of challenges, I remain confident in the Company's future prospects, particularly in light of the appointment of Brad Lingo as the Company's CEO in June 2020. Brad has had has a long and successful career in the Australian Oil and Gas exploration and production industry, most notably credited as the driving force in the growth of Drillsearch Energy to a market capitalisation in excess of A$700 million prior to its acquisition by Beach Energy in 2016. I look forward to working with Brad to achieve a similar outcome for Armour Energy over the coming years. In Amour's latest Investor Presentation "Primed for growth and focused on delivery", the Company has outline five priorities which are focused on delivering Armours growth Strategy. By delivering on these priorities, Armour is fully focussed on delivering value for shareholders and will enable the Company to significantly strengthen its balance sheet giving it the ability to demonstrate the value of its high quality assets in each of its core operating areas - the Surat, the Northern Basin and the Cooper Basin. Svalue To assist with funding for future work programs and to help accelerate the repayment of Amour debt position, the Company is actively progressing further asset transactions, specifically farming out the Northern Territory acreage and exploring options for generating significant value from the Newstead Gas Storage Facility as the only independent, operational gas storage facility. Delivering a similar outcome to the joint venture farmout to Santos for the North Queensland and the Northern Territory South Nicholson Basin exploration tenements and securing a significant joint venture partner or other transaction on these assets, will enable the Company to significantly sstrengthen and unencumber the balance sheet allowing maximum capital and business flexibility. Recent asset transactions with Santos (JV deal on part of the Company's northern Australian acreage - $21 million cash payments Received, carried on $65 million work program) and APLNG ($4 million sale of Armour's 10% interest in the Murrungama Block) ப have provided the Company with additional working capital and paved the way for accelerated debt payments. In August 2020, the Company made accelerated principal amortisation payments for the Senior Secured Amortising Bonds of $5.3 million bringing the total amortisation payments made on these bonds of approximately $10 million since inception in June 2019. In June 2020 Armour announced a $10 million capital raise via an initial unconditional share placement of $3.36 million, an underwritten Accelerated Non-Renounceable Entitlement Offer raising $4.53 million and an additional conditional placement targeting raising $2.1 million. Due to overwhelming demand from existing and third-party investors, the Board has upsized the conditional placement component to approximately $7 million, subject to necessary approvals, bring the total capital raise to $15 million. The additional capital will allow Armour to accelerate 2020 and 2021 work programs and is a clear indication of support the Company has generated from existing and new institutional shareholders. Also, the Company agreed to acquire all Oilex's Cooper-Eromanga Basins exploration acreage. The Oilex transaction will give Armour, a significant exposure to the Cooper-Eromanga Basin. The Cooper Basin is one of Australia's most prolific producing oil and gas provinces, producing 1.5 billion barrels of oil equivalent and notably, the historic core of Santos' onshore Australian production base. The Cooper assets comprise a substantial footprint of exploration and production licences on the oil rich Western and Northern Flanks of the Cooper Basin. Upon completion of the acquisition, Armour will hold and operate the largest net petroleum exploration position in the South Australian Cooper-Eromanga Basins. The Cooper-Eromanga Basins have historically high exploration success rates, low cost development pathways, and remain under-explored and under-developed. Proven oil fairways transect and lie adjacent to the licence areas subject of the proposed acquisition and the many nearby discoveries and fields provide analogues for future discoveries. I look forward to bringing you results of the Company's work programs in these new areas into the future. Over the next 12 months, Armour's forward work program includes: Increasing its production at Kincora (Surat) through a six well stimulation program. Applying for production licences and field development plans approvals for Glyde, Cow Lagoon and Lamon Pass in the Northern Territory, securing a JV partner for its remaining northern Australian acreage. Undertaking minor above ground facility work to restart the Newstead Gas Storage Project and develop a plan to substantially increase the Project's storage injection and draw-down rates and expand the overall gas storage capacity. Kick-off exploration activity in the newly acquired Cooper-Eromanga Basins acreage with a view of high-grading the current 3D seismic-controlled leads and prospects portfolio into an initial 3 to 5 well drill-ready exploration program by CYE 2021. Formulating an appraisal program for the Panning Tight Gas discovery in the newly acquired Cooper Basin acreage and assessment of the overall development potential for this large, undeveloped tight gas discovery. Kicking off this work program, Armour commenced the 2020 work program on the 10 September 2020, which is focused on increasing production from existing well stock via a multi-well stimulation program. Phase 1 of the program will involve a three- well stimulation campaign will be executed over the next 3 months (Horseshoe 4, Horseshoe 2, and Warroon 1) with all three wells planned to be completed and flowing through Armour's gas gathering system by early December 2020. Phase 2 of the program will involve a further three-well stimulation program accelerated to the first of half of 2021. In addition to adding new volumes of liquid rich gas, results are expected to support the de-risking of new drilling locations and contribute to the reserves maturation plan. The Company has a deep portfolio of these production enhancement projects in the Surat Basin and with the successful completion of this program is focussed on carrying these activities into successive multi-well stimulation programs through to 2023 aimed at driving sales gas production up to a consistent 20 TJ/day. Clearly, the impact of the COVID-19 pandemic on domestic Australian oil and gas prices has affected Armour's operational performance this year, with gas prices on the East Coast Gas Market (ECGM) diving during the first half of 2020. The Company initiated a COVID Response Plan in April 2020 which included a range of capex deferrals and cost reduction measures across its field and site operations as well as head office. However, spot gas prices at Wallumbilla have started rising off recent lows and Armour remain confident that prices will continue to recover. Based on current industry supplied data, the Australian Energy Market Operator (AEMO) - 2020 Gas Statement of Opportunities projects that the Eastern Australian domestic gas market is likely to substantially tighten and is only expected to meet demand until 2023 so long as LNG exports are redirected into the domestic market. Gas supply uncertainty and variability have substantially increased since the 2019 report, especially between 2022 and 2024. 2 3