Icon Energy Limited Annual Report 2017

CHAIRMAN’S LETTER You will have heard much talk in the press about the shortage of gas in the Australian Eastern Gas Market. Icon is hopeful that the shortage of gas locally will lead to increased interest in development of gas resources such as ATP 855 (Icon 100%). ATP 855 is located in southwest Queensland where infrastructure facilities are well developed. Two gas pipelines traverse the tenement with potential to carry extra gas to the Eastern State markets or an LNG terminal at Gladstone for export. ATP 855 contains a gas resource which has been determined by DeGolyer and MacNaughton, at 28.5 (P50) Trillion Cubic Feet ( Tcf ) of Unconventional Prospective Raw Natural Gas 1 over the whole permit and 1.57 Tcf of 2C Contingent Resource 2 determined within defined areas surrounding the five wells already tested. Icon is seeking funding for the appraisal and development program in the tenement. Talks with interested parties are proceeding, but as at the date of this report, no agreement has been reached. Icon assumed control of ATP 855 on 31 March 2017. On 25 August, the Department of Natural Resources and Mines ( DNRM ) declared eight Potential Commercial Areas ( PCA’s ) over the whole tenement for fifteen years. Icon wishes to acknowledge the assistance provided by the DNRM in facilitating this timely approval. Obtaining clear title and approvals for the tenement has significantly strengthened Icon’s prospects of securing funding for the work program. Icon has identified several opportunities for the initial seismic and appraisal drilling program. The aim is to confirm commercial gas flow rates in identified “sweet spots” discovered previously during the Stage-1 exploration program. Once funding is obtained for the new Joint Venture, operations will commence as soon as equipment and approvals are in place. DEAR SHAREHOLDER This past financial year has been a year of consolidation for Icon Energy. At years end, Icon held and still holds a 100% working interest in these tenements: − ATP 855 in the Cooper Basin - and Operator − ATP 594 in the Cooper-Eromanga Basin - and Operator − PEP 170 in Gippsland Basin (permit granted) and in PEP 172 & 173 (where the issue of the permit is subject to acceptance by Icon). In addition, our former PEL 218 in South Australia has been re-issued with approved retention leases PRL’s 33 to 49. Icon’s working interest is 33.33% in the post-Permian section. The gas and oil resources in the Cooper Basin have placed Icon in a position of strength in the Australian Gas market over the mid to longer term. 1. Icon Energy announced on 19 June 2014, that DeGolyer and MacNaughton, a well-respected and qualified international petroleum reserve and resource evaluation company, estimated that the Unconventional Prospective Raw Natural Gas Resource was 28.5 (P50) Tcf. Unconventional Prospective Resources are defined as those quantities of petroleum that are estimated, as of a given date, to be potentially recoverable from undiscovered unconventional accumulations by application of future development projects. Unconventional Prospective Resources may exist in petroleum accumulations that are pervasive throughout a large potential production area and would not be significantly affected by hydrodynamic influences (also called continuous-type deposits). The estimated quantities of petroleum that may potentially be recovered by the application of a future development project relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons. These Unconventional Prospective Resources are based on probabilistic estimates for each target formation and these have been statistically aggregated. 2. Icon Energy announced on 31 December 2014, that DeGolyer and MacNaughton, a well-respected and qualified international petroleum reserve and resource evaluation company, estimated that, the 2C Recoverable Gross Contingent Resource was 1,572 Bcf or 1.57 Tcf. Contingent Resources are those quantities of wet gas (produced gas minus carbon dioxide) that are potentially recoverable from known accumulations but which are not considered to be commercially recoverable due to the need for additional delineation drilling, further validation of deliverability and original hydrocarbon in place ( OHIP ), and confirmation of prices and development costs. This is based on a statistical aggregation method using Monte Carlo simulation estimates for each formation. 2 ICON ENERGY ANNUAL REPORT 2017 CHAIRMAN’S LETTER