Icon Energy Annual Report 2019

Review of Operations continued 8 Icon Energy Annual Report 2019 The remaining work outstanding in the Later Work Program, which includes Geological and Geophysical technical work and the drilling of two wells, is programmed to be completed within the two-year extension period to 16 April 2021. ATP 594 is well positioned on the eastern flank of the Cooper Basin and is prospective for both oil and gas. Numerous wells within and adjacent to ATP 594 have encountered hydrocarbon shows and there are many producing oil fields to the south and southeast of the tenement, including the Kenmore and Bodalla South oil fields. In addition, the nearby town of Eromanga has an oil refinery with spare capacity, providing a ready market for newly discovered oil reserves. The Harrier 3D seismic survey carried out in the northern block of ATP 594 identified a structural prospect at Hutton Sandstone level and a stratigraphic target identified in the mid-Birkhead Sandstone. There are additional follow-up leads within northern block and there is still almost 900 square kilometres of the tenement in the central and southern blocks that remains underexplored. Icon continues to seek a potential joint venturer interested in farming into ATP 594 to continue the exploration of the permit. Icon is the Operator of ATP 594 and currently has a 100% working interest in the tenement. PEP 170 (PEP 172 AND 173 PENDING), GIPPSLAND BASIN, VICTORIA PEP 170 (granted), and PEP 172 and 173 (grants pending), remain subject to a moratorium on onshore exploration and a ban on unconventional drilling activity. The Victorian Government advised Icon that the Resources Legislation Amendment (Fracking Ban) Act 2017 came into effect on 16 March 2017. The Act bans hydraulic fracturing under the Petroleum Act 1990 and imposes a moratorium on conventional petroleum exploration and petroleum production in the onshore areas of Victoria until 30 June 2020. An application for suspension and extension of the term of PEP 170 was submitted to the Department of Economic Development, Jobs, Transport and Resources on 27 September 2019 and Icon is expecting to receive approval for this in due course. The Victorian Earth Resources Regulation Branch intends to vary the permit conditions of PEP 170 to reflect the approved suspension and extension and will consider Icon’s proposed revised work program which has been submitted. With the advent of a tightening gas market in NSW and Victoria, there is considerable pressure being placed on the Victorian Government to open up onshore Victoria and remove the moratorium. In addition, offshore gas fields are in decline and the need for additional gas resources are approaching a critical point to maintain industrial manufacturing in Victoria. In July the Victorian Government approved the drilling of an onshore well which is programmed to directionally drill offshore intersecting targets under the sea. This may indicate a potential change of thinking within Government foreshadowing the lifting of the moratorium on onshore exploration in June 2020. Meanwhile, Icon has continued to keep the tenement in good standing by paying all necessary statutory and Native Title fees. Icon is the Operator of PEP 170 and has a 100% working interest in the tenements. PRLS 35, 37, 38, 41, 43, 44, 45, 48 AND 49 SOUTH AUSTRALIA −− On 15 March 2019 Beach Energy informed Icon that it has made an application to renew 50% of the PRL 33 to 49 area. This means that the eight PRL’s that do not contain wells will be relinquished as of the anniversary date on 28 April 2019. −− Icon has a 33.33% interest in the post-Permian section of the remaining PRLs 35, 37, 38, 41, 43, 44, 45, 48 and 49 in South Australia, which cover a total area of 857 km 2 . 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 27 March 2015, 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.