Petsec Energy Ltd
1201 Louisiana, Suite 306 , Houston, Texas, United States

Petsec Energy’s corporate objective is to increase shareholder value by increasing the net asset value of the Company through successful oil and gas exploration, development and production, thereby building Petsec Energy into a significant mid-tier oil and gas exploration and production company, respected in the industry for its technical skills, timely and cost effective delivery of projects, and the integrity with which it conducts its business.  The Company’s strategy is to meet the above objective is to maximise the value of its current reserves, pursue participation in high quality, high impact exploration drilling opportunities, and to acquire leases, with undeveloped or producing oil and gas reserves, which hold significant development, low risk exploitation and exploration potential.  Historically the strategic and geographical focus has been predominantly exploration in Louisiana, USA. This focus had shifted in 2014 to include oil reserve acquisition in the Middle East and North Africa (MENA) region. In Yemen, the Company holds two leases. One with undeveloped oil resources, and substantial exploration potential, and the second a production licence over five sizeable oil and gas discoveries, one of which is developed (An Nagyah) and has until recently been in production. The Company will actively continue to identify and acquire additional developed and undeveloped reserves within the MENA region.

Corporate Governance Statement

The Board of Petsec Energy Ltd (“Petsec”) is committed to good corporate governance.  This statement sets out the main corporate governance practices adopted by the Company in the format of the Corporate Governance Principles and Recommendations (3rd Edition, 2014) (Recommendations) issued by the ASX Corporate Governance Council.  Unless otherwise stated, the Company’s corporate governance practices were in place throughout the 2018 year and comply with the Recommendations. In a limited number of instances there are departures from the Recommendations, with the details and reasons for the departures stated below in italics.

Operations

• Petsec Energy has been active in the USA since 1989 and has explored offshore in the Gulf of Mexico and onshore in Louisiana, and Texas, Petsec has drilled over 100 wells in the USA and has enjoyed a success rate of 74%.
• In 2014, the Company determined that it wished to pursue both an exploration and an oil reserves acquisitions strategy. Following a strategic review, the Company identified the Middle East & North African (MENA) region as a growth area for the Company where licences with producing oil reserves or near development reserves, with associated high exploration potential, can be acquired at lower prices than those in the USA. In 2015, a non-operated interest in a large licence (Block 7) area was acquired in Yemen, which held a potentially large undeveloped oilfield discovery and a number of drill prospects which held potentially very large oil reserves ranging up to 900 million barrels of oil. In early 2016, the Company acquired another licence Damis (Block S1) in Yemen, which held five oil and gas fields of which one field, the An Nagyah Oilfield had been developed and was producing until political unrest in 2014 caused it to be shut-in.  Petsec has continued to negotiate for additional interests in these licenses and now has agreements to acquire and operate 100% interest in both blocks.