Strike Energy : Half Year Financial Report

ACN 078 012 745

Financial Report for the half-year ended 31 December 2020

Contents

Directors' Report 1

Auditor's Independence Declaration 5

Independent Auditor's Review Report 6

Directors' Declaration 8

Condensed Consolidated Statement of Profit and Loss and Other Comprehensive Income 9

Condensed Consolidated Statement of Financial Position 10

Condensed Consolidated Statement of Changes in Equity 11

Condensed Consolidated Statement of Cash Flows 12

Notes to the Condensed Consolidated Financial Statements 13

The Board of Directors (the "Board" or the "Directors") of Strike Energy Limited (the "Company") and its subsidiaries (together referred to as the "Group") submit their report for the half-year period ended 31 December 2020.

The names and details of the Company's Directors and Officers who were in office during or since the end of the half-year period and until the date of this report are outlined below. All Directors and Officers were in office for this entire period, unless otherwise indicated:

Summary

Strike's focus during the half year has been delivering the West Erregulla appraisal programme and continuing the evaluation of targets for the 2021 exploration campaign. This has set Strike up to continue an exciting period that is expected to add material new well and subsurface results to Strike's existing discovered Perth Basin resources at West Erregulla. Strike's 100% owned acreage to the south of West Erregulla in the Permian Gas Fairway will be further explored as part of the 2021 drilling campaign, and on success could significantly exceed Strike's existing discovered Perth Basin resources.

During the last reporting period, Strike also announced the launch of Project Haber which would facilitate a move into downstream processing of urea. The project includes a proposed 1.4mtpa urea plant near Geraldton in Western Australia, which is expected to underpin the commercialisation of Strike's Greater Erregulla conventional gas resources. Strike has completed pre-feasibility studies with TechnipFMC and entered into discussions with several parties with an interest in securing offtake and or equity in the project. In Q2/21, Strike will commence a formal offtake tender with various Australian and international urea consumers.

During the half year, the Company also announced its decision to close its Cooper Basin pilot project in South Australia.

Strike bolstered its capital position with confirmation of an up to $28 million pre-development facility from Macquarie Bank, to fund the West Erregulla appraisal programme. This, and the conclusion of the Company's ongoing Research & Development ("R&D") issues, which saw $8 million in R&D refunds returned to Strike, resulted in the Company ening the reporting period in a strong financial position.

WA Gas market

Several major developments have occurred in the Western Australian gas market during the period that align with the Company's development strategy.

The growing resource base in the Perth Basin underpinned APA Group's announcement that it will build a pipeline connecting the Perth Basin to the energy constrained Goldfields Region. This is demonstrable evidence that these large scale, low-cost, onshore gas resources can facilitate further economic development and investment in broader infrastructure.

In December of 2020, the Australian Energy Market Operator (AEMO) released its annual update on the supply and demand outlook for the WA domestic gas market, which forecasts a gas shortage from 2029. AEMO also indicated that nearly 50% of the current domestic gas market will enter into the recontracting cycle by mid-decade. In combination, this points to excellent market opportunities for Strike as we mature our Perth Basin resources through the 2021 appraisal and exploration program.

AEMO, 2020 Western Australia Gas Statement of Opportunities

West Erregulla

Strike and its joint venture partner in

EP469, Warrego Energy Limited, signed a binding Heads of Agreement in September 2020 to develop the West Erregulla gas field in EP469. The joint venture has agreed to increase the Phase 1 development capacity from 50 to 80 TJ/d which will be delivered into the Dampier to Bunbury Natural Gas Pipeline. Australian Gas Infrastructure Group (AGIG) remains the preferred proponent to build, own and operate the Phase 1 facility which is progressing towards a final investment decision.

West Erregulla - Upstream Development

Strike finalised the Field Development Plan and has subsequently completed the upstream FEED for the gathering network and infield pipelines at West Erregulla. Strike is now preparing the upstream packages for tendering with the major items and construction tenders expected to complete before the end of the current financial year.

West Erregulla - Finance

In September 2020, Strike executed a pre-development debt facility with Macquarie Bank Limited for up to $28 million to support the drilling costs of the West Erregulla wells. The two-year facility is broken up into two tranches, with the first tranche of $13 million now available for drawdown after achieving financial close for that tranche, and the second tranche of up to $15 million being subject to certain drilling milestones and further lender approvals.

West Erregulla - Appraisal Drilling

During the period Strike opened its 2020/2021 appraisal and exploration drilling campaign with the West Erregulla 3 well. Upon WE3 reaching a depth of 4,294m, abnormally over-pressured gas was encountered.

The Company interpreted that WE3 had drilled into a fault zone, which connects the full Permian source rock sequence, and that the Carynginia in the Northern Fault Block of West Erregulla would appear to host an abnormally high, over-pressured and gas charged reservoir. These recent over-pressures are at a magnitude not previously observed in the Perth Basin.

The interim results from WE3, as announced to the ASX on 23 December 2020, bode well for

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