Armour Energy : 23 December 2020 - Surat 2020 Work Programme Update

ASX ANNOUNCEMENT

THURSDAY 24 DECEMBER 2020

ASX Code: AJQ

Executives

Bradley Lingo - Chief Executive Officer Karl Schlobohm - Company Secretary Michael Laurent - Chief Operating Officer Toni Hawkins - Chief Financial Officer

Directors

Nicholas Mather - Executive Chairman

Stephen Bizzell - Non-Executive Director

Roland Sleeman - Non-Executive Director

Eytan Uliel - Non-Executive Director

Contact Details

Level 27, 111 Eagle Street

Brisbane Qld 4000

Tel: [phone]

Website: ArmourEnergy.com.au

Twitter: @armour_energy

LinkedIn: linkedin.com/company/armour- energy

SURAT 2020 WORK PROGRAMME UPDATE

HIGHLIGHTS:

• Warroon #1 & Horseshoe #4 are connected to sales and will continue to clean up in-line
• Artificial lift installations on Myall Creek #3 and Myall Creek #4 completed and commissioning is in progress
• Schedule impacts experienced from wet weather access; clean-up and flowback of Horseshoe #2 deferred to January
• Warroon #1, Horseshoe #2 and Horseshoe #4 continue to establish proof of concept in the Basal Rewan formation unlocking new play potential throughout the greater Kincora Surat Project
• Preparations are underway for a 2021 Work Programme

The Board of Armour Energy ("Armour" or the "Company") is pleased to provide an update on the Surat 2020 Work Programme which is being conducted on Armour's 100% owned and operated Kincora Gas Project.

Stimulation Programme Update

Armour re-established momentum on its 2020 Work Program following delays from the COVID-19 quarantine measures restricting personnel movements from South Australia enacted in late November/early December enabling most of the 2020 Work Program to be completed in December. However, some further delays in completing some activities have been recently experienced due to wet weather restricting access.

On 14 Dec 2020, testing equipment was mobilized to the Horseshoe #4 location to commence clean-up operations. With the initial assistance of nitrogen, the well immediately began to recover frac fluids and gas to flare. Continuous flowback operations were interupted by wet weather restricting access. While the well is in the early stages of clean-up, it is currently capable of sustaining flow on its own and as such the Company has elected to connect the well to sales and continue cleaning up and evaluting the well in-line.

Warroon #1 has been connected to sales and will continue to clean-up and be evaluated in-line. The well is currently producing 400 mscfd and appears to be a strong hydrocarbon liquids rich producer. Flow rates are expected to increase through the in-lineclean-up phase. In order to enhance liquids recovery, artificial lifts will be considered after further data is collected. As a final step, the temporarily suspended Showgrounds interval, previously producing at approximately 400 mscfd, will be commingled with the new liquids rich Rewan production.

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Work programme delayed by wet weather

As a result of wet weather and equipment scheduling impacts, the Horseshoe #2 flowback and clean-up operations have been deferred to January. The Company will continue to provide updates on intial result results, overall programme highlights, and production data 30-days following commencement of sales gas production. All wells in the 2020 Work Programme will produce and flow gas into Armour's Surat Basin Gas Gathering System to the Kincora Gas Processing Plant for additional gas sales.

The Company is overall very encouraged with both the Horseshoe #4 and Warroon #1 Basal Rewan results to date as it establishes the potential of a significant new pay zone with multiple additional candidates that have been previously overlooked by other operators. Identification of bypassed pay zones is possible due to advancements in logging technology allowing for the identification of mineralogically complex sandstones with hydrocarbon saturation suitable for hydraulic stimulation. The encouraging initial results pave the way for a potential material reserves maturation plan to unfold across Armour's Surat acreage from the Rewan formation.

Armour Energy is using both new and existing data to finalize its candidates for a 2021 Work

Programme. The Company is planning to execute this new work programme, which will include fracture stimulations activities within its existing wellstock, during the first half of 2021.

Bypassed pay & tight gas stimulation candidates (ref. 18 Dec 2020 AGM CEO Presentation)

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Myall Creek #4 Artificial Lift Installation

Mr. Lingo added:

"We are highly encouraged with these early indications in unlocking a new play within the Surat Basin. With the earlier success in the Black Alley Shale at Myall Creek, the Rewan formation is the second new pay interval Armour has started to unlock. These results clearly point to multiple new targets in both the Rewan and the Black Alley formations to build a multi-well programme around."

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Other Surat Production Enhancement Activities

As part of the 2020 Work Programme, artificial lift has been installed on four existing wells. These low risk activities are designed to artificially lift liquids and enhance production. A workover rig has installed a reciprocating mechanical pump deep in the well bores of Myall Creek 3 and Myall Creek 4. The pump is supported by a wellsite generator and pump controller and will remove the liquids and restore gas production. These projects have now been completed on budget and are currently being commissioned and brought on-line.

Myall Creek #4 Artificial Lift Install

This Announcement is Authorised by the Board of Directors

Karl Schlobohm

Company Secretary

For further information contact:

Nicholas Mather - Executive Chairman 07 3303 0680

Brad Lingo - CEO

07 3303 0680

Karl Schlobohm - Company Secretary 07 3303 0661

Sarah Schuiringa - Marketing & Communications 07 3303 0619

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