Senex Energy : December 2016 Quarterly Report

HIGHLIGHTS

During the second quarter of FY17, Senex Energy (Senex, the Company, ASX:SXY) benefited from higher oil prices and met a major milestone on its flagship gas project (WSGP). Highlights of the quarter include:

• First appraisal wells brought online on the Western Surat Gas Project ahead of schedule, on budget and using local contractors

• Commencement of FY17 drilling program with success on the Worrior-11 oil development well, ahead of a multi-well oil exploration and development campaign in the western flank. Subsequent to quarter end, the Spitfire-8 oil appraisal well successfully intersected hydrocarbons in the target zone

• Core oil business continued to perform strongly, delivering net production of 200,000 bbls (down 5% on prior quarter) with continued strong operating cost performance

• Sales revenue of $12.8 million, up 28% on prior quarter reflecting higher realised oil price and slightly higher sales volumes
• Capital expenditure of $17.8 million on an increased work program

• Continued strong balance sheet at 31 December 2016 with cash balance of $82.8 million and additional undrawn bank facilities of $77 million

KEY PERFORMANCE METRICS	December Quarter Q2 FY17	September Quarter Q1 FY17	Quarter on Quarter change	December Quarter Q2 FY16	Half year H1 FY17
Net Production (mmboe)	0.20	0.21	(5%)	0.26	0.41
Net Sales volumes (mmboe)	0.20	0.19	5%	0.26	0.39
Sales revenue ($ million)	12.8	10.0	28%	18.1	22.8
Cash ($ million)	82.8	93.5	(11%)	99.6	82.8
Average realised oil price (A$ per barrel)	64	53	21%	70	59

W orrior -11 oil dev elo p ment well, Coo pe r Basi n

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For the quarter ended 31 December 2016 released 25 January 2017 1 FINANCIAL SUMMARY Sales revenue increased 28% to $12.8 million this quarter, reflecting a higher realised oil price and higher sales volumes

• The average realised oil price for the December quarter was A$64 per barrel, compared to A$53 per barrel the prior quarter. This reflected an increase in the Brent crude oil price and a favourable movement in the

  AUD/USD exchange rate. Senex did not receive any hedging settlements on sales volumes during the quarter

• Sales volumes for the December quarter were 200,000 barrels, up 5% on the previous quarter

• A hedging program is in place for the second half of FY17: the instruments consist of swaps providing downside protection below US$55 per barrel, and call options providing upside participation above US$60 per barrel

  SALES	December Quarter Q2 FY17	September Quarter Q1 FY17	Quarter on Quarter change	December Quarter Q2 FY16	Half year H1 FY17
  Oil sales (mmboe)	0.20	0.19	5%	0.26	0.39
  Sales revenue ($ million)	12.8	10.0	28%	18.1	22.8
  Average realised oil price (A$ per barrel)	64	53	21%	70	59

  Capital expenditure of $17.8 million was incurred during the quarter, a significant ramp up on the previous quarter

• The major components of the capital expenditure for the quarter were spend relating to growth projects, including the Glenora pilot (well completions and surface facilities), the acquisition of the Liberator and Koonchera seismic surveys, and drilling of the Worrior-11 oil development well

• Senex continued work on the remediation of wells on the Eos block during the quarter (see page 4), expending

$2.6 million (not included in capital expenditure)

CAPITAL EXPENDITURE	December Quarter Q2 FY17	September Quarter Q1 FY17	Quarter on Quarter change	December Quarter Q2 FY16	Half year H1 FY17
Exploration and appraisal	15.2	6.5	134%	4.4	21.7
Development, plant and equipment	2.6	0.3	767%	3.0	2.9
Total	17.8	6.8	162%	7.4	24.7

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Numbers may not add due to rounding

PRODUCTION OPERATIONS Senex delivered net oil production of approximately 200,000 barrels for the quarter

Senex's major producing oil fields continued to perform in line with, or ahead of expectations. The reduction of 5% on the prior quarter follows natural field decline, partly offset by ongoing production optimisation activities and well workovers.

Senex continues to drive operating efficiencies in its oil business, delivering strong operational cost control.

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PRODUCTION	December Quarter Q2 FY17	September Quarter Q1 FY17	Quarter on Quarter change	December Quarter Q2 FY16	Half year H1 FY17
Net Production (mmboe)	0.20	0.21	(5%)	0.26	0.41
Oil	0.20	0.21	(5%)	0.26	0.41
Gas and gas liquids	-	-	-	-	-

Prod uctio n ope ra tion s in the Co op er B a sin

SURAT BASIN

GAS | Western Surat Gas Project

The Glenora pilot was brought online during the quarter

The work program involved the completion of five existing wells and construction of surface facilities including a pipeline to Santos GLNG's facilities at the neighbouring Roma field. The work program was completed ahead of schedule, on budget and using local contractors.

Since bringing the pilot online in November 2016, Senex has undertaken a program of pulse testing on the wells. The testing has generated valuable data on the properties of the reservoir, which will help to inform the next phase of drilling on the block. Testing will be concluded in the coming weeks, after which time the wells will be brought online for continuous dewatering and production.

Senex continued to work with Santos GLNG during the quarter to progress a raw gas sales agreement from the Glenora pilot, ahead of first gas production from the wells.

Full field development planning progressing

Senex is actively progressing the investment decision for the first material tranche of gas to be produced from the Western Surat Gas Project.

All long lead activities (including regulatory approvals, native title and land access) are being progressed in parallel with full field development planning.

During the quarter, Senex continued to plug, abandon and rehabilitate legacy QGC wells on the Eos block

As at 31 December 2016, the Company had safely and efficiently remediated seven of the 47 wells for which it received $20 million from QGC in 2014 as part of the asset swap.

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Evidence of good gas productivity has been observed during this process, with gas free-flowing to surface during routine rehabilitation procedures. These results confirm that Eos is a priority block for appraisal and development.