Announcement PDF QUARTERLY ACTIVITIES REPORT FOR THE THREE MONTHS ENDING 31 DECEMBER 2023 Perth, Western Australia – 31st January 2024 – Oil and gas producer, Stonehorse Energy Limited (ASX:SHE) (Stonehorse or the Company) is pleased to present this Quarterly Report for the quarter ended 31 st December 2023. Operational Highlights: Stonehorse Energy Limited • Stonehorse successfully completed the Certus Caroline (previously Certus 1-27-33) well, located in Central Alberta, Canada. • Multi day flow-back and in-test successfully conducted at Caroline, prompting the well to be equipped and tied into permanent production facilities and brought online to condensate to sales. • Within the first 21 days of production, Certus Caroline produced over 25,000 BOE with an initial production average of 1,193 BOE per day. • Successful spud of Gryphon Wapiti (16-02-65-08) well, located in WestCentral Alberta, Canada. • Drilling operations were completed at the Wapiti well, on time and within budget. • A 29-stage fracture stimulation was successfully completed at the Wapiti well without incident. ACN: 086 972 42 T: 08 6489 1600 F: 08 6489 1601 E: info@stonehorseenergy.com W: stonehorseenergy.com Directors Rob Gardener, Executive Chairman David Deloub, Executive Director Jay Stephenson, Non-Executive Director & Company Secretary Issued Capital (ASX: SHE) 684.4m Ordinary Shares Media and Enquiries Andrew Rowell White Noise Communications E: andrew@whitenoisecomms.com T: 0400 466 226 Investor Hub Visit the Investor Hub here: https://investorhub.stonehorseenerg y.com/welcome • Stonehorse’s portfolio of working interests in oil and gas wells generated approximately 33,530 BOE for the quarter, with the Canadian assets contributing 21,375 BOE or a 176% increase on production for the portfolio. Stonehorse Executive Director David Deloub commented: “This has been an impressive quarter for Stonehorse, with the Certus Caroline well producing over 25,000 BOE within the first 21 days of production. The fracture stimulation was also successfully completed at Wapiti, keeping the well on track for production sales by early 2024. We are very pleased with the efforts of our team and the significant progress of the Company to date.” 1 Canadian Assets During the Quarter, Stonehorse successfully completed the Certus Caroline well, located in Central Alberta, Canada1. The frack stimulation was successfully pumped over 65 stages across a ~9000 ft lateral interval in the Glauconite formation. Drilling and completion operations were executed without any safety incidents, commencing the flowback and test phase. A multi-day flow-back and in-test was successfully completed by Stonehorse, with adequate initial production results, prompting the well to be equipped and tied into permanent production facilities. Proceeding this, Certus Caroline was brought online to produce natural gas and condensate to sales. Within the first 21 days of production, Certus Caroline produced over 25,000 BOE (raw sales), well above expectations with a higher than forecasted condensate yield 2. The daily production summary on the 12th of November (estimated sales) read as follows: • Gas vol: 3,412 mcf/day • Cond. vol: 220 bbl/day • NGL vol: 445 bbl/day • BOE: 1,234 BOEPD • SHE net equivalent (26.25%): 324 BOED The production efficiency, mixed with the continuous strong hydrocarbon commodity process, made a significant contribution to the overall portfolio performance. Figure 1. Arial view of fracture spread on location at the Certus Caroline 1-27-33-05-W5 well. 1 ASX Announcement – 5 October 2023 “Canadian Operations Update – Expect Production to Sales-Oct” 2 ASX Announcement – 13 November 2023 “Canadian Operations Update” 2 During the quarter, Stonehorse was pleased to announce the successful spud of the Gryphon Wapiti well, located in West-Central Alberta, Canada3. Wapiti entails a legacy oil productive reservoir, neighbouring decent analogue producing fields both north and south of the prospective area. The well has available infrastructure on hand and access to take-away capacity for gas processing and oil sales, with major E&P operations in the surrounding area. The Pad preparation, rig mobilisation and spud was completed on schedule, with drilling operations commenced on October 22nd. In mid-November, drilling operations were successfully completed on the Wapiti well2, both on time and within budget, reaching a total depth of 3,280m. Figure 2. Gryphon Wapiti well site with drill rig. During the quarter, the 29 stage fracture operations were successfully completed for the Gryphon Wapiti well, with post frac integrity test and flow back / test operations following 4. Initial tests of the well’s oil were positive, and in line with pre-drill expectations. Following the test period, Stonehorse will commence a shut-in of the well, recording pressure data whilst installing production equipment and organising flowline transport to the nearest processing plant. Permanent production equipment and flowline are expected to be completed in the immediate future, with production sales and reporting of stabilised well production results expected in Q1 2024. 3 ASX Announcement – 27 October 2023 “Canadian Operations Update – Gryphon and Certus wells” 4 ASX Announcement – 13 December 2023 “Canadian Operations Update – Gryphon Well” 3 Figure 3. Fracture spread on location at Gryphon Wapiti 16-02-65-08 well in North-Western Alberta, Canada. United States Assets The US portfolio continues to deliver consistent production results totalling 12,454 BOE for the quarter representing an ~8% decrease in portfolio production from the previous quarter. This 1,077 BOE reduction for the quarter reflects the natural decline in production rates from the well. SUBSEQUENT EVENTS The Wapiti 16-02-65-08 well test, construction and tie-in were completed with well equip, battery construction and tie-in completed on time and budget with no accidents or incidents. Well production was brought online to a permanent facility January 1, 2024. Early production indicates light oil and performing as expected. Light oil is being trucked to terminal and associated gas in being gathered and processed at regional third-party gas plant. 4 Figure 4. Wapiti Light Oil Well Equip and Tie-in 5 CURRENT PORTFOLIO OF OIL AND GAS WELL ASSETS The Company currently has non-operated working interests in 14 wells including 2 new wells located in Alberta, Canada and the highly productive Jewell well located in Oklahoma. Well Name Reference Number Stonehorse US Burgess 28-1 Sutton 2H-52 Bullard 1-18-07UWH Henry Federal 1-8-5XH Randolph 1-34-27XHM Randolph 3-34-27XHM Randolph 4-34-27XHM Jewell 1-13-12SXH Newberry 12-1 Mitchell 12-1 Thelma 1-32 Stonehorse Canada Caroline 1-27-33 Wapiti 16-02-65-08 Stonehorse Australia Myall Creek Myall Creek-2 Working Interest County, State Operator 96.81% 25.00% 15.60% 2.30% 0.21% 0.21% 0.21% 41.50% 21.70% 50.00% 50.00% Ellis, OK Hansford, TX Gravin, OK Blaine, OK Blaine, OK Blaine, OK Blaine, OK Carter, OK Carter, OK Carter, OK Murray, OK Black Mesa Energy Strat Land Exploration Rimrock Resources Continental Resources Continental Resources Continental Resources Continental Resources Black Mesa Energy Black Mesa Energy Black Mesa Energy Black Mesa Energy 26.25% 18.75% Sundry, AB Wapiti, AB Certus Gryphon 25.00% Surat Basin, Qld Armour Energy Table 1. Current Portfolio of North American and Australian well bore interests. CORPORATE In mid-July Stonehorse formally launched its Investor Hub. The Investor Hub is a dedicated platform for investors to learn more about Stonehorse Energy and our latest activities during this period of anticipated growth for the company. Visit the Investor Hub here: https://investorhub.stonehorseenergy.com/welcome Operating Results The Company realised revenue of $648k from continuing operations for the 6 months to 30 December 2023. Financial Position As at 31 December 2023, the Company had a balance of cash at bank of $5.4m and additional liquid assets in the form of tradable securities worth $750k. ASX Additional Information 1. ASX Listing Rule 5.2.1 and 5.4.2 – Oil and gas production and development and investment activity expenditure during the quarter was $101k. Full details of the activity during the quarter are set out in this report. 2. ASX Listing Rule 5.2.2 and 5.4.1 – Exploration activity investment and operating expenditure for the quarter was $2.1m. 3. ASX Listing Rule 5.4.5 – Payments to related parties of the Company during the quarter and outlined in the Appendix 5B include $71k for Director Fees. 6 About Stonehorse Energy Stonehorse Energy Limited (ASX:SHE) is an Australian based E&P company with a focus on onshore oil and gas in North America. The overall objective of the Company is to implement its strategy of building a portfolio of high quality well bore assets with Working Interest (WI) percentages reflecting risk appetite and capital availability. - ENDS – For further information: For Media enquiries David Deloub Executive Director Stonehorse Energy Limited Tel: (+61 8) 6489 1600 E: info@stonehorseenergy.com Andrew Rowell Senior Communications Advisor White Noise Communications Tel: 0400 466 226 E: andrew@whitenoisecomms.com Forward-Looking Statements and Other Disclaimers This announcement may include forward-looking statements. Forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions, which are outside the control of Stonehorse Energy Limited (“Stonehorse Energy” or “the Company”). These risks, uncertainties and assumptions include commodity prices, currency fluctuations, economic and financial market conditions in various countries and regions, environmental risks and legislative, fiscal or regulatory developments, political risks, project delay or advancement, approvals and cost estimates. Actual values, results or events may be materially different to those expressed or implied in this announcement. Given these uncertainties, readers are cautioned not to place reliance on forward-looking statements. Any forward-looking statements in this announcement speak only at the date of issue of this announcement. Subject to any continuing obligations under applicable law and the ASX Listing Rules, Stonehorse Energy does not undertake any obligation to update or revise any information or any of the forward-looking statements in this announcement or any changes in events, conditions, or circumstances on which any such forward looking statement is based. This announcement does not constitute investment advice. Neither this announcement nor the information contained in it constitutes an offer, invitation, solicitation, or recommendation in relation to the purchase or sale of shares in any jurisdiction. Shareholders should not rely on this announcement. This announcement does not take into account any person's particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations in this announcement are not intended to represent recommendations of particular investments to particular persons. All securities transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments. The information set out in this announcement does not purport to be all-inclusive or to contain all the information, which its recipients may require to make an informed assessment of Stonehorse Energy. You should conduct your own investigations and perform your own analysis to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this announcement. To the fullest extent permitted by law, the Company does not make any representation or warranty, express or implied, as to the accuracy or completeness of any information, statements, opinions, estimates, forecasts or other representations contained in this announcement. No responsibility for any errors or omissions from this announcement arising out of negligence or otherwise is accepted. 7 Rule 5.5 Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report Name of entity Stonehorse Energy Limited ABN Quarter ended (“current quarter”) 13 086 972 429 31 December 2023 Consolidated statement of cash flows Current quarter $A’000 1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for Year to date (6 months) $A’000 254 648 (1) 6 - - (c) production (101) (490) (d) staff costs (71) (117) (e) administration and corporate costs (193) (315) - - 19 70 (a) exploration & evaluation (b) development 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Government grants and tax incentives - - 1.8 Other (7) (10) 1.9 Net cash from / (used in) operating activities (100) (208) 2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities - - (b) tenements - - (c) property, plant and equipment - - (2,133) (2,133) (e) investments - - (f) - - (d) exploration & evaluation (well rework / development cost) other non-current assets ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Page 1 Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report Consolidated statement of cash flows 2.2 Current quarter $A’000 Year to date (6 months) $A’000 Proceeds from the disposal of: (a) entities - - (b) tenements / working interests - - (c) property, plant and equipment - - (d) investments - - (e) other non-current assets - - 2.3 Cash flows from loans to other entities - - 2.4 Dividends received (see note 3) - - 2.5 Other (provide details if material) - - 2.6 Net cash from / (used in) investing activities (2,133) (5,164) 3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) - - 3.2 Proceeds from issue of convertible debt securities - - 3.3 Proceeds from exercise of options - - 3.4 Transaction costs related to issues of equity securities or convertible debt securities - - 3.5 Proceeds from borrowings - - 3.6 Repayment of borrowings - - 3.7 Transaction costs related to loans and borrowings - - 3.8 Dividends paid - - 3.9 Other (provide details if material) - - 3.10 Net cash from / (used in) financing activities - - 4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 7,646 10,738 4.2 Net cash from / (used in) operating activities (item 1.9 above) (100) (208) 4.3 Net cash from / (used in) investing activities (item 2.6 above) (2,133) (5,164) 4.4 Net cash from / (used in) financing activities (item 3.10 above) - - ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Page 2 Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report Consolidated statement of cash flows Current quarter $A’000 Year to date (6 months) $A’000 4.5 Effect of movement in exchange rates on cash held 10 47 4.6 Cash and cash equivalents at end of period 5,423 5,423 5. Reconciliation of cash and cash equivalents Current quarter $A’000 Previous quarter $A’000 at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts 5.1 Bank balances 5,403 7,626 5.2 Call deposits 20 20 5.3 Bank overdrafts - - 5.4 Other (High Interest Account) - - 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above) 5,423 7,626 6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 71 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Current quarter $A'000 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments. Section 6.1: • $70,724 for the payment of current quarter Director fees to Mr Gardner, Mr Deloub and Mr Stephenson. ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Page 3 Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report 7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities - - 7.2 Credit standby arrangements - - 7.3 Other (please specify) - - 7.4 Total financing facilities - - 7.5 Unused financing facilities available at quarter end 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well. - - $A’000 8. Estimated cash available for future operating activities 8.1 Net cash from / (used in) operating activities (item 1.9) 8.2 (Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) (2,133) 8.3 Total relevant outgoings (item 8.1 + item 8.2) (2,233) 8.4 Cash and cash equivalents at quarter end (item 4.6) 5,423 8.5 Unused finance facilities available at quarter end (item 7.5) 8.6 Total available funding (item 8.4 + item 8.5) 5,423 8.7 Estimated quarters of funding available (item 8.6 divided by item 8.3) 2.43 (100) - Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7. 8.8 If item 8.7 is less than 2 quarters, please provide answers to the following questions: 8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not? Answer: N/A 8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful? Answer: N/A ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Page 4 Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report 8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis? Answer: N/A Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered. Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Date: ......................31/1/24................................. Authorised by: ...................... By the Board......................... (Name of body or officer authorising release – see note 4) Notes 1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so. 2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity. 4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [name of board committee – eg Audit and Risk Committee]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”. 5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively. ASX Listing Rules Appendix 5B (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms. Page 5