to the Gladstone LNG Plants AACC 4 May 2017 - Australian State Government Initiatives http://www.nasdaq.com/markets/crude-oil-brent.aspx?timeframe=10y https://www.aemo.com.au/-/media/Files/Gas/STTM/Data/2017/STTM_Price_and_Withdrawals.xlsx ~ 15% of Brent is netback to the Gladstone LNG Plants OUTLINE Australian State / Territory Government Initiatives Summary of the South Australia’s Energy Plan Plan for Accelerating Exploration (PACE) Gas; PACE Royalty Return; and Otway Basin PEL Application Area 2. Offshore Bight Basin 3. Synopsis of upstream energy business Barry Goldstein Energy Resources Division Department of the Premier and Cabinet South Australian State Government` 1

Australian State / Territory Government Initiatives Generalised Objectives: Investment & regulatory frameworks continuously improved to foster investment and public trust Notable Jurisdiction Highlights Western Australia: Has enabled LNG exports, enabling biggest CCS project in the world (Gorgon), E-portals for licence dealings and community engagement for petroleum in unconventional reservoirs; Northern Territory: Has enabled LNG exports and support for new inter-jurisdiction gas pipeline; Victoria: A$10m for geoscience studies of gas both offshore and in onshore conventional reservoirs; Queensland: Has enabled LNG exports; Has enabled large scale coal seam gas development, exploration licence open for bids. Gas found in the new licence reserved for domestic gas demand. South Australia: Details follow.

South Australia Energy Plan Battery storage and renewable technology fund: Australia’s largest battery will be built in South Australia to store renewable energy and add stability to supply as part of a new $150 million Renewable Technology Fund. New generation- more competition The State Government will use its bulk-buying power to attract new electricity generation to increase competition and put downward pressure on prices. State-owned gas power plant The South Australian Government will build its own gas power plant to have government-owned stand-by power available in South Australia. Energy security target A new target will increase South Australia’s energy self-reliance by requiring more locally generated, cleaner, secure energy to be used in South Australia. Local powers over national market The State Government will legislate to give the Energy Minister direction over the market so South Australia’s best interests always come first if there is an electricity shortfall.. South Australian Gas incentives The State Government will offer incentives to source more gas for use in South Australia, replacing coal-fired energy from Victoria – More on next slides. 3

South Australia Energy Plan – Gas Incentives The A$48 million PACE GAS Program is designed to support to most substantiated ‘shovel-ready’ projects in South Australian Petroleum Licences with the greatest likelihood of: securing new and significant gas supplies to South Australian customers from South Australian gas fields by year-end 2019 (Round One) and 2020 (Round Two); accelerated deployment of new technologies to lift existing and new well productivity; new gas exploration wells in proximity to existing gas infrastructure; and new gas processing, storage and transport facilities. Round 1 grants to Senex Energy, Beach Energy, Strike Energy and Santos Limited PACE Gas Round Two Applications will be determined and grants delivered in 2017 4

South Australia Gas Incentives Round 1 PACE Gas grants include: A$5.82 million - Senex-Santos Cooper Basin pipelines; A$6 million - Beach Energy Otway Basin exploration well; A$3.96 million - Santos Cooper Basin re-fracture stimulation; A$6 million - Santos Cooper Basin underbalanced drilling; A$2 million - Strike Energy Cooper Basin deep coal pilot project. Unrisked sales gas targeted by the 5 PACE Gas grants > 100 PJ with > 1,700 PJ prospective follow-up potential. Round 2 grants to come PACE Gas grants simultaneously underpin learnings to reduce uncertainties and reduce the expected cost of failure. 5

South Australia Energy Plan – Royalties for Landowners The PACE Royalties Return provides 10 % of the State’s take of royalties to freehold landowners and perpetual leaseholders with properties that overlie the proven plus probable (2P) extent of relevant petroleum discoveries. A ‘no worse off’ policy prevails. Existing private party compensation agreements will remain a requirement. Relevant land title and entitlement to a share of the State royalty cannot be separated. Where a PGE Act licensee or an affiliate is (or becomes) the property owner, the royalty sharing arrangement does not apply (or will cease). 6

ONSHORE OTWAY BASIN ACREAGE RELEASE (OT2017-A) The SA Government has called for competitive work program bids for a new Petroleum Exploration Licence (OT2017-A) in the Otway Basin in the State’s South East. Both conventional and unconventional plays are recognised in OT2017-A. Area: 1,734 square km 2D seismic: 2,294 line km 3D seismic: 87 square km Wells in area: 14 Bids close 4PM CST Friday 29 September 2017. The State Government’s royalty sharing program will apply to this area. 7

Roadmap for Unconventional Gas informed by South Australia’s Roundtable for Oil and Gas Conclusions: Descend cost & ascend productivity curves to be competitive without harm. Regional sharing of costs mitigates the tyranny of distance for remote operations. The ROADMAP was informed by a Roundtable of: industry; governments; peak bodies for protecting environments and aboriginal people; research institutions & 30 individuals. >2000 members from > 1100 organizations The Roundtable for Oil and Gas Projects with 8 working groups to inform the public and enabling industry cooperation. Strategic actions: Demonstrate where the net present value of cooperation (JVs for JVs) exceeds the value of go-it-alone planning / investment; Local businesses given a ‘heads-up’ to use competence to build capacity to compete (local skin in the game) See: http://petroleum.statedevelopment.sa.gov.au/roundtable_for_oil_and_gas

Master of the Obvious Challenges for Upstream Oil & Gas Projects Low oil prices drive reduced upstream petroleum investment world-wide; No jurisdictions are immune. Effective investment /regulatory frameworks minimize pain; Capital constraints on development to convert reserves/resources to supplies is minimizing competition between gas suppliers. Not good from public-value perspective; High-graded oil and gas plays are still being explored – but at reduced rates; Licence holders are re-positioning: All operators seek to lift productivity. All seek to reduce costs, reducing debts, optimize investment, and some exiting up-, mid-, down-stream; Organised opponents of oil and gas exploration and development remain; Domestic gas market opportunities remain attractive but are capital and demand constrained; Uncertainty from Parliamentary inquiries, local jurisdiction commitments to moratoria/bans for oil need be overcome. Efficient, objective-based regulation and demonstrably compatible multiple land use should be the common ‘rule’.

AACC 4 May 2017 - Australian State Government Initiatives Go to South Australia Barry Goldstein Energy Resources Division Department of the Premier and Cabinet South Australian State Government` 10