September 2022 Quarterly Report

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synergia energy

september 2022 quarterly report

Highlights

CAMBAY FIELD, ONSHORE GUJARAT, INDIA

· During the Quarter the Company completed the re-frac on the C-77H well.

· Production continued on the Company's Cambay gas field, together with gas sales, from the C-73 and C-77H wells.

· During the Quarter the Company commenced plans to initiate a formal farm out process for up to 50% of the c. 1 TCF Cambay gas and condensate field.

UNITED KINGDOM CONTINENTAL SHELF CCS

· During the Quarter the Company announced it had submitted two applications under the North Sea Transition Authority's ("NSTA") 1st Carbon Storage licensing round.

CORPORATE

· This Report is for the period 1 July 2022 to 30 September 2022 (the "Quarter").

· Cash resources as at 30 September 2022 were A$2.2 million (£1.3 million).

· Borrowings as at 30 September 2022 were US$429k (A$660k).

· During the Quarter the Company changed its company name from "Oilex Ltd" to "Synergia Energy Ltd".

· During the Quarter the Company appointed Jack Rosagro as the new Company Secretary.

· During the Quarter the Company issued 174,831,394 new fully paid ordinary shares which was for the second tranche of the equity capital raising arranged by the Company during the previous quarter ended 30 June 2022 ("May Placement"). The shares were approved, under Listing Rule 7.1, by Synergia Energy shareholders at the Company's General Meeting on 13 July 2022.

· During the Quarter the Company also issued 30,000,000 unquoted options ("Fee Options"), exercisable at £0.0020 each on or before 30 April 2024, to Novum Securities Limited. The options were approved under Listing Rule 7.1 at the same General Meeting on 13 July 2022.

· During the Quarter, the Company also issued 324,675,324 options as long term incentives to the Company's Executive Directors. The options were approved at the General Meeting on 13 July 2022 and vest with each holder over a period of three (3) years, commencing on 1 July 2021. The options are exercisable at £0.0022 and expire on 12 August 2027.

operations review

CHIEF EXECUTIVE OFFICER'S REPORT TO SHAREHOLDERS FOR THE QUARTER

OVERVIEW

The Company continued to execute its revised strategy that was adopted in July 2021, namely to focus on the development of the Cambay gas and gas condensate field in India and to develop a carbon capture and storage ("CCS") business in the UK.

The Government of India ("GOI") continues to provide practical assistance and encouragement for the development of indigenous hydrocarbon production. In October 2022 the GOI announced an increase in domestic gas sales price from c. $6.1 / MCF to c. $8.57/MCF. High gas demand, strengthening prices and GOI encouragement make the Company's c. 1 TCF Cambay gas and gas condensate field an increasingly valuable asset.

Having re-established production from the Company's Cambay gas and condensate field in India, the Company elected to undertake a re-frac operation on the C-77H well to prove up a fraccing methodology for implementation on future new wells. The re-frac was successfully executed during July 2022 and the well was placed on production, initially through surface test facilities and later through the C-73 wellsite production facilities to flow back the frac fluid and clean up the well. Initial flow rates from the two re-frac zones were up to 0.5 mmscfd but the well clean-up was hindered by liquid loading in the wellbore. This was confirmed by an echometer survey conducted prior to the re-installation of the production tubing on 16 September 2022. After the re-installation of the production tubing, the well was able to lift some of the fluids and establish a steady gas flow rate of c. 150,000 scfd. A subsequent pressure gradient survey revealed a c. 1450m column of gas condensate in the wellbore. On 15 October 2022 the gas production rate had steadily increased to c. 0.25 mmscfd with increased flowing wellhead pressure indicating the well is continuing to clean up. The Company is developing plans to install a pump in the wellbore to lift condensate fluids and further increase gas flow rates.

The establishment of a steady (plateau) gas production from the two re-fracced zones on the C-77H gives the Company encouragement to launch a farm out process for up to 50% of the Cambay PSC. A recognised advisory firm has been engaged to manage the farm out process and the Company expects results over the next 3 to 6 months. The aim of the farm out process is to identify a suitable joint venture partner to assist in a full field development of the Cambay field commencing in 2023 with the drilling of new horizontal wells.

In the UK, significant effort was expended in the preparation of two applications under the NSTA 1st carbon storage licensing round. The applications were submitted in advance of the 13 September 2022 submission deadline and the results are expected in early 2023.

Health, Safety, Security and Environment

All work was undertaken safely, without environmental incident.

CAMBAY FIELD, GUJARAT, INDIA

(Synergia Energy / Oilex: Operator and 100% Participating Interest)

The Cambay field development is centred on the successful exploitation of the gas resources held in the Eocene EP-IV reservoir which extends across the field and has been penetrated by over 30 wells. The EP-IV reservoir comprises low permeability ("tight") siltstones and requires frac stimulation to provide economic gas production rates.

Cambay Well 77H Re-Frac

In order to establish a robust fraccing methodology for the future full field development of the Cambay field, the Company contracted Bedrock Drilling and Manan Oilfield Services to engineer and manage a revised fraccing "pilot" program for two new zones on the C-77H horizontal well. The revised program addressed the deficiencies experienced during the fraccing of the existing four zones, which were isolated by a bridge plug.

Fraccing operations were undertaken in July 2022 with Schlumberger as the primary contractor. The Company announced on 29 July 2022 that the two new zones had been successfully fracced and that the well was flowing at a gas rate of circa 0.5 mmscfd through a 16/64" choke with frac fluid being removed via surface testing equipment. On 8 August 2022, the well had been tied back to the C-73 wellsite production facility so that the gas could be sold to the grid rather than being flared.

During August and September 2022 it was observed that liquid loading was inhibiting gas production and this was confirmed via an echometer survey which detected a fluid column at a depth of 450m. The production tubing was re-installed into the well on 27 September 2022 and the wellbore fluids were able to be more efficiently lifted due to the higher velocities in the 2 3/8" production tubing compared to the 4.5" casing. Significant volumes of frac fluid and kill fluid were removed from the wellbore and an initial plateau gas production rate established at c. 150,000 scfd.

The C-77H well continues to clean up with careful production management including fluid removal and by 15 October 2022 the production rate had increased steadily to 0.25 mmscfd with increased flowing wellhead pressure. This is despite the existence of a c. 1450m gas condensate column in the wellbore as confirmed by a pressure gradient survey undertaken in early October 2022.

In order to optimise gas and condensate production, the Company plans to engineer an artificial lift solution and install a pump into the production string to eliminate fluid loading. Such a solution may lead to a resumption of production from the original 4 fracced zones in the C-77H well which have historically exhibited serious fluid loading.

It is important to note that the establishment of continuous plateau gas production from the two newly fracced zones on the C-77H well gives the Company sufficient encouragement to initiate a farm out process leading to a full field development.

United Kingdom

Carbon Capture and Storage (CCS)

During the Quarter, the Company announced it had submitted applications under the North Sea Transition Authority's ("NSTA") 1st Carbon Storage licensing round. Synergia has made two separate license applications covering depleted gas fields in the UKCS, which if successful will provide c.100 MT of carbon dioxide ("CO2") storage capacity to complement the Company's Medway Hub CCS project. Development of the project would be subject to the Company securing the necessary funding.

Originally, the Company's Medway Hub CCS project had specified CO2 storage in the Esmond and Forbes depleted gas fields in the Southern North Sea. However, due to concerns regarding potential overlap between CCS and windfarm activity, the NSTA elected to omit Esmond and Forbes from inclusion in the 1st Carbon Storage licensing round. Fortunately, the Medway Hub CCS scheme is flexible as to where CO2 is stored, being a marine solution not requiring pipelines and fixed platforms. Consequently, alternative depleted fields that were part of the licensing round were identified and form the basis of the two applications, albeit at a cost of significant sub-surface engineering effort.

It is anticipated that the Company will know the results of its applications in early 2023.

JPDA 06-103, TIMOR SEA

(Synergia Energy: PSC Terminated 15 July 2015 - Operator and 10% Participating Interest)

In August 2020, on behalf of its joint venture participants, Synergia Energy announced a Deed of Settlement and Release (the "Deed") with the Autoridade Nacional Do Petroleo E Minerais ("ANPM").

Under the terms of the Deed, Synergia Energy committed to a settlement of US$800k payable up to the financial year 2024. To date, a total of US$800k has been drawn down on the US$800k loan facility provided by two of the joint venture partners to fund the settlement. The joint venture partners providing the loan facility were Japan Energy E&P JPDA Pty Ltd ("JX") and Pan Pacific Petroleum (JPDA 06 103) Pty Ltd ("PPP").

The drawdowns from the loan facility, and settlement payments made to ANPM to date included the following:

• US$50k drawn down (US$25k from JX and US$25k from PPP) and paid to ANPM in August 2020;

• US$250k drawn down from JX and paid to ANPM in December 2021;

• US$250k drawn down from JX and paid to ANPM in March 2022; and

• US$250k drawn down from JX and paid to ANPM in September 2022.

The movement in the settlement payable to ANPM during the Quarter was as follows:

As shown in the table above, following the final instalment paid to ANPM on 7 September 2022, the termination penalty payable to ANPM has been fully extinguished, thereby ending the Company's obligations to ANPM.

The loan facility from JX and PPP was restricted for the purposes of the settlement of the Company's liability with ANPM. The portion borrowed from PPP was fully repaid in December 2021. The movement in the remaining loan payable to JX during the current Quarter was as follows:

Following final drawdown made on 7 September 2022, no further loan facility is available to be drawn from JX. The interest rate of the remaining loan is 11% and the balance of the loan from JX at the end of the Quarter, plus interest, is to be repaid in two instalments (in February 2023 and in August 2023), prior to the loan's maturity on 17 August 2023.

CORPORATE AND FINANCIAL

2022 Annual Report to Shareholders

During the Quarter the Company released its 2022 Annual Report to Shareholders, Corporate Governance Statement and Appendix 4G. The Annual Report can be accessed via the Company website https://www.synergiaenergy.com/investors/financial-reports.

2022 Annual General Meeting of Shareholders

In accordance with ASX Listing Rule 3.13.1, the Company advised that the Annual General Meeting ("AGM") of the Company will be held on Wednesday 23 November 2022. A Notice of Meeting for the AGM is being prepared by the Company and will be announced to ASX and provided to shareholders in the coming weeks.

Change of Company Name

Following shareholder approval obtained at the Company's General Meeting held on 13 July 2022, the Company changed its name from "Oilex Ltd" to "Synergia Energy Ltd".

Company Secretary Appointment

During the Quarter, the Company announced the resignation of Lisa Wynne and the appointment of Jack Rosagro as Company Secretary. Mr Rosagro is a Chartered Company Secretary, a Fellow of Governance Institute of Australia, and holds a Bachelor of Commerce majoring in Finance. He has 16 years' experience in capital markets, share registry, and governance. He is currently the company secretary for several ASX listed companies, predominantly in the mining, energy, and technology sectors. Mr Rosagro has previous experience with AIM-listed companies.

Issue of Shares and Securities

During the Quarter, following shareholder approval received at the 13 July 2022 General Meeting, 174,831,394 fully paid ordinary shares ("Tranche 2 Placement Shares") were issued at £0.0020 (A$0.0035) per share. The Tranche 2 Placement Shares, being the final instalment of the May Placement, was arranged and announced during the previous quarter on 4 May 2022. 69,932,558 shares were issued on 21 July 2022 and 104,898,836 were issued on 3 August 2022.

In addition, following shareholder approval received at the 13 July 2022 General Meeting, 30,000,000 unquoted Fee Options were issued on 13 September 2022. The Fee Options are exercisable at £0.0020 each on or before 30 April 2024. The Fee Options were issued to Novum Securities Limited as Lead Manager pursuant to the capital raising advisory agreement relating to the May Placement.

Issue of Options to Executive Directors

Following shareholder approval received at the 13 July 2022 General Meeting, 324,675,324 options were issued as long-term incentives to the Company's Executive Directors, as follows:

The options vest with each holder over a period of three years, commencing on 1 July 2021. The options are exercisable at £0.0022 and expire on 12 August 2027, with one third vesting on 30 June 2022, one third vesting on 30 June 2023 and one third vesting on 30 June 2024.

Payments Made to Related Parties and Their Associates

The attached Appendix 5B includes an amount of A$250k in items 6.1 and 6.2 (total) which constitutes payments to directors for salaries, director fees and superannuation.

FINANCIAL

As at 30 September 2022, Synergia Energy retained cash resources of A$2.2 million (£1.3 million).

The Company also had a remaining loan balance of US$429k (A$660k) as at 30 September 2022, which was previously drawn upon for the purposes of the settlement of the Company's liability with ANPM. No further loan facility is available to be drawn from JX following the final drawdown made on 7 September 2022. The interest rate of the remaining loan is 11%. For further details of the loan refer to the "JPDA 06-103, TIMOR SEA" section above.

Capital Structure

The shares and options on issue as at 30 September 2022 were as follows:

Qualified Petroleum Reserves and Resources Evaluator Statement

Pursuant to the requirements of Chapter 5 of the ASX Listing Rules, the information in this report relating to petroleum reserves and resources is based on and fairly represents information and supporting documentation prepared by or under the supervision of Mr Jonathan Salomon, Executive Chairman employed by Synergia Energy Ltd. Mr Salomon has over 36 years' experience in petroleum geology and is a member of the American Association of Petroleum Geologists, and the Society of Petroleum Engineers. Mr Salomon meets the requirements of a qualified petroleum reserve and resource evaluator under Chapter 5 of the ASX Listing Rules and consents to the inclusion of this information in this report in the form and context in which it appears. Mr Salomon also meets the requirements of a qualified person under the AIM Note for Mining, Oil and Gas Companies, and consents to the inclusion of this information in this report in the form and context in which it appears.

corporate details

(1) PSC terminated on 15 July 2015. The Joint Venture remains operational governed by a Joint Operating Agreement.

list of abbreviations and definitions

Appendix 5B

Mining exploration entity or oil and gas exploration entityquarterly cash flow report

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: 27 October 2022

Authorised by: By the Board

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.