Australis Oil & Gas provides the following corporate update on the Company’s Tuscaloosa Marine Shale (“TMS”) project and current financial position, including a summary of amendments to its secured credit facility with Macquarie Bank.

Highlights

• Reduced debt balance by US$10 million to US$23 million on 3 April 2020
• Oil Hedge position valued at US$8.7 million as at 31 March 2020
• Restructure of the Facility including waiver of certain financial covenants to the end of 2020
• Implemented further significant reductions in G&A and operating costs

Market Update

The impact of COVID-19 on global demand for oil, coupled with the announced increase in the supply of oil from Saudi Arabia and Russia, has led to a dramatic decline in benchmark oil prices. In response to the uncertain macro environment, Australis acted swiftly to ensure the health and safety of staff and contractors, as well as managing cash flows. Commencing early in the year these actions included:

1. Implementation of strategies and practices directed towards protecting staff and contractors from the transmission of COVID-19;
2. Further oil hedges added in February with a protected WTI price above $50/bbl;
3. Immediate cessation of all land leasing and other capital expenditure;
4. A restructure of the Facility via a US$10 million repayment of debt (reduced Facility balance to US$23 million) and the waiver until year end of financial covenants impacted by oil price;
5. A significant reduction in G&A including staff rationalisation and material reductions in all KMP cash salaries; and
6. Field production being managed relative to hedge positions to maximise returns for the Company.

More recently as US gulf coast area oil inventory levels continue to increase, all local pricing differentials, including the LLS (applicable to Australis crude) which has historically traded at a consistent premium to WTI, have been negatively affected by the limited remaining storage capacity. Australis is monitoring this closely and will continue to manage production rates as required.