Issued by AWE Limited on 29 July 2016

Quarterly Report

For the 3 months to 30 June 2016

HIGHLIGHTS

PRODUCTION AND DEVELOPMENT

• Full year production for FY 2015-16 of 5.0 mmboe was within guidance range

• Following the sale of Sugarloaf in March 2016, June quarter production of 0.9 mmboe was down 33% on the previous quarter as expected

• Waitsia Stage 1A construction nearing completion and on target for first gas in August 2016

• AAL FID now expected in second half of calendar year 2017

  EXPLORATION AND APPRAISAL

• Good flow test results from the AAL appraisal well, which successfully drilled and intersected the primary G Sand and secondary K Sand targets and was completed within the Operator's budget

  RESERVES AND RESOURCES

• Waitsia gross 2P Reserves increased by 93% to 344 Bcf of gas (AWE share 172 Bcf), and Waitsia gross 2P plus 2C up 30% to 630 Bcf of gas (AWE share 315 Bcf)

  FINANCIAL AND CORPORATE

• Net cash at 30 June 2016 was $18 million, comprising cash of $33 million and drawn debt of $15 million

• The average realised oil and condensate price, inclusive of hedging, for the June quarter was A$58.99 per barrel

• Sales revenue, including hedging, for the June quarter was $39 million, down 4% over the March quarter

• Sales revenue, including hedging, for the 2015-16 financial year was $202 million, down 29% over the previous financial year

• Sale of Cliff Head completed and sale of Lengo announced

• No Lost Time Injuries (LTIs) or reportable environmental incidents during the quarter

• New CEO and MD, David Biggs, and new CFO, Ian Bucknell, commenced

  QUARTERLY PRODUCTION BY PRODUCT '000 BOE	QUARTERLY SALES REVENUE BY PRODUCT $'000
  GAS	523	15,246
  OIL	232	16,715
  CONDENSATE	53	4,759
  LPG	57	2,680
  TOTAL	865	39,400

  Note: Numbers may not add due to rounding. Sales Revenue includes effective hedging where applicable.

  AWE LIMITED LEVEL 16, 40 MOUNT STREET NORTH SYDNEY NSW 2060 AUSTRALIA

  P +61 2 8912 8000 F +61 2 9460 0176 E [email protected] ABN 70 077 897 440 www.awexplore.com

  MANAGING DIRECTOR'S COMMENTS

  Over the past 12 months, AWE has reshaped itself to operate sustainably in a low oil price environment. The key elements of this strategy were cost control, optimisation of operating structures, reduction and reprioritisation of investment spend, and capital recycling through active portfolio management - which included the sale of Sugarloaf, Cliff Head (both complete) and Lengo (pending).

  The benefits to AWE have been significant:

  • Strengthened the balance sheet by repaying debt with sale proceeds

  • Removed significant recurring capex commitments

  • Removed near term sensitivity to oil price, while retaining exposure to longer term improvement

  • Focused the company on developing Waitsia - a newly discovered, low cost, major domestic onshore gas field in WA.

AWE is now in a substantially different position to where it was 12 months ago. We have reprioritised our production and development portfolio to be firmly weighted towards stable gas revenues in the near to medium term, and future spending commitments have been eliminated or significantly reduced. In addition, the company has repaid over $200 million of debt and was in a net cash position at 30 June.

Although current market conditions are challenging, we remain focused on growing the company. We will continue to foster our traditional technical strengths, particularly in exploration and appraisal, and we have a strong portfolio of quality 2P Reserves and 2C Contingent Resources that provides us with a pipeline of development projects and growth options.

Against this background, AWE achieved a number of milestones in the June quarter with further asset sales, reserves growth and substantial progress on key development projects. Full year production was within guidance, development and exploration spending was disciplined and came in below guidance, and sales revenue was only 4% below guidance, largely due to the timing of liftings undertaken at Tui.

In Western Australia, our operating team made excellent progress on the construction of Stage 1A of the Waitsia gas project and work is rapidly nearing completion. The project is on time and within budget and first gas is planned for August 2016, as scheduled. The concept select process for the next development stage of the Waitsia gas field has commenced.

During the quarter, Waitsia gross 2P Reserves were increased by a substantial 93% to 344 Bcf of gas (net 172 Bcf to AWE) following the evaluation of core data from the Waitsia 1 and Waitsia 2 wells. Total gross 2P plus 2C for Waitsia, Senecio, Irwin and Synaphea now stands at gross 867 Bcf (net 432 Bcf to AWE).

In Indonesia, the AAL appraisal well was spudded in May and two Drill Stem Tests (DST's) delivered positive results, which could lead to an increase in gross recoverable oil for the AAL project and enhanced project economics. Preliminary laboratory testing of the recovered oil samples from both the K Sand and G Sand reservoirs indicated lower levels of impurities than expected, which should have a positive impact on future marketing of the crude. FID has been extended to the second half of calendar year 2017 to allow contractors more time to submit revised bids that conform to recent regulatory changes.

Portfolio management and capital recycling continued with the sale of our interest in the Cliff Head oil project completed in June. The divestment of Cliff Head, a mature production asset, will also reduce AWE's exposure to future field decommissioning costs. The sale of Lengo, a pre-development gas project in Indonesia, was announced in May and is awaiting regulatory approval.

The year ahead will see us further consolidate our position in a very challenging market. With fewer production assets, both production and revenue will naturally be lower over the near term, but our pipeline of quality projects - particularly Waitsia and AAL - makes me enthusiastic about the growth potential of AWE in the medium term and beyond.

David Biggs

Managing Director and CEO

FINANCIAL & CORPORATE

FINANCIAL

Production for the June quarter was 0.9 mmboe, 33% lower than the March quarter as expected due to no contribution from Sugarloaf (sold in March 2016). After adjusting for the divestment of Cliff Head and Sugarloaf, normalised production for the June quarter was 0.8 mmboe and in line with the March quarter.

The ratio of gas to liquids production was 60:40 for the June quarter, compared with 50:50 in the previous quarter, which underlines AWE's near-term strategy of reducing exposure to low oil prices.

For the 12 months to 30 June 2016, total production of 5.0 mmboe was similar to the previous 12 month period (5.1 mmboe) and within our guidance range of 4.9 to 5.1 mmboe. The improved full year contribution from BassGas offset lower production from Casino and Cliff Head and the impact of the Sugarloaf sale.

Sales revenue, including hedging, for the June quarter was $39 million, down 4% from $41 million reported in the March quarter. A single lifting was undertaken at Tui in April and oil inventory at 30 June was 198,400 barrels net to AWE. The average realised oil and condensate price was A$58.99 per barrel for the June quarter and A$57.30 per barrel for the full financial year. Sales revenue for the 12 months to 30 June, including hedging, was $202 million and 4% below the lower end of the guidance range of $210 to $220 million due to the timing of liftings undertaken at Tui.

The mark to market value of unutilised hedging at 30 June 2016 was a liability of $2.3 million, comprising 403,000 barrels of oil hedged for the 12 months to June 2017 at a weighted average Brent price of US$47.82 per barrel in relation to New Zealand production assets. A payment of $1.4 million was made in respect of hedges related to Cliff Head for FY 2016-17 that were closed out early following its divestment.

Development expenditure for the June quarter was $30 million, an increase of 52% compared to the previous quarter. The increase was due primarily to the drilling of the AAL appraisal well and development expenditure in respect of the Waitsia Stage 1A gas project. Exploration expenditure was further reduced to $0.3 million for the quarter. For FY 2015-16, development expenditure of $120 million was below the guidance range of $125 to $135 million, and exploration expenditure of $19 million was below the $25 million forecast.

Field Opex for the June quarter was $26 million and Field EBITDAX for the period was $14 million. For the full financial year, Field Opex was $111 million, down 22% from the previous financial year, and Field EBITDAX was $91 million, down 36%.

At the end of June 2016, AWE was in a net cash position of $18 million, with cash of $33 million, drawn debt of $15 million, and undrawn facilities of $385 million. Subsequent to the end of the period, the company reduced its debt facility by $100 million to $300 million, which reflects AWE's significantly lower capex commitments post the sale of Sugarloaf.

Note: Financial highlights are preliminary and unaudited. Numbers may not add due to rounding. Sales Revenue includes effective hedging where applicable. * Credits reflect over-accrued expenditure from prior periods.

Note: Financial highlights are preliminary and unaudited. Numbers may not add due to rounding. Sales Revenue includes effective hedging where applicable. * Credits reflect over-accrued expenditure from prior periods.

CORPORATE

As previously announced, AWE's new Managing Director and CEO, Mr David Biggs, commenced in May.

Subsequent to the end of the period, Mr Ian Bucknell joined AWE in July as Chief Financial Officer. Ian is an experienced CFO with over 18 years international upstream oil and gas financial experience including senior executive roles at Drillsearch Energy, Great Artesian Oil and Gas, and Oil Search.

In May, AWE received an unsolicited indicative, conditional and non-binding proposal from Lone Star Japan Acquisitions Ltd on behalf of a Lone Star Fund to acquire all of the shares in AWE for a cash consideration of A$0.80 per share. The AWE Board decided to reject the proposal, concluding that it was opportunistic and did not reflect the fair underlying asset value of the company.

In May, AWE announced it had entered into an agreement to sell its 42.5% interest in the Bulu PSC, including the undeveloped Lengo gas project, to a subsidiary of HyOil Pte Ltd for up to A$27.5 million cash. The effective date is 1 April 2016 and the transaction is subject to the approval of the Indonesian government.

AWE completed the sale of its 57.5% interest in the Cliff Head oil project to Triangle Energy in June for total consideration of A$3.2 million with an additional royalty of US$5/bbl receivable by AWE for oil sales in excess of US$70/bbl. The effective date of the transaction was 1 January 2016 and net cash paid to AWE, after final purchase price adjustments, was A$2.3 million.

RESERVES AND RESOURCES

In June, AWE upgraded its assessment of Reserves and Resources for the Waitsia gas project in Western Australia's onshore North Perth Basin. Waitsia gross 2P Reserves increased by 93% to 344 Bcf of gas (AWE share 172 Bcf of gas or 30.4 mmboe) and Waitsia gross 2P Reserves plus 2P Contingent Resources increased by 30% to 630 Bcf of gas (AWE share 315 Bcf of gas or 55.7 mmboe). AWE's 2C Contingent Resources for the Senecio, Irwin and Synaphea tight gas fields remained unchanged at gross 237 Bcf of gas (net 117 Bcf to AWE). AWE was awarded Best Peer Reviewed Paper at the 2016 APPEA Conference, for the second consecutive year, for its paper on the Waitsia field.