ABN 73 119 160 360

Annual Report

2016

Corporate Philosophy

Target Energy Limited was established in 2006 with the simple objective of creating a successful publicly listed petroleum exploration and production company.

We chose the United States as our principal area of operations due to the attractive operating environment in that country. In particular we focused on regions with high levels of activity, success and infrastructure. We then selected reputable operators who had demonstrated track records of success and selected the best available prospects from their inventories to comprise our portfolio.

This strategy paid off almost immediately with Target Energy becoming an oil and gas producer in the United States within 6 months of listing on the ASX.

More recently, the Company has expanded its focus to include unconventional and resource plays, such as those in the prolific Permian Basin in West Texas. The Company now has an established presence in this sector.

Target will continue to actively source and drill a range of prospect types and will seek to expand its areas of operations as opportunities become available.

2 TARGET ENERGY LIMITED

Contents

Corporate Directory 4

Page

Corporate Overview 6

Chairman's Report 5

Production 9

Project Review 7

Lease-holdings 13

Reserves 11

Directors' Report 18

Glossary of Technical Terms 14

Financial Statements 27

Auditor's Independence Declaration 26

Directors' Declaration 61

Notes to the Financial Statements 31

Shareholder Information 64

Auditor's Report 62

Corporate Governance Statement 67

ANNUAL REPORT 2016 3

Corporate Directory

Directors

Christopher Rowe, M.A Non Executive Chairman

Laurence Roe, B.Sc Managing Director

Stephen Mann, CA Non Executive Director

Company Secretary

Rowan Caren, B.Com, CA

US Office

1900 St James Place, Suite 425

Houston Texas 77056 USA

Telephone (713) 275 9800

Facsimile (713) 275 0999

Registered Office - Australia 6 Richardson Street, Suite 5 WEST PERTH WA 6005

Telephone (08) 9476 9000

Facsimile (08) 9476 9099

Mailing

PO Box 140

WEST PERTH WA 6005

Email: [email protected]

Website: www.targetenergy.com.au

Solicitors to the Company

Steinepreis Paganin Gardere Wynne Sewell LLP Level 4, The Read Buildings 1000 Louisiana, Suite 2000

16 Milligan Street Houston, Texas 77002

PERTH WA 6000 USA

Auditors

HLB Mann Judd GBH CPAs, PC

Level 4, 130 Stirling Street 6002 Rogerdale Road, Suite 500

PERTH WA 6000 Houston Texas 77072 USA

Share Registry

Advanced Share Registry Services 150 Stirling Highway

NEDLANDS WA 6009

4 TARGET ENERGY LIMITED