30 March 2023

Mosman Oil and Gas Limited

 ("Mosman" or the "Company")

Half Year Results

Mosman Oil and Gas Limited (AIM: MSMN) the oil exploration, development and production company, announces its Half Year results to 31 December 2022 (H123), a period in which it continued to build significant traction in oil and gas production across its US projects.

Summary

·       Revenue increased 26% to $936,187 (H122 $745,790)

·       Gross Profit increased 50% to $283,003 (H122 $188,487)

·       Net loss was $665,096 (H122 $498,940), as a result of investment in further development work, from which the production falls into the next period.

·       Net Production to Mosman of 13,170BOE (excludes Cinnabar which falls into current quarter)

·       Significant progress at Cinnabar in East Texas, with a development drilling programme leading to initial production in December 2022.

All amounts are in Australian Dollars

¹BOE/boe - barrels of oil equivalent

²Gross Project Production -the production of BOE at a total project level (100% basis) before royalties (where Mosman is the Operator) and where Mosman is not the operator the total gross production for the project

³Net Production - Net to Mosman's Working interest before royalties

Post Period end

·       Cinnabar-1 well was completed and perforated, and subsequently the pipeline was completed and regular oil production and sales commenced.

·       Sacred Site Clearance Certificate received for EP 145, situated in the Amadeus Basin, from the Central Land Council (CLC).

·       Oil reserves for the Cinnabar project had increased by approximately 78%, which was determined from an updated independent Reserve Report.

·       The Board has announced a review of the corporate structure with the objective of maximising the Company's assets.

John W Barr, Chairman of Mosman commented: "The Group made solid progress in H123, with a focus on development at Cinnabar, at which, post year end, the proved reserves increased 78% to 1.58m gross boe.

"The H1 performance has provided a strong foundation for Mosman to increase production in the second half and the Board is highly encouraged with the progress being made in both the US and Australia."

Enquiries:

Updates on the Company's activities are regularly posted on its website:

www.mosmanoilandgas.com

Notes to editors

Mosman (AIM: MSMN) is an oil exploration, development, and production company with projects in the US and Australia. Mosman's strategic objectives remain consistent: to identify opportunities which will provide operating cash flow and have development upside, in conjunction with progressing exploration of its existing exploration permit and permit application. The Company has several projects in the US. In addition to exploration projects in the Amadeus Basin in Central Australia.

Operations Review

Mosman's Strategic Objective remains to identify opportunities which will provide operating cash flow and have development upside, in conjunction with exploration of existing exploration permits. The strategic objective is achieved using a dual approach.  Oil and gas development and production in the USA, and exploration for hydrogen, helium, oil and gas in Australia.

More than $2.1m was spent on increasing production and exploration during the period. Mosman has made progress towards this objective with continued production at its existing USA projects and significantly the drilling and now production from the Cinnabar-1 well in Tyler County, Texas. The Board is pleased with this progress made in the last six months.

This project was acquired at modest cost when oil and gas prices were lower. Extensive technical work, including reprocessing and re-interpretation of 3D seismic, provided insight into the best location for the first re-development well. This technical work, and the investment in drilling, were more than justified by the excellent results achieved to date.

Recently, the company completed an independent report on the reserves at the Cinnabar project. Total proved reserves (gross) increased by approximately 78% from 887,000 to 1,581,000 gross boe.

Gross Reserves (MBOE):

In Australia's Northern Territory, Mosman published a new Prospective Resource estimate over the EP-145 lease where we hold 100% and continue to work to secure all required approvals for the next step of exploration.

As shareholders and stakeholders expect, Mosman continues to take its Health and Safety requirements very seriously and to date there have been no health, safety or wellbeing issues reported in our small team.

Given the operational progress both during the period and after the reporting period, the Board looks forward with great optimism.

Results

The unaudited results for the six months to 31 December 2022 reflect a 26% increase in sales to $936,187 ($745,790 in 2021). Gross profit also increased by 50% to $283,003 ($188,487 in 2021).

The overall result for the period was a net loss of $665,096 (2021: $498,940).

The average sale prices achieved during the period was US$86.05 per barrel for oil, and US$6.34 per MMBtu for gas (in each case after transport and processing costs and prior to royalties).

These results do not include any revenue from the Cinnabar well which started in January 2023.

Projects

Mosman has Working Interests in several onshore producing projects located in the USA. The Company also owns one granted exploration permit and one application for an exploration permit in the Amadeus Basin in Central Australia.

Producing Projects in the USA

A summary of the current oil and gas projects as at 30 March 2023:

¹All projects are operated by US subsidiaries of Mosman Oil and Gas Limited, except for Arkoma Stacked Pay, which is operated by Inland Operating Company.

²All leases are held by production. The Falcon lease was extended by agreement until August 2023.

Production Summary for the six months ending 31 December 2022

¹BOE/boe - barrels of oil equivalent

²Gross Project Production - Means the production of BOE at a total project level (100% basis) before royalties (where Mosman is the Operator) and where Mosman is not the operator the total gross production for the project

³Net Production - Net to Mosman's Working Interest; Net Production attributable to Mosman means net to Mosman's Working Interest before royalties

Australia

^1. Mosman's ownership is working interest before royalties. The interest shown is approximate, as there are small variations on individual wells.

^2. Mosman's wholly owned subsidiary, Trident Energy Pty Ltd is the operator of EP 145.

Mosman has continued to conduct technical work on its Central Australian exploration projects, focused on the 100% owned EP-145, in the Amadeus Basin, Northern Territory.

A new Prospective Resource estimate for EP 145 was published by Mosman in October 2022 and is detailed below.

All seismic and drilling activities are subject to obtaining the necessary planning approvals from the NT Department of Industry and Resources, which are currently being coordinated by the project manager.

At Mosman's other central Australian project in EPA-155, the permit application is subject to a farmout with the next step being completion of Native Title negotiations.  Mosman understands that the farm-in partner is currently arranging funding.

Matters subsequent to the reporting period

Subsequent to the end of the reporting period the Company announced the following material matters occurred:

·      On 6 January 2023, the Group announced that the Cinnabar-1 well was completed and perforated, and subsequently on 16 January 2023 announced that the pipeline had been completed and regular oil production and sales had commenced.

·      On 20 February 2023, the Group announced that it had received a Sacred Site Clearance Certificate for EP 145, situated in the Amadeus Basin, from the Central Land Council (CLC).

·      On 15 March 2023, the Group announced that oil reserves for the Cinnabar project had increased by approximately 78%, which was determined from an updated independent Reserve Report.

·      On 28 March 2023, the Group announced the issue of 45,454,545 new ordinary shares of no-par value in the capital of the as full payment of a consulting fee at a price of 0.055p per share.

·      On 28 March 2023, the Group announced that it has commenced a corporate review to evaluate optimal next steps for Mosman and its shareholders, including the possibility of seeking a separate stock exchange listing of Trident and/or OilCo. To assist in the review process, the Group have engaged the services of Mr. David Minchin, a highly experienced helium exploration geologist with public company experience.

There were no other material matters that occurred subsequent to 31 December 2022.

Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income

For The Half Year Ended 31 December 2022

Consolidated Statement of Financial Position

As at 31 December 2022

The accompanying notes form part of these consolidated financial statements

All amounts are in Australian Dollars

Consolidated Statement of Changes in Equity

For the Half Year Ended 31 December 2022

The accompanying notes form part of these consolidated financial statements

All amounts are in Australian Dollars

Consolidated Statement of Cash Flows

For the Half Year Ended 31 December 2022

The accompanying notes form part of these consolidated financial statements

All amounts are in Australian Dollars

For the Half-Year Ended 31 December 2022

All amounts are Australian Dollars

1. Summary of Significant Accounting Policies

   Statement of Compliance

The half-year financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS34 Interim Financial Reporting. The half-year report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the most recent annual financial report.

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of certain non-current assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. All amounts presented in Australian dollars, unless otherwise noted.

The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Group's 2022 annual financial report for the financial year ended 30 June 2022, except for the impact of the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards (IFRS).

Going Concern

The condensed consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and the discharge of liabilities in the normal course of business.

The directors have considered the funding and operational status of the business in arriving at their assessment of going concern and believe that the going concern basis of preparation is appropriate, based upon the following:

·    The ability to further vary cash flow depending upon the achievement of certain milestones within the business plan and;

·    The ability of the Company to obtain funding through various sources, including debt and equity.

However, should the Group be unable to raise further required financing from equity markets or other sources, there is uncertainty which may cast doubt as to whether or not the Group will be able to continue as a going concern and whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

Exploration and Evaluation Costs

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are carried forward in respect of an area for which the rights to tenure are current and that has not at reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or relating to, the area of interest are continuing.

Impairment of Exploration and Evaluation Assets

The ultimate recoupment of the value of exploration and evaluation assets is dependent on the successful development and commercial exploitation, or alternatively, sale, of the exploration and evaluation assets.

Impairment tests are carried out when there are indicators of impairment in order to identify whether the asset carrying values exceed their recoverable amounts. There is significant estimation and judgement in determining the inputs and assumptions used in determining the recoverable amounts. If, after having capitalised the expenditure under the policy, a judgement is made that the recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss.

The key areas of judgement and estimation include:

·    Recent exploration and evaluation results and resource estimates;

·    Environmental issues that may impact on the underlying tenements; and

·    Fundamental economic factors that have an impact on the operations and carrying values of assets and liabilities.

Revenue Reporting

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances, rebates and amounts collected on behalf of third parties.

The group recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and specific criteria have been met for each of the Group's activities as described below. The group bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue from joint operations is recognised based on the Group's share of the sale by the joint operation.

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

Oil and Gas assets

The cost of oil and gas producing assets and capitalised expenditure on oil and gas assets under development are accounted for separately and are stated at cost less accumulated amortisation and impairment losses. Costs include expenditure that is directly attributable to the acquisition or construction of the item as well as past exploration and evaluation costs.

When an oil and gas asset commences production, costs carried forward are amortised on a units of production basis over the life of the economically recoverable reserves. Changes in factors such as estimates of economically recoverable reserves that affect amortisation calculations do not give rise to prior financial period adjustments and are dealt with on a prospective basis.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance.

New standards and interpretations

The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2022

All amounts are Australian Dollars

Condensed Notes to the Financial Statements

For the Half-Year Ended 31 December 2022

All amounts are Australian Dollars

1.     The increase in trade creditors is primarily attributable to creditors in Nadsoilco LLC and relates to amounts owing for prepaid workover costs. The balance includes amounts payable on behalf of other royalty holders for which there are also receivables owing for their share of the workover costs (refer Note 9).