Galilee Energy : March 2022 Quarterly Report & Appendix 5B

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March 2022 Quarterly Report & Appendix 5B

29 April 2022

Highlights

• • By quarter-end the Glenaras Gas Project was producing ~60 Mscfd of natural gas and ~17,000 BWPD.

• • Silver City Rig 23 rig arrived on site at Glenaras shortly after the end of the quarter and as reported, the first well in current programme has been successfully drilled.

• • The 2022 programme consists of drilling, completing, connecting, and powering an additional 5 vertical wells at Glenaras to accelerate depressurisation of the Betts Creek coals and adjacent sands to initiate gas desorption.

• • Glenaras Gas Project remains well placed to achieve commercial production along with an anticipated maiden reserve booking at the Project within the coming 12 months.

• • Galilee completed an over-subscribed placement to institutional and sophisticated investors, raising $11.8 million (before costs) at $0.32 per share.

• • Galilee is well capitalised to pursue its gas development plans recent capital initiatives with a cash balance of $17.3 million and no debt.

• • Galilee continues to review commercially viable investments to transition our operations to a low carbon operation.

Galilees' Managing Director, David Casey commented:

The March quarter saw considerable progress at the Glenaras Gas Project. The Company completed the preparations required to embark on the 5 well programme and as we have reported Silver City Rig 23 has now successfully drilled the 1st well in the programme safely and within schedule, a really good achievement considering the high rainfall that occurred during drilling.

A key development during the quarter was the completion of the $11.8 million capital raise which attracted a number of new institutional and sophisticated investors to the register. This funding, together with the recent SPP, will allow Galilee to better exploit the large contingent gas resource at Glenaras, one of the largest certified, uncontracted contingent resource positions on the east coast of Australia.

In an environment of extreme tightness in global gas supplies and increasing east coast prices the timing bodes well for new gas producers. We continue to expect the multi-well programme at Glenaras to yield commercial production and an anticipated maiden reserve booking at the Project within the coming 12 months.

Glenaras Gas Project (ATP 2019) - Galilee 100%

Galilee Energy Limited (ASX:GLL)

("Galilee") is pleased to provide an update

on the Glenaras multi-well pilot programme

("Pilot") in the Galilee Basin in Queensland

(Figure 1).

The Glenaras Gas Project ("Project") is

located in ATP 2019, which is 100% owned

and operated by Galilee. The Permit covers

an area of approximately 3,200 km2.

The Project is currently producing ~60

mscfd of very low CO2 gas and ~17,000

BWPD (barrels of water per day) with all

wells online and pumping throughout the

quarter. Encouragingly, it has been over 4

months since any downhole pump failures

have been encountered, reinforcing the

Company's view that the downhole design

modifications made in the last workover

campaign have delivered a more robust

production system.

Figure 1 - Glenaras Gas Project

All preparatory activities for the five well drilling programme were completed during the quarter. Drilling and construction activities commenced immediately after Easter, with the Silver City Rig 23 having now successfully drilled the 1st well. The Company is anticipating the first well to be online in early June. The preparatory clear and grade for the right of ways for the gas gathering and electrical cables is complete with the commencement of the trenching and construction activities to install these having occurred after Easter.

The Project has one of the largest contingent gas resources on the east coast of Australia and is strongly positioned to help address AEMO's forecast eastern Australian domestic market gas shortfall expected from around 2023. The Project's independently derived and certified Contingent Resource* estimates are included in Table 1.

Category	Contingent Resource (PJ)	Area (km2)
1C	308	~36
2C	2,508	~1,200
3C	5,314	~2,500

Table 1: Glenaras Gas Project Contingent Resources Estimates

Galilee is highly focused on pursuing the development of the Project with minimal environmental impact. The Company continues to review commercially viable investments to transition our operations to a low carbon environment. Some of the key aspects of our decarbonisation pathway are outlined below:

• • Low CO2 content - The early gas composition data collected from the Project indicates that it will be a low CO2 gas development, with CO2 levels below 2%. This attribute alone reduces the carbon footprint of Glenaras versus other gas producers and sets our hurdle for carbon neutrality lower.

• • Solar Power - The use of solar power onsite continues to be assessed. The existing 17 MW Longreach Solar Farm is strong evidence of the commercial viability of solar farms in this region which is renowned as being one of the best locations in Australia for solar energy. Solar and an abundance of essentially fresh water provides Galilee with yet further optionality when low to zero emission hydrogen and urea production are considered.

• • Carbon Sequestration - Coal seam gas projects can yield saline water which creates a disposal issue for the Operator. A key advantage of the Project is the high volume of essentially fresh water that is produced. During the quarter, Galilee continued its comprehensive review of the potential cropping and farming options and the scope for additional direct and indirect revenue streams to Galilee in the future.

These include evaluating the carbon sequestration/credit benefits related to timber crops and specific crops that provide higher carbon storage within the soil. Early investigations have shown that certain crops can provide both carbon benefits and potential for a bio-fuel product. The Company is already irrigating ~70 ha, growing a combination of sorghum, barley, and oats to handle the ~17,000 BWPD currently being produced.

The continued good performance and yields from the crops provides confidence in the long-term sustainability of the current irrigation practices being used in conjunction with the CSG water from the Project.

ATP 2043 Kumbarilla Project - Galilee 100%

Exploration work is continuing at ATP 2043, progressing the understanding of both the conventional oil and gas prospectivity and coal seam gas prospectivity of the permit. High-grading of future drilling locations remains the primary objective through integration of the reprocessed 675km of 2D seismic with the existing regional well control, the Kumbarilla Central 1, 2 & 3 exploration wells and the adjacent PL 1009 pilot production data gained from the data exchange with Shell.

ATP 2050 Springsure Project - Galilee 100%

The Permian stratigraphic section in ATP 2050 hosts conventional gas prospectivity and Late Permian coal seam gas prospectivity, both of which have been proven commercial in the adjacent northern Denison conventional gas fields and the Mahalo project. Evaluation of multiple opportunities for both play types is ongoing with the intention of maturing high integrity locations for exploration drilling. ATP 2050 is strategically located close to existing conventional gas facilities and future planned coal seam gas facilities, which places potential new discoveries in a strong position for rapid development and supply to the east coast gas market.

Corporate

The cash flow for the quarter is presented in the accompanying Appendix 5B (quarterly Cashflow Report). The Company continues to maintain a very strong cash position as at 31 March 2022 of $17.3 million, with no debt.

During the period, the Company spent $3.1 million on exploration and evaluation activities, primarily on preparations for the five well drill programme, the Glenaras water management projects and Glenaras pilot operating activities.

During the quarter Galilee completed a well-supported and oversubscribed placement to institutional and sophisticated investors to raise approximately A$11.8 million (before costs) at $0.32 per share. In addition to the placement, Galilee issued A$440,000 of new shares to Galilee directors on the same terms as the placement.

The final element of the capital raise was an SPP Offer to existing shareholders on the Company's register as at 23 February 2022 and which closed after the end of the quarter, on April 11. The offer also included a 1 for 1 bonus option issue with an exercise price of $0.48 per share, expiring 4 September 2023.

The SPP received strong support with $1.56 million (before costs) in applications for new shares at $0.32 per share.

As previously indicated, funding from the capital raise will be applied to the current five well drilling programme to accelerate pressure drawdown and initiate gas desorption at Glenaras in order to achieve commercial gas production in support of a material maiden reserve booking.

Shortly after the end of the quarter, a General Meeting was held at which the Company's shareholders ratified the share placement and the participation of directors.

The Appendix 5B includes an amount in item 6.1 which constitutes director's fees paid in the March quarter.

Petroleum Tenements Held

Permit	Location	Interest Held Previous Quarter	Interest Held Current Quarter
ATP 2019	Galilee Basin (Qld)	100%	100%
ATP 2043	Surat Basin (Qld)	100%	100%
ATP 2050	Bowen Basin (Qld)	100%	100%

For further information contact:

David Casey - Managing Director Galilee Energy Limited [phone]

* Listing Rule 5.42 + The details of Contingent Resources referenced throughout this release in respect to ATP 2019 were announced to the market on 1 September 2015. In accordance with Listing Rule 5.42.3, Galilee Energy confirms that it is not aware of any new information or data that materially affects the information in that market announcement reporting the details of the Contingent Resources for ATP 2019 and that all of the material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed.