Mr. Chayan Chakrabarty reports

BENGAL ENERGY ANNOUNCES FISCAL 2024 FIRST QUARTER RESULTS

Bengal Energy Ltd. has released its financial and operating results for the first quarter of fiscal 2024 ended June 30, 2023.

First quarter fiscal 2024 highlights

The following is an overview of the financial and operational results during the three months ending June 30, 2023. All amounts are in Canadian funds unless otherwise noted.

Financial summary:

• Sales revenue: Crude oil sales revenue was $1.7-million in the first quarter of fiscal 2024, which is 32 per cent lower than the $2.5-million recorded in Q1 fiscal 2023. The lower sales revenue is directly due to the decrease in Brent reference price of 31 per cent to $78.32 (U.S.) per barrel (bbl) in Q1 fiscal 2024.
• Funds from (used in) operations (1): Funds from operations were nil during Q1 fiscal 2024, compared with $700,000 in Q1 fiscal 2023, stemming from a 31-per-cent decrease in Brent reference price, decreasing revenue by $800,000. This was offset by $100,000 lower operating expenses.
• Net income: Bengal reported a net loss of $400,000 for the current quarter, compared with a net income of $400,000 in Q1 fiscal 2023, directly impacted by the decrease in realized oil price, lowering sales revenues by $800,000.

Operational summary:

• Production volumes: The company's share of total Cuisinier production in the current quarter was 16,058 barrels, which is a 4-per-cent decrease from the 16,757 barrels produced in the first quarter of fiscal 2023. The current quarter production averaged 176 barrels per day, compared with 184 barrels per day produced in the first quarter of fiscal 2023. During the current quarter, the C28 well was offline during April and May, and the C27 well was offline in June resulting in approximately 15 barrels of oil per day of deferred production.
• Capital expenditures: There was limited capital activity during the current quarter compared with Q1 fiscal 2023, when the company was actively working on its development projects at Wareena 1 and Wareena 5, and completed activities at Caracal-1. Due to weather delays and the availability of equipment and field staff, Bengal has delayed its Wareena testing program to the second half of calendar 2023 in order to control costs.

Bengal has filed its consolidated financial statements and management's discussion and analysis for the quarter ended June 30, 2023, with the Canadian securities regulators. The documents are available on SEDAR or by visiting Bengal's website.

Business overview

Bengal's producing and non-producing assets are situated in Australia's Cooper basin, a region featuring large accumulations of very light and high-quality crude oil and natural gas. The company's core Australian assets, petroleum lease (PL) 303 Cuisinier, authority to prospect (ATP) 934 Barrolka, ATP 732 Tookoonooka and four recently acquired petroleum licences are situated within an area of the Cooper basin that is well served with production infrastructure and takeaway capacity for produced crude oil and natural gas. Still in early stages in terms of appraisal and development, Bengal believes these assets offer attractive upside potential for both oil and gas. Australia presents a stable political, fiscal and economic environment in which to operate, and a favourable royalty regime for oil and gas production.

Under the State of Queensland regulatory process, ATPs are granted by the state generally for a period of 12 years with one-third of the original grant area expiring every four years. At the end of the final term of the ATP, an application can be made to continue a portion of the permit in the form of a potential commercial area (PCA). PCAs have a life span of five to 15 years. PCA applications include a commercial viability report that indicates that the area is likely to be commercially viable within the applied term. This allows for extra time to commercialize the resource. These PCAs remain a part of the ATP until expiry. If a discovery of oil or gas is made, an application for a PL (petroleum lease) is made to allow for production. PLs are granted for up to a 30-year term.

Bengal has two PLs on the former ATP 752 Barta block, PL 303 and PL 1028, in addition to three PCAs, PCA 206, PCA 207 Barta West and PCA 155 Wompi block-Nubba/Yilgarn. Bengal also holds four PLs, including a producing pipeline licence (PPL) 138 adjacent to the 100-per-cent-owned ATP 934.

Australia -- Cooper basin, Queensland

PL303 and PL 1028 Cuisinier (controlling permit ATP 752) (30.357-per-cent working interest (WI))

The company continues to evaluate the results of its pilot water injection program at Cuisinier. The injection of produced formation water is anticipated to both increase production in up to four offsetting wells and reduce water handling charges. On establishing success of the pilot, the joint venture will begin a multistaged water injection scheme, targeted fracture stimulation and more commercially efficient development drilling. While the joint venture (JV) has observed compelling evidence that the overall field decline has been temporarily arrested with a modest upward trend in oil production rate during the previous quarter, the pilot has suffered from extended shut-in periods due to equipment failure and waiting on replacement parts in this quarter. The WI pilot is expected to be operational again from late July onward.

Bengal's joint venture partner and operator of the Cuisinier pool drilled four wells in the Cuisinier field during calendar 2023. The company did not participate in this program based on its internal economic hurdles and given that the operator has not prepared a suitable field development plan, considering the water injection pilot and projected capital and operating costs make such investment less attractive than alternatives available in Bengal's inventory.

PL 114 Wareena, PL 157 Ghina, PL 188 Ramses, PL 411 Karnak, PPL 138 pipeline (100-per-cent WI)

The company has a 100-per-cent working interest in four PLs and a natural gas pipeline connected to transportation infrastructure into the eastern Australia gas market. These non-productive PLs are highly compatible and in close proximity to ATP 934. Bengal continues to integrate subsurface data from the PLs to enhance the company's understanding of ATP 934 and to finalize the selection of exploration and appraisal drilling locations.

Included in this program is the reinstatement of two gas wells and an existing gas pipeline to produce raw gas into existing infrastructure at PL 114 Wareena. The company completed workover activities at Wareena 1 and Wareena 5 in November, 2022. Initial test results indicate Wareena 1 would require additional stimulation and dewatering to yield commercial production rates. The company is encouraged by wellhead pressure measured at Wareena 5 and therefore additional testing is planned subject to the availability of equipment. If this testing yields commercial rates, Bengal will tie in the producing well to pipeline PPL 138. The company is investing in proprietary proof of concept arrangements to allow commercial gas production prior to a pipeline connection with all required equipment now on site.

The 100-per-cent ownership of these assets presents an appraisal and development opportunity that will be operated by the company and is seen as a key stepping stone for Bengal's natural gas platform upon which future development and appraisal work at the existing PLs and exploration growth through ATP 934 can be undertaken.

ATP 732 Tookoonooka (100-per-cent WI)

In June, 2019, the company applied for an amendment to the LWP for the third term of ATP 732 permit. On Oct. 22, 2019, the company received approval from the Queensland regulatory authority for an amended LWP for the third four-year term commencing April 1, 2019, to March 31, 2023. The approved LWP was revised to minimum activities of reprocessing seismic and inversion work with an estimated cost of $50,000 and geological and geophysical investigation at an estimated cost of $50,000 during the four-year term.

On the Caracal-1 well, the company conducted an acid treatment to improve well bore inflow with positive results and moderate inflow of very light 53-degree gravity oil from the Wyandra zone. While not immediately commercially viable, these results are being evaluated with a plan for fracture stimulation to further enhance productivity being put in place. Following fracture stimulation, the well could commence production using the company's early oil production system with the addition of storage and load-out infrastructure. The well is currently suspended with shut-in pressure data being actively monitored to aid in future stimulation work plan.

ATP 732 reached the end of its term in March of 2023 and the company lodged an application over the northern portion of the ATP for continuation in the form of PCA 332 for a further 15 years. Based on the positive results from Caracal-1, the application was approved on Jan. 30, 2023. In addition, the company is assessing farm-in interest on other 3-D defined drilling targets on PCA 332. The PCA, granted by the Queensland government in record time, provides much-needed certainty for Bengal to focus on its hydrocarbon projects in the Talgeberry-Tintaburra corridor. The majority of PCA 332 is covered by 3-D seismic, which has outlined the prospective targets as described in the company's news release, "Bengal Energy Announces Independent Oil and Natural Gas Resource Report," dated March 30, 2022.

ATP 934 Barrolka East (100-per-cent WI)

ATP 934 is the company's 100-per-cent-owned natural gas exploration block. Bengal received approval of a special amendment for ATP 934 in March, 2021, which relinquished 50 per cent of the existing ATP area and extended the term of the ATP by entering an outcome based LWP for another six years to Feb. 28, 2027. As part of the special amendment, another relinquishment of 118 subblocks (50 per cent of the remaining sub blocks) (88,972 acres) was required by Feb. 28, 2023. The relinquishment was accepted by the regulator during April of 2023.

The relinquished area was not considered to be prospective by the company due to the lack of identified prospects and limited physical access. The LWP includes the drilling of up to three wells and 260 square kilometres of 3-D seismic.

ATP 934 Durham Downs East farmout block (40-per-cent WI)

Bengal entered into an agreement with Santos in July, 2020, to farm in on a portion of the ATP 934 block. Santos carried the drilling costs of one well to earn a 60-per-cent operated interest in the ATP 934 southern farmout block, which represents 57.8 per cent of the total block acreage after the April, 2020, relinquishment. On Oct. 14, 2021, Santos completed the drilling of the Legbar-1 exploration well. Santos paid 100 per cent of the costs to drill, plug and abandon the well, and has accordingly earned a 60-per-cent working interest in the 103,760-square-kilometre gross exploration land.

While the Legbar-1 well did not indicate commercial quantities of hydrocarbons, thick, high-quality reservoir sands were encountered in the primary Permian Toolachee formation and in the Jurassic Birkhead zone, with evidence of residual hydrocarbon saturation in both zones. In addition, fluorescence shows and elevated gas readings through the Jurassic Birkhead Fm/Top Hutton sandstone indicate oil has passed through the reservoir, supporting the search for a valid closure to test this play. The findings from the Legbar-1 well will help Bengal refine its exploration targets going forward, both with Santos in the Santos farmout block and across the balance of ATP 934, which is 100 per cent owned by Bengal.

Business development

The company is in discussions with potential industry and financial partners to finance some of these oil-and-gas-related activities.

About Bengal Energy Ltd.

Bengal is an international junior oil and gas exploration and production company with assets in Australia. The company is committed to growing shareholder value through international exploration, production and acquisitions. Bengal's common shares trade on the Toronto Stock Exchange under the symbol BNG.

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