Helios Energy : December 2021 Half Yearly Report and Accounts

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Helios Energy Limited

Interim Financial Report

31 December 2021

Helios Energy Ltd

ABN 61 143 932 110

Interim Financial Report - 31 December 2021

For personal use only

CONTENTS
	Page
Corporate Directory	1
Directors' Report	2-6
Auditor's Independence Declaration	7
Interim Financial Statements	8-11
Notes to the Interim Financial Statements	12-16
Directors' Declaration	17
Independent Auditor's Review Report to the Members	18-19

These interim financial statements do not include all the notes of the type normally included in the annual financial statements. Accordingly, these interim financial statements are to be read in conjunction with the annual financial statements for the year ended 30 June 2021 and any public announcements made by the Company during the period from 1 July 2021 to the date of this report in accordance with the continuous disclosure requirements of the Corporations Act 2001 (Cth).

Helios Energy Ltd

Corporate Directory

31 December 2021

CORPORATE DIRECTORY

Directors

onlyuseCompany Secretary Registered Office

personalShare Register

Auditor

ForLawyers

Hui Ye

Non-Executive Chairman

Richard He

Managing Director

Nicholas Ong

Non-Executive Director

Robert Bearden

Non-Executive Director

John Palermo

Australian Office	USA Office
Level 3, 18 Richardson Street	3 Riverway, 17th Floor
West Perth WA 6005 Australia	Suite 1750, Houston
PO Box 1485 West Perth	Texas USA 77056
WA 6872 Australia	T:[phone]
T:[phone]	F:[phone]
F:[phone]
Computershare Investor Services Pty Ltd
Level 11, 172 St George's Terrace
Perth WA 6000 Australia
Investor enquiries: 1300 557 010
T:[phone]
F:[phone]
BDO Audit (WA) Pty Ltd
Level 9, Mia Yellagonga Tower 2
5 Spring Street
Perth WA 6000 Australia
T:[phone]
F:[phone]

Steinepreis Paganin

Level 4, The Read Buildings

16 Milligan Street

Perth WA 6000 Australia

1. [phone]

1. [phone]

Stock Exchange	Australian Securities Exchange (ASX)
	ASX Code: HE8 and HE8OA
Website	www.heliosenergyltd.com

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DIRECTORS' REPORT

Your directors present their report on the consolidated entity consisting of Helios Energy Ltd and the entities it controlled at the end of, or during, the half year period ended 31 December 2021 (Helios or the Company or the Group).

DIRECTORS

The name of each person who has been a director during the reporting period and to the date of this report are:

Hui Ye - appointed 1 December 2017. Richard He - appointed 20 October 2017. Nicholas Ong - appointed 4 August 2017. Robert Bearden - appointed 14 February 2018.

COMPANY SECRETARY

The company secretary is John Palermo who was appointed on 10 September 2018.

PRINCIPAL ACTIVITIES AND REVIEW OF OPERATIONS

The Company is an oil and gas exploration company whose principal activity is the Presidio Oil Project which is located in Presidio County in the State of Texas in the USA.

4th Well - Presidio Oil Project - Presidio 52#1

During 2021, the Company integrated all its geological, geochemical and geophysical data with the aim of high grading multiple well locations that target the Ojinaga Formation (primary target) but which also include the Eagle Ford Formation (secondary target) as well as older (deeper) Cretaceous units being the Buda, Georgetown and Edwards limestone Formations (all secondary targets). During the 6 month half year period, on 7 September 2021, the Company advised of its plan to spud and complete a 4th well in its Presidio Oil Project located in Presidio County, Texas, USA.

Completion of 11 Miles of New 2D Seismic

During the 6 month half year period ending on 31 December, the Company completed its latest 2D seismic work program. The program involved line clearing and shooting an additional 11 miles of 2D seismic. This new 2D seismic (2 lines of approximately 5.5 miles each) augments the existing old 2D seismic which covers the location of the Presidio 52#1 well. The full acquisition, processing and interpretation of this 2D seismic is now completed and the exact location of the Presidio 52#1 well has been determined. The Presidio 52#1 well, located in Presidio County, Texas, USA and the 4th well in the Presidio Oil Project, will be spudded by 31 March 2022.

Presidio 52#1 Well - Interpreted Traps - Buda, Georgetown and Edwards Formations

The previously completed 88 miles of 2D seismic has established a thick presence of Austin Chalk age equivalent Ojinaga Formation across the Company's entire acreage position of 85,685 gross acres. Interpretation of the newly acquired 2D seismic has resulted in the Company forming the view that a 1,700 acre enclosure or trap at the Buda Formation level may be present at the Presidio 52#1 location. The interpreted trap is a 3-way fault closure at the Buda interval over 1,700 acres. In addition, there is an interpretated trap of approximately 1,300 acres at the Georgetown interval along with a further interpretated 150 acre trap at the Edwards interval. The opportunity to drill into the

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lower bench of the Ojinaga Shale Formation was present in all the proposed drilling location choices, including Presidio 52#1.

At the Presidio 52#1 well location, the lower bench of the Ojinaga Shale Formation is at a depth of approximately 6,950 feet and the bench is approximately 650 feet thick. The Presidio 52#1 well will be drilled to a total depth (TD) of 9,800 feet. The Presidio 52#1 well location permits a very cost- effective penetration into these Buda, Georgetown and Edwards interpreted traps as well as representing a prime location and depth for the Ojinaga Shale Formation. The Buda, Georgetown and Edwards are conventional oil plays where the Eagle Ford Shale sources the porous and naturally fractured limestone reservoirs. These older (deeper) Cretaceous units being the Buda, Georgetown and Edwards limestone formations will be found between approximately 8,474 feet (top of the Buda interval) to 8,605 feet (top of the Georgetown interval) to 9,244 feet (top of the Edwards interval) in the Presidio 52#1 well.

Eagle Ford Shale Formation

The tested oil analysis shows that the oil in the Ojinaga Shale Formation is sourced from the Eagle Ford shale. The Eagle Ford shale has an average thickness across the Presidio Oil Project of 460 feet. When the Presidio 52#1 well is drilled, the well will pass through the Eagle Ford Shale on the way to the Buda, Georgetown and Edwards Formations. The interpreted thickness of the Eagle Ford Shale at the Presidio 52#1 location is 866 feet.

Ojinaga Formation Play Area - 300,000 Acres

The Company's previously completed analysis of 88 miles of 2D seismic has established a thick presence of Austin Chalk age equivalent Ojinaga Formation across the Company's entire acreage position of 85,685 gross acres. The thickness of the Ojinaga Formation ranges from 1,000 feet in the eastern section of the Company's acreage to 2,000 feet in the western section. In addition, these 88 miles of 2D seismic has established a thick presence of Ojinaga Formation across the entire Ojinaga Formation play area which is approximately 300,000 acres in size.

Ojinaga Formation - Easily Mapped with 2D & 3D Seismic

The lower bench of the Ojinaga Formation shows well on both 2D & 3D seismic and is easily mapped. The new 11 miles of 2D seismic has easily mapped the lower bench of the Ojinaga Formation in the Presidio 52#1 well. At the Presidio 52#1 well location, the lower bench of the Ojinaga Shale Formation is between 6,950 and 7,600 feet and is therefore approximately 650 feet thick.

Porosity and Permeability in Lower Bench of the Ojinaga Shale Formation

Based on previous petrophysical analysis, the lower bench of the Ojinaga Shale Formation has porosity predominately ranging between 4% to 12.5% and permeability up to 0.75 µd (micro darcys). The porosity of sidewall cores taken from the Presidio 141#2 well is 4% to 10% therefore confirming the previous petrophysical analysis. The permeability of the sidewall cores taken from the Presidio 141#2 well is significantly higher than the previous petrophysical analysis, up to 0.06 md (60 µd). Analysis of the Quinn Creek 141#1 well and the Presidio 141#2 well as well as surrounding historical wells clearly shows that these porosity and permeability characteristics in Presidio County in the Ojinaga Shale Formation exceed the characteristics present in the Eagle Ford Shale in the Karnes Trough which is the premier sweet spot of the Eagle Ford Shale play.

Presidio 141#2 Well

Pressure build up testing of the Presidio 141#2 well occurred during the 6 month half ending on 31 December 2021. As the well is shallow with normal formation pressure, the well will require artificial

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