Material Risks Risk Management Approach Joint Operations Risk The Company is party to a joint operation arrangement and may enter into further joint operations. Although The Company has sought, and will seek, to protect its interests, existing and future joint operations necessarily involve special risks., including but not limited to inconsistent goals with joint operations partners and potential reputational risk by association to a partner. The Company has a clearly structured process of contracting with third parties. In addition, The Company will only participate in joint operations where it has a real influence in the operation and is not a dormant partner. The existing Joint Operation the company is the operator and therefore drives execution and oversight of the joint operation. All future Joint operations will continue to be structured in a manner that ensures an appropriate level of control and direction. Funding Risks The oil and gas industry is a capital-intensive industry with regulator mandated minimum work program obligations and financial support for those. There can be no assurances that all The Company’s future business activities will in fact be met without future borrowings or further capital raisings, and whether such funding will be available and on terms favourable to The Company. The Company is adequately funded for its approved future work plans. The Company manages its capital structure and requirements actively and may issue additional equity securities, raise debt or other financing solutions to fund future work program obligations, at the best possible terms. Exploration Risks Development of the Company’s petroleum exploration permits is contingent upon securing funding and obtaining satisfactory exploration results. Petroleum exploration and development is expensive and risky, which even a combination of experience, knowledge and careful evaluation may not be able to adequately mitigate. The Company’s corporate strategy has defined limits for how much risk it will assume from any one single exploration activity on a sole risk basis, beyond which it will bring in partners to participate in the exploration. This capital allocation discipline combined with best-in-class technical expertise and resources is the most practical mitigant to this risk. Reserves and Resources Risks Estimates of Reserves, Contingent Resources and Prospective Resources are based on limited sampling, are not precise and no assurance can be given that these reserves or resources will be recovered during production. Production estimates, in addition to being dependent on the above reserve and resource estimates and the risks associated therewith, are further reliant on, among other things, recovery rates. The Company has a Reserves Committee that is responsible for establishing and reviewing reserve and resource estimates for the Company’s portfolio of prospects. The members of this Committee, and the Company’s geoscientists that prepare estimates for this Committee, are experienced professionals with suitable formal qualifications and decades of relevant experience in the oil and gas sector preparing such estimates in accordance with relevant international norms and standards. The recommendations of this Committee are overseen at Board level by competent persons and, where appropriate, independent external certifiers are used to review internal estimates. Pandemic Risks Large scale pandemic outbreaks of a communicable disease such as COVID19 have the potential to affect personnel, production and delivery of projects. The Company employs its crisis and emergency management plans, health emergency plans and business continuity plans to manage this risk including ongoing monitoring and response to government directions and advice. This enables the Company to take active steps to manage risks to the Company’s staff and stakeholders and to mitigate risks to production and progress of growth projects. For its field operations, it also maintains strict protocols with regards to testing of visitors by suitably qualified medical personnel before permitting entry to the site, isolation of incoming crews for a period of time before rotation to identify emergence of any symptoms and maintaining isolation accommodation on site where people suspected of development symptoms may be monitored in isolation. Climate Change Risks Increasing regulations and costs associated with the identification, management and reduction of the Company’s environmental footprint, along with potential disruption to field operations, are the principal risks associated with public concerns regarding the potential for significant climate change. The objective of the Company’s environmental policy is to minimise the environmental impact of its operations. The Company actively pursues initiatives to minimise waste, spills and emissions to optimise environmental and economic benefits. The Company also carefully monitors emerging weather conditions that have the potential to impact its field operations and has formal protocols for the securing of site equipment and the safety of its personnel. 33 Melbana Energy Limited Annual Report 2023
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