Cue Energy Resources Limited Directors' report 30 June 2025 12 The valuation of oil and gas assets is affected by expectations of future oil and gas prices. An extended or substantial decline in oil and/or gas prices or demand, or an expectation of such a decline, may reduce the expected cash flows and/or quantity of reserves and resources classified in relation to the associated oil and gas assets, which may lead to a reduction in the valuation of these assets. Foreign exchange risk The Consolidated Entity is exposed to foreign currency risk on cash and cash equivalents, oil sales, the recoverable value of oil and gas assets and capital commitments that are denominated in foreign currencies. The Consolidated Entity’s financial report is presented in Australian Dollars (AUD) and the functional currency for its operations in New Zealand and Indonesia is the United States Dollar (USD). The majority of the Consolidated Entity ’s costs are incurred in currencies other than AUD and revenue is mainly received in USD. Accordingly, it is subject to fluctuations in the rates of currency exchange between these currencies, the primary impact of which is reflected in other comprehensive income. The Consolidated Entity currently does not utilise hedging or other derivate instruments. Foreign exchange risk exposures are mitigated through natural hedging of cost and revenue currencies, where appropriate. Ability to access funding Exploration, development, and production can involve significant capital expenditure. If cashflows decrease or the Consolidated Entity is not able to access necessary funding, this may result in postponement or reduction of capital expenditures, relinquishment of rights in assets or otherwise may have an adverse effect on the Consolidated Entity’s operations and financial performance. The Consolidated Entity’s ability to raise additional funds if required would be subject to, among other things, factors beyond the control of the Consolidated Entity and its Directors, including cyclical factors affecting the economy, investment climate for the energy sector and share markets generally. If for any reason the Consolidated Entity was unable to raise future funds if required, its ability to realise its strategy could be significantly affected. Joint Operations The Consolidated Entity participates in its business activities through minority interest in joint operations operated by other companies, governed by operating agreements. Under these agreements, the Consolidated Entity does not control the approval of work programmes and budgets and other project partners may participate in activities without the Consolidated Entity's approval. The Consolidated Entity may also be required to participate in activities which it did not approve, have its interests diluted or not gain the benefit of an activity. Project agreements can be subject to differences in interpretation and implementation with Operator responsibility for day to day operations. As a result, the Consolidated Entity may be exposed to operational and financial obligations outside of its control. Reserves and resources Estimating oil and gas reserves and resources is subject to significant uncertainties associated with technical data and the interpretation of that data, future commodity prices and development and operating costs. There can be no guarantee that the Consolidated Entity will successfully produce the volume of hydrocarbons that it estimates as reserves or that hydrocarbon resources will be successfully converted to reserves. The Consolidated Entity’s reserves and resources estimates are prepared by qualified, experienced engineers in accordance with the 2018 update to the Petroleum Resources Management System sponsored by the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers (SPE-PRMS). Exploration and Development The Consolidated Entity’s projects are at various stages of exploration, development and production. Oil and gas exploration and development activities can be high-risk undertakings and there can be no assurance that the exploration or development of any projects will result in the discovery of, and ability to realise any economic resources. Even if an apparently viable oil and gas resource is identified, there is no guarantee that it can be economically produced. 24 Cue Energy Resources Limited Annual Report 2025
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