88 ENERGY LIMITED

ASX LODGEMENT OF ANNUAL REPORT

88 Energy Limited (ASX:88E; AIM:88E) ("88 Energy" or "Company") advises that a copy of the Company's Annual Report for the year ended 31 December 2018 has been lodged on the ASX and is also available on the Company's website at www.88energy.com and at the following link - http://www.rns-pdf.londonstockexchange.com/rns/0018R_1-2019-2-25.pdf. The Annual Report was sent to shareholders today.

Set out below is the Chairman's Statement as included in the Company's Annual Report.

Also set out below is a summary of the Company's audited financial information for the year ended 31 December 2018 as extracted from the Annual Report, being:

· Consolidated Statement of Comprehensive Income;

· Consolidated Statement of Financial Position;

· Consolidated Statement of Changes in Equity; and

· Consolidated Statement of Cash Flows.

Media and Investor Relations:

88 Energy Ltd

Dave Wall, Managing Director Tel: +61 8 9485 0990

Email: [email protected]

Finlay Thomson, Investor Relations Tel: +44 7976 248471

Hartleys Ltd

Dale Bryan Tel: + 61 8 9268 2829

Cenkos Securities

Neil McDonald/Derrick Lee Tel: +44 131 220 6939

CHAIRMAN'S STATEMENT

Dear Shareholders

It is a pleasure to present my Chairman's Report for the 2018 financial year.

As I write, Nordic Rig#3 is on location drilling the Winx-1 well. The well will test a conventional oil prospect, defined by 3D seismic, in the Nanushuk play fairway on the Alaskan north slope with a gross mean unrisked prospective resource of 400 million barrels. It is arguably one of the most significant wells to be drilled by an ASX listed entity in 2019 and offers substantial upside to 88E shareholders in the event of success.

As we approach the drilling of this well, it is worth reminding ourselves of why 88E chose to explore in Alaska. At the outset, 88E cast the net far and wide in search of a project that could make a meaningful difference; one which would capture investor attention with significant upside. The north slope of Alaska offers vast potential remaining to be discovered. 88E was early in recognising potential and now has the advantage of a strategic acreage position and operational capability, giving the company high leverage to success.

Our initiative to target Alaska has been validated by recent exploration successes and the entry of new entrants like Oil Search, one of Australia's leading oil companies, who screened over 150 projects before settling on Alaska. Access to existing infrastructure; a very supportive and stable State Government and significant exploration upside were all cited as supporting factors - these long being recognised by 88E.

Bill Armstrong, one of north America's most successful explorers has described the source rocks of Alaska as unbelievably rich and prolific, having generated and expulsed about 1.5 trillion barrels of oil. Yet only a small fraction of that 1.5 trillion barrels has been found, leaving vast potential remaining to be discovered. Almost all the remaining fields in Alaska are stratigraphic traps rather than anticlines and require a subtler exploration approach, which 88E is pursuing as it targets reservoirs adjacent to those same source rocks.

During 2018, 88E continued to leverage its early mover advantage and is now Operator/Manager on 4 active Exploration Projects across 355,000 net acres. Unlike the lower 48 States, Alaskan leases have an attractive 7-10-year term with no mandatory relinquishment and a low 16.5% base royalty. Our prospective land holding is now of a size one would normally associate with the big end of town and provides scope to attract drilling partners.

Debt funding of Alaskan exploration rebates has enabled 88E to maintain leverage and reduce, to some extent, the large equity dilution normally associated with frontier exploration. The leverage from our enlarged acreage position is further enhanced due to the proximity of the all-weather Dalton Highway and the ability to connect into the trans-Alaska pipeline that can handle up to 2.1 million barrels per day and has considerable spare capacity.

The Alaskan program has been competently executed by our Managing Director, David Wall, with the assistance of a small dedicated team including senior geologist and Exploration Manager, Elizabeth Pattillo; petroleum engineer Hassan Fatahi; our Alaskan based Operations Manager, Erik Opstad and the full support of my fellow Directors. The confidence of the Board in their work and the support staff at 88E has been more than demonstrated in the exercise of options by Directors, which further aligns our risk with that of our shareholders.

88E has prudently raised additional capital in advance of the 2019 program. We all know the process of evaluation is not without risk; however, we look to the future with considerable optimism as we unlock both the conventional and unconventional potential of our Alaskan exploration acreage.

During the year our long-standing Director Brent Villemarette passed away. He was a champion and was instrumental in reviving the company. I would like to acknowledge his efforts and record that he will be missed by all at 88E.

Before closing I would like to thank the Department of Natural Resources, the Alaska Oil and Gas Conservation Commission; the North Slope Borough and other regulatory agencies that have facilitated our exploration effort in the State.

Our mission would not be possible without your support as shareholders in what has been a challenging yet exciting environment. Our dual listing on both ASX and AIM has garnered a wide investor base and we have been ably supported by our brokers and advisers Hartleys and Cenkos.

We look forward to a successful 2019 year.

Yours faithfully,

Michael Evans

Non-Executive Chairman

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018


	Note	2018	2017
		$	$
Revenue from continuing operations
Other income	3(a)	1,362,745	56,711

Administrative expenses	3(b)	(1,524,870)	(930,848)
Occupancy expenses		(44,958)	(154,689)
Employee benefit expenses	3(c)	(1,879,007)	(1,676,706)
Share-based payment expense	18	(21,750)	(2,020,772)
Depreciation and amortisation expense		(50,609)	(3,952)
Finance cost		(4,224,698)	(2,703,317)
Other expenses		(149,010)	(269,358)
Foreign exchange (loss) / gain		538,564	(705,984)
Loss before income tax		(5,993,593)	(8,408,915)
Income tax expense	4	-	-
Loss after income tax for the year		(5,993,593)	(8,408,915)

Other comprehensive income / (loss) for the year Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations		6,961,354	(2,644,471)
Other comprehensive income / (loss) for the year, net of tax		6,961,354	(2,644,471)

Total comprehensive income / (loss) for the year attributable to members of 88 Energy Limited		967,761	(11,053,386)

Loss per share for the year attributable to the members of 88 Energy Limited:
Basic and diluted loss per share	5	(0.001)	(0.002)

The Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the notes to the financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2018


	Note	2018	2017
		$	$
ASSETS
Current Assets
Cash and cash equivalents	6	21,722,211	14,014,422
Trade and other receivables	7	2,101,501	357,723
Total Current Assets		23,823,712	14,372,145

Non-Current Assets
Plant and equipment	8	11,172	4,575
Exploration and evaluation expenditure	9	76,983,981	46,934,162
Other receivables	10	22,977,103	20,248,981
Total Non-Current Assets		99,972,256	67,187,718

TOTAL ASSETS		123,795,968	81,559,863

LIABILITIES
Current Liabilities
Trade and other payables	11	6,001,949	4,667,815
Provisions	12	255,353	195,865
Borrowings	13	-	21,164,883
Total Current Liabilities		6,257,302	26,028,563

Non-Current Liabilities
Borrowings	13	23,424,471	-
Total Non-Current Liabilities		23,424,471	-

TOTAL LIABILITIES		29,681,773	26,028,563

NET ASSETS		94,114,195	55,531,300

EQUITY
Contributed equity	14	179,304,850	141,711,466
Reserves	15	22,628,390	15,645,286
Accumulated losses		(107,819,045)	(101,825,452)
TOTAL EQUITY		94,114,195	55,531,300

The Consolidated Statement of Financial Position should be read in conjunction with the notes to the financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018


	Issued Capital	Reserves	Accumulated Losses	Total
	$	$	$	$
At 1 January 2018	141,711,466	15,645,286	(101,825,452)	55,531,300
Loss for the year	-	-	(5,993,593)	(5,993,593)
Other comprehensive income	-	6,961,354	-	6,961,354
Total comprehensive income for the year after tax	-	6,961,354	(5,993,593)	967,761

Transactions with owners in their capacity as owners:
Issue of share capital	39,678,216	-	-	39,678,216
Share-based payments	-	21,750	-	21,750
Share issue costs	(2,084,832)	-	-	(2,084,832)
Balance at 31 December 2018	179,304,850	22,628,390	(107,819,045)	94,114,195

At 1 January 2017	125,157,965	16,268,985	(93,416,537)	48,010,413
Loss for the year	-	-	(8,408,915)	(8,408,915)
Other comprehensive loss	-	(2,644,471)	-	(2,644,471)
Total comprehensive loss for the year after tax	-	(2,644,471)	(8,408,915)	(11,053,386)

Transactions with owners in their capacity as owners:
Issue of share capital	17,792,774	-	-	17,792,774
Share-based payments	-	2,020,772	-	2,020,772
Share issue costs	(1,239,273)	-	-	(1,239,273)
Balance at 31 December 2017	141,711,466	15,645,286	(101,825,452)	55,531,300

The Consolidated Statement of Changes in Equity should be read in conjunction with the notes to the financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANICAL YEAR ENDED 31 DECEMBER 2018


	Note	2018	2017
		$	$

Cash flows from operating activities
Payment to suppliers and employees		(4,333,868)	(3,729,444)
Interest received		16,896	12,359
Interest & finance costs		(2,267,612)	(814,137)
Other income		-	101,792
Net cash flows used in operating activities	6(b)	(6,584,584)	(4,429,430)

Cash flows from investing activities
Payments for exploration and evaluation activities		(35,110,843)	(34,080,618)
Contribution from JV Partners in relation to Exploration		12,156,384	11,324,969
Net cash flows used in investing activities		(22,954,459)	(22,755,649)

Cash flows from financing activities
Proceeds from issue of shares		39,677,293	17,644,774
Share issue costs		(2,124,000)	(1,250,296)
Payment of borrowing costs		(1,126,456)	(665,868)
Net cash flows from financing activities		36,426,837	15,728,610

Net increase/(decrease) in cash and cash equivalents		6,887,794	(11,456,469)

Cash and cash equivalents at the beginning of the year		14,014,422	27,303,178
Effect of exchange rate fluctuations on cash held		819,995	(1,832,287)
Cash and cash equivalents at end of year	6(a)	21,722,211	14,014,422

The Consolidated Statement of Cash Flows should be read in conjunction with the notes to the financial statements.