SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)

12 Months Ended

Sep. 30, 2023

Supplemental Information On Oil And Gas Operations

SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)

16. SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED)

Supplemental unaudited information regarding Permex’s oil and gas activities is presented in this note. All of Permex’s reserves are located within the U.S.

Costs Incurred in Oil and Gas Producing Activities

	12 Months Ended		12 Months Ended
	September 30, 2023		September 30, 2022
Acquisition of proved properties	$	—	$	—
Acquisition of unproved properties		—		—
Development costs		2,019,639		1,676,668
Exploration costs		—		—
Total costs incurred	$	2,019,639	$	1,676,668

Results of Operations from Oil and Gas Producing Activities

	12 Months Ended			12 Months Ended
	September 30, 2023			September 30, 2022
Oil and gas revenues	$	688,827		$	815,391
Production costs		(879,471	)		(829,194	)
Exploration expenses		—			—
Depletion, depreciation and amortization		(104,798	)		(99,855	)
Impairment of oil and gas properties		—			—
Result of oil and gas producing operations before income taxes		(295,442	)		(113,658	)
Provision for income taxes		—			—
Results of oil and gas producing activities	$	(295,442	)	$	(113,658	)

PERMEX PETROLEUM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023 AND 2022

16. SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED) (cont’d…)

Proved Reserves

The Company’s proved oil and natural gas reserves have been estimated by the certified independent engineering firm, MKM Engineering. Proved reserves are the estimated quantities that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are the quantities expected to be recovered through existing wells with existing equipment and operating methods when the estimates were made. Due to the inherent uncertainties and the limited nature of reservoir data, such estimates are subject to change as additional information becomes available. The reserves actually recovered and the timing of production of these reserves may be substantially different from the original estimate. Revisions result primarily from new information obtained from development drilling and production history; acquisitions of oil and natural gas properties; and changes in economic factors.

Our proved reserves are summarized in the table below:

	Oil (Barrels)			Natural Gas (Mcf)			BOE (Barrels)
Proved developed and undeveloped reserves:
September 30, 2021		6,199,420			3,018,350			6,702,478
Revisions		48,320			(5,613	)		47,385
Purchase of proved reserves		-			-			-
Sale reserves		-			-			-
Production		(10,670	)		(11,567	)		(12,598	)
September 30, 2022		6,237,070			3,001,170			6,737,265
Revisions		(3,588,541	)		(951,270	)		(3,747,086	)
Purchase of proved reserves		-			-			-
Sale reserves		-			-			-
Production		(11,729	)		(7,500	)		(12,979	)
September 30, 2023		2,636,800			2,042,400			2,977,200
Proved developed reserves:
September 30, 2021		587,450			411,910			656,102
September 30, 2022		1,153,870			864,770			1,297,998
September 30, 2023		1,027,100			765,300			1,154,650
Proved undeveloped reserves:
September 30, 2021		5,611,970			2,606,440			6,046,377
September 30, 2022		5,083,200			2,136,400			5,439,267
September 30, 2023		1,609,700			1,277,100			1,822,550

PERMEX PETROLEUM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023 AND 2022

16. SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED) (cont’d…)

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

The following information is based on the Company’s best estimate of the required data for the Standardized Measure of Discounted Future Net Cash Flows as of September 30, 2023 and September 30, 2022 in accordance with ASC 932, “Extractive Activities – Oil and Gas” which requires the use of a 10% discount rate. This information is not the fair market value, nor does it represent the expected present value of future cash flows of the Company’s proved oil and gas reserves.

Future cash inflows for the years ended September 30, 2023 and September 30, 2022 were estimated as specified by the SEC through calculation of an average price based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for the period from October through September during each respective fiscal year. The resulting net cash flow are reduced to present value by applying a 10% discount factor.

	12 Months Ended
	September 30, 2023			September 30, 2022
Future cash inflows	$	211,828,000		$	589,481,000
Future production costs(1)		(40,061,000	)		(91,630,000	)
Future development costs		(17,241,000	)		(71,700,000	)
Future income tax expenses		(39,262,000	)		(113,873,000	)
Future net cash flows		115,264,000			312,278,000
10% annual discount for estimated timing of cash flows		(60,184,000	)		(167,549,000	)
Standardized measure of discounted future net cash flows at the end of the fiscal year	$	55,080,000		$	144,729,000

(1) Production costs include crude oil and natural gas operations expense, production ad valorem taxes, transportation costs and G&A expense supporting the Company’s crude oil and natural gas operations.

Average hydrocarbon prices are set forth in the table below.

	Average Price		Natural
	Crude Oil (Bbl)		Gas (Mcf)
Year ended September 30, 2021 (1)	$	55.98	$	2.95
Year ended September 30, 2022 (1)	$	91.72	$	5.79
Year ended September 30, 2023 (1)	$	78.61	$	2.23

(1) Average prices were based on 12-month unweighted arithmetic average of the first-day-of-the-month prices for the period from October through September during each respective fiscal year.

Future production and development costs, which include dismantlement and restoration expense, are computed by estimating the expenditures to be incurred in developing and producing the Company’s proved crude oil and natural gas reserves at the end of the year, based on year-end costs, and assuming continuation of existing economic conditions.

PERMEX PETROLEUM CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED SEPTEMBER 30, 2023 AND 2022

16. SUPPLEMENTAL INFORMATION ON OIL AND GAS OPERATIONS (UNAUDITED) (cont’d…)

Sources of Changes in Discounted Future Net Cash Flows

Principal changes in the aggregate standardized measure of discounted future net cash flows attributable to the Company’s proved crude oil and natural gas reserves, as required by ASC 932, at fiscal year-end are set forth in the table below.

	12 Months Ended
	September 30, 2023			September 30, 2022
Standardized measure of discounted future net cash flows at the beginning of the year	$	144,729,000		$	73,269,000
Extensions, discoveries and improved recovery, less related costs		—			—
Sales of minerals in place		—			—
Purchase of minerals in place		—			—
Revisions of previous quantity estimates		(103,529,000	)		1,674,000
Net changes in prices and production costs		(52,170,000	)		88,333,000
Accretion of discount		19,862,000			10,077,000
Sales of oil produced, net of production costs		191,000			(49,000	)
Changes in future development costs		27,173,000			911,000
Changes in timing of future production		(16,145,000	)		(3,099,000	)
Net changes in income taxes		34,969,000			(26,387,000	)
Standardized measure of discounted future net cash flows at the end of the year	$	55,080,000		$	144,729,000