See accompanying Notes to Consolidated Financial Statements.

SAMSON OIL & GAS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

SAMSON OIL & GAS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ (DEFICIT)/EQUITY

(Unaudited)

See accompanying Notes to Consolidated Financial Statements.

SAMSON OIL & GAS LIMITED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying Notes to Consolidated Financial Statements

SAMSON OIL & GAS LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

These Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting. All adjustments which are normal and recurring by nature, in the opinion of management, necessary for fair statement of Samson Oil & Gas Limited’s (the “Company”) Consolidated Financial Statements have been included herein. Interim results are not necessarily indicative of expected annual results because of the impact of fluctuations in prices received for oil and natural gas, as well as other factors. In the course of preparing the Consolidated Financial Statements, management makes various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events, and, accordingly, actual results could differ from amounts previously established.

The Company’s Consolidated Financial Statements have been prepared on a basis consistent with the accounting principles and policies reflected in the Company’s audited financial statements as of and for the year ended June 30, 2017.2018. The year-end Consolidated Balance Sheet presented herein was derived from audited Consolidated Financial Statements, but does not include all disclosures required by GAAP.

It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Company’s latest annual report (“Form 10-K”).

Accruals.   Accrued liabilities at June 30, 20172018 and March 31, 20182019 consist primarily of estimates for goods and services received but not yet invoiced.

Prepayments.Prepayments at June 30, 20172018 and March 31, 20182019 include tubing and chemicals and other subscription costs paid in advance for the year.

Comparatives.Changes have been made to the classification of certain prior period comparatives in order to remain consistent with the current period presentation. These changesIn Form 10-Q for the period ended December 31, 2018 comparatives were changed to show the impact of certain assets being held for sale. During last quarter these assets were no longer deemed to be held for sale and therefore comparatives have had no material impact onnot been changed. See the financial statements.Discontinued Operations note below.

Liquidity and Going Concern

These financial statements have been prepared on the going concern basis, which contemplates the continuity of normal business activities and the realization of assets and settlement of liabilities in the normal course of business.

As disclosed in the financial statements, we incurred lossesa net loss from continuing operations of $5.2$3.8 million for the nine months ended March 31, 20182019, and had cash outflows from operations of $0.5 million. Asas at March 31, 2018that date, we had net$36.7 million in current liabilities, of $32 million.including $11.9 million in accounts payable, and approximately $3.4 million in current assets. Our ability to continue as a going concern is dependent in part on the renegotiation ofrefinancing our finance facilities to permit additional development of our oil$24 million bank debt. The refinancing was completed on April 9, 2019 and gas properties or a monetization of some or all of those properties.

On February 9, 2018, we entered into an agreement (the “Agreement”)details are provided in Note 12, Subsequent Events. Our compliance with our principal lender, Mutual of Omaha Bank (the "Bank") that amended and supplemented our loan agreement with the Bank (the "Loan Agreement").  Under the Agreement, we were required to provide the Bank, on or before March 31, 2018, with either (a) an executed agreement evidencing the sale of Samson and its subsidiaries or its respective businesses and assets, or (b) a fully-executed letter of intent or other form of commitment letter from a credible lender or other financing source reflecting a proposed refinance or payment of Samson’s outstanding obligations to the Bank, in each case providing for the full repaymentcovenants of the Bank on or before May 31, 2018.  Upon a failure to meet these deadlines,new credit facility will depend upon the Bank has the right to commence foreclosure proceedings or pursue alternative repayment methods, including salesuccess and timing of the loan.  Despite our best efforts, we were unable to meet the Agreement's March 31, 2018, deadlines. 

On March 31, 2018, the Company entered into a subscription agreement with a private equity firm calling for a $5.5 million debtdrilling program and equity investment in the Company in multiple installments (the "Securities Purchase").  The Company subsequently obtained a loan commitment from an institutional lender to replace the Bank, which by its termsit is contingent upon the Company successfully closing the Securities Purchase.  The Company also soughta number ofnecessary changes to that loan commitment, which changes have not yet been made.  Finally, nonepossible one quarter waiver delay of the scheduled installment purchases required by the subscription agreement for the Securities Purchases has yet to occur.  

As a result, the Company has refocused its efforts on seeking an outright sale of all or substantiallyall ofthe Foreman Butte Project assets in order to repay the Bank.  The Company has been discussing such a sale witha number ofinterested potential purchasers. The Company has advised the Bank of these developments.  While the Bank may have the right to declare a default under the Loan Agreement and pursue the remedies described above, it has not yet done so. 

Based on our current financial position we may be required to accept terms less favorable than would otherwise be available to us. There also can be no assurances that wecovenant measurement will be successful in renegotiation or refinancingrequested from the lender. The receipt of such approval is not assured. Due to our debt or our efforts explore the sale of some or all of our assets. These factors indicatehistorical net losses and accounts payable balances there is substantial doubt about our ability to continue as a going concern.concern for 12 months after the report date.

Discontinued Operations

As at June 30, 2018 and September 30, 2018 the majority of our assets in the Foreman Butte project were held for sale and were recognized as discontinued operations during those periods. Following repeated failures by the contracted buyer to close a sale of our Foreman Butte assets, we pursued discussions with a new lender with a view to refinancing our Mutual of Omaha Bank credit facility and completed the refinancing after March 31, 2019. As such the assets were no longer held for sale in the Balance Sheet as of December 31, 2018 or included as discontinued operations in the Income Statement.

Recent Accounting Standards

Revenue Recognition

On July 1, 2018, we adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) using the modified retrospective approach, which only applies to contracts that were not completed as of the date of the application. The adoption did not require an adjustment to the opening retained deficit for the cumulative effect adjustment and does not have a material impact on our ongoing consolidated balance sheet, statement of operations, statement of stockholders’ equity or statement of cash flows.

We recognize revenues from the sales of oil, natural gas and natural gas liquids (“NGL”) to our customers in accordance with the five-step revenue recognition model prescribed in ASC 606. Specifically, revenue is recognized when our performance obligations under contracts with customers (purchasers) are satisfied, which generally occurs with the transfer of control of the products to the purchasers. Control is generally considered transferred when the following criteria are met: (i) transfer of physical custody, (ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment of any repurchase rights or other similar rights. Given the nature of our sales, revenue is recognized at a point in time based on the amount of consideration we expect to receive in accordance with the price specified in the contracts.

Recent Accounting StandardsConsideration under the marketing contracts is typically received from the purchaser one to two months after production and, as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. We record the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. Such differences have historically not been significant as we use knowledge of our properties and their historical performance, spot market prices and other factors as the basis for these estimates. At March 31, 2019, the Company had receivables related to contracts with customers of $0.9 million.

In August 2014,

There was no impact on previously recognized revenue and no changes to what we would have recognized under the FASB issued previous revenue recognition standard, ASC Topic 605 Revenue Recognition

Leasing

Accounting Standards UpdateCodification 842 (“ASU”ASC 842”) No. 2014-15,Presentation of Financial Statements –Going Concern(“ASU 2014-15”). The objective of ASU 2014-15 is to provide guidance on management’s responsibility to evaluate whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. ASU 2014-15Leases is effective for fiscal years ending after December 15, 2016 and annual and interim periods thereafter. This standard has been adopted by the Company and additional disclosures were made in the Form 10-K for the period ended June 30, 2017.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. The standard requires an entity to recognize revenue in a manner that depicts the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance in ASU 2014-09 is now effective for annual reporting periods beginning after December 15, 2017, including interim periods therein, as a result2018. Although the impacts of the FASB's recent decisionstandard are still being reviewed, due to deferminimal leasing activity undertaken by the effective date by one year. We are currently evaluatingus, we expect this statement to have little impact on the method of adoption and impact this standard will have on our consolidated financial statements and related disclosures.Financial Statements.

2. Income Taxes

The Company has cumulative net operating losses (“NOLs”) that may be carried forward to reduce taxable income in future years. The Tax Reform Act of 1986 contains provisions that limit the utilization of NOLs if there has been a change in ownership as described in Internal Revenue Code Section 382. The Company’s prior year NOLs are limited by IRC Section 382.

ASC Topic 740 requires that a valuation allowance be provided if it is more likely than not that some portion or all deferred tax assets will not be realized. The Company’s ability to realize the benefits of its deferred tax assets will depend on the generation of future taxable income through profitable operations. Due to the Company’s history of losses and the uncertainty of future profitable operations, the Company has recorded a full valuation allowance against its deferred tax assets.

assets, except for a tax asset for certain refundable AMT credit carryforwards.

3. Earnings Per Share

Basic earnings (loss) per share is calculated by dividing net earnings (loss) attributable to ordinary shares by the weighted average number of shares outstanding for the period. Under the treasury stock method, diluted earnings per share is calculated by dividing net earnings (loss) by the weighted average number of shares outstanding including all potentially dilutive ordinary shares (which in Samson’s case consists of unexercised stock options). In the event of a net loss, however no potential ordinary shares are included in the calculation of shares outstanding since the impact would be anti-dilutive. 

During the quarter ended December 31, 2018, following receipt of shareholder approval, we consolidated our outstanding ordinary shares by a factor of 10 to 1, reducing the number of ordinary shares outstanding. Prior year shares outstanding has been adjusted to reflect this change as if it had happened at the beginning of the period presented.

The following table details the weighted average dilutive and anti-dilutive securities outstanding, which consist of transferable options to purchase ordinary shares which are tradeable on the ASX (“options”), for the periods presented:

The following tables set forth the calculation of basic and diluted loss per share:

4. Asset Retirement Obligations

The Company’s asset retirement obligations primarily represent the estimated present value of the amounts expected to be incurred to plug, abandon and remediate producing and shut–in properties at the end of their productive lives in accordance with applicable state and federal laws. The Company determines the estimated fair value of its asset retirement obligations by calculating the present value of estimated cash flows related to those obligations. The significant inputs used to calculate such liabilities include estimates of costs to be incurred, the Company’s credit adjusted discount rates, inflation rates and estimated dates of abandonment. The asset retirement liability is accreted to its present value each period and the capitalized asset retirement cost is depleted using the units–of–production method.

The value of asset retirement obligation held related to assets held for disposal as at June 30, 2018 relates to the retirement obligation associated with certain properties held for sale relating to our Foreman Butte project in North Dakota and Montana. These wells are no longer held for sale and the liability related to their asset retirement is held as a non-current liability.

In the currentprior year, the liabilities settled relate to wells plugged and abandoned in our Sabretooth project in Texas and two wells in our Foreman Butte project in North Dakota.Texas. Disposition of properties relaterelates to the sale of certain wells in Wyoming.

Liabilities settled during the prior period relate to wells in our Hawk Springs project area in Goshen County, Wyoming which were plugged and abandoned during the period ended March 31, 2017. Disposition of properties in the prior year relates to the sale of our North Stockyard project in North Dakota, which also closed during the period ended March 31, 2017.

The following table summarizes the activities for the Company’s asset retirement obligations for the nine months ended March 31, 20182019 and 2017:2018:

5. Fair Value Measurements

Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. The FASB has established a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurement).

The three levels of the fair value hierarchy are as follows:

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value as of MarchDecember 31, 2018 and June 30, 2017.2018.

The following methods and assumptions were used to estimate the fair value of the assets and liabilities in the table above:

Level 1 Fair value Measurements

Fair Value of Financial Instruments.   The Company’s financial instruments consist primarily of cash and cash equivalents, restricted cash, accounts receivable and payable and derivatives (discussed below). The carrying values of cash equivalents and accounts receivable and payable are representative of their fair values due to their short–term maturities.

Level 2 Fair Measurements

Derivative Contracts.The Company’s derivative contracts consist of oil collars and oil call options. The fair value of these contracts are based on inputs that are either readily available in the public market, such as oil future prices or inputs that can be corroborated from active markets. Fair value is determined through the use of a discounted cash model using applicable inputs discussed above.

Other fair value measurements

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis.

The Company also applies fair value accounting guidance to measure non–financial assets and liabilities such as business acquisitions, proved oil and gas properties, and the initial recognition of asset retirement obligations. These assets and liabilities are subject to fair value adjustments only in certain circumstances and are not subject to recurring revaluations. These items are primarily valued using the present value of estimated future cash inflows and/or outflows. Given the unobservable nature of these inputs, they are deemed to be Level 3.

6. Commitments and Contingencies

The Company has no accrued environmental liabilities for its sites, including sites in which governmental agencies have designated the Company as a potentially responsible party, because it is not probable that a loss will be incurred and the minimum cost and/or amount of loss cannot be reasonably estimated. However, due to uncertainties associated with environmental assessment and remediation activities, future expense to remediate the currently identified sites, and sites identified in the future, if any, could be incurred. Management believes, based upon current site assessments, that the ultimate resolution of any such matters will not materially affect our results of operations or cash flows.

From time to time, we are involved in various legal proceedings through the ordinary course of business. While the ultimate outcome is not known, management believes that any resolution will not materially impact the financial statements.

7. Capitalized Exploration Expense

We use the successful efforts method of accounting for exploration and evaluation expenditure in respect of each area of interest. The application of this policy requires management to make certain estimates and assumptions as to future events and circumstances, in particular the assessment of whether economic quantities of reserves have been found.  Any such estimates and assumptions may change as new information becomes available.

Exploration and evaluation assets are assessed for impairment when facts and circumstances indicate that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount.  When assessing for impairment consideration is given to but not limited to the following:

If, after having capitalized expenditures under our policy, we conclude that we are unlikely to recover the expenditures through future exploitation, then the relevant capitalized amount will be written off to expense.

As of March 31, 2018,2019 we had capitalized exploration expenditures of $nil,$0, having written off the expense previously capitalized associated relating to the Cane Creek project in Utah. Our option to acquire leasehold lands in this project expired unexercised.  

Exploration or divestment activities are continuing in all exploration areas. The outcome of these activities remains uncertain and may result in write offs in future periods if the related efforts prove unsuccessful.

8.  Share Capital

Issue of Share Capital

No shares were issued during the nine months ended March 31, 2018.

2019. During the three months and nine monthsquarter ended MarchDecember 31, 2017 140,143 options with an exercise price2018, following receipt of AUD$0.038 per ordinary share were exercised for net proceeds of AUD$5,325/US$3,811. On March 31, 2017 229,442,097 unexercised options expired. All options exercised were issued in a public rights offering conducted in June 2013.

During the nine months ended March 31, 2017 the company issued 67,005,600shareholder approval, we consolidated our outstanding ordinary shares by a factor of 10 to employees and Directors1, reducing the number of ordinary shares outstanding. Prior year shares outstanding has been adjusted to reflect this change as if it had happened at the beginning of the Company. These shares were issued in lieu of cash salaries for employees and directors during the period from August 1, 2015 to August 31, 2016. The share price on the grant was US$0.0035 per ordinary share.

Issue of Warrants

During the year ended June 30, 2017 we issued 272,000,000 warrants at no cost to employees and Directors of the Company. The warrants have an exercise price of AUD$0.0055 and an expiry date of November 17, 2026. The options vested on November 17, 2017. The warrants have been valued at AUD$0.0038 using a binomial option pricing model. We also issued 48,000,000 warrants to Australian based employees and directors of the Company. These warrants have an exercise price of AUD$0.007 and vested on November 17, 2017 and expire on November 27, 2026. The expense related to both sets of warrant grants was recognized over the vesting period. For the nine months ended March 31, 2018 share-based payment expense of $0.3 million has been recognized. No further amounts need to be recognized in future periods as the warrants have vested.presented.

9. Cash Flow Statement

Reconciliation of loss after tax to the net cash flows from operations:

10. Credit Facility

In January 2014, we entered into a $25.0 million credit facility with our primary lender, Mutual of Omaha Bank, with an initial borrowing base of $8.0 million, which was increased to $15.5 million in June 2014. In November 2014, the borrowing base was increased to $19.0 million, which was fully drawn prior to the closing of the Foreman Butte Acquisition (as defined below). In March 2016, our credit facility was amended to increase the borrowing base to $30.5 million to partially fund the Foreman Butte Acquisition. An additional $4 million in financing was also provided by the seller. This promissory note was paid off in May 2017. We were required under the amended credit agreement to repay Mutual of Omaha $10 million by June 30, 2016. This was ultimately increased to $11.5 million and extended to October 31, 2016. The pay down was achieved through the sale of our North Stockyard property for $14.95 million on October 28, 2016 and was made on October 31, 2016.

In May 2017, Mutual of Omaha Bank agreed to repay our outstanding promissory note to the seller of the Foreman Butte Acquisition through a term note in addition to our current facility. This closed on May 5, 2017. Samson paid $0.45 million in interest from existing cash reserves, while Mutual of Omaha Bank paid $4.0 million in principal.

As a result of this amendment to the credit facility the interest changed from being based on LIBOR to the Wall Street Journal published Prime Rate (“Prime”). The interest rate on the term loan is Prime plus 2.5% or approximately 6.5% and the credit facility is Prime plus 1.0% or 5%.

In June 2017, Samson and Mutual of Omaha Bank agreed to extend both the $4 million term loan and our $19.45 million reserve base facility until October 2018. The previous maturity date was October 31, 2017.

Following multiple covenant breaches, on February 9, 2018, we entered into an agreement (the “Agreement”) with our principal lender, Mutual of Omaha Bank (the "Bank") that amended and supplemented our loan agreement with the Bank (the "Loan Agreement").   Under the Agreement, we were required to provide the Bank, on or before March 31, 2018, with either (a) an executed agreement evidencing the sale of Samson and its subsidiaries or its respective businesses and assets, or (b) a fully-executed letter of intent or other form of commitment letter from a credible lender or other financing source reflecting a proposed refinance or payment of Samson’s outstanding obligations to the Bank, in each case providing for the full repayment of the Bank on or before May 31, 2018.  Upon a failure to meet these deadlines, the Bank has the right to commence foreclosure proceedings or pursue alternative repayment methods, including sale of the loan.  Despite our best efforts, we were unable to meet the Agreement's March 31, 2018, deadlines. 

On March 31, 2018, the Company entered into a subscription agreement with a private equity firm calling for a $5.5 million debt and equity investment in the Company in multiple installments (the "Securities Purchase").  The Company subsequently obtained a loan commitment from an institutional lender to replace the Bank, which by its terms is contingent upon the Company successfully closing the Securities Purchase.  The Company also soughta number ofnecessary changes to that loan commitment, which changes have not yet been made.  Finally, none of the scheduled installment purchases required by the subscription agreement for the Securities Purchases has yet to occur.  

As a result, the Company has refocused its efforts on seeking an outright sale of all or substantiallyall ofthe Foreman Butte Project assets in order to repay the Bank.  The Company has been discussing such a sale witha number ofinterested potential purchasers. The Company has advised the Bank of these developments.  While the Bank may have the right to declare a default under the Loan Agreement and pursue the remedies described above, it has not yet done so. 

The current borrowing base is $24.0 million and the balance of the drawn facility is $23.9 million. No additional amounts are available for drawdown under the facility.

The borrowing base under our credit facility may be increased (up to the credit facility maximum of $50.0 million, which would require syndication of the loan) or decreased in the future depending on the value of our reserves. Borrowing base redeterminations are performed by the lender every six months based on our June and December reserve reports. We also have the ability to request a borrowing base redetermination at another time, once a year, although under the Agreement, the determination of the borrowing base as of October 31, 2017 will be postponed.

In March 2016, the facility was extended to $30.5 million to partly fund the Foreman Butte Acquisition. As a result ofIn connection with this amendment to the facility agreement, the following changes were made to the original facility agreement:

The credit facility includes the following covenants, tested on a quarterly basis:basis, were included:

As at March 31,Following multiple covenant breaches, on June 14, 2018 we were in breachentered into a forbearance agreement with Mutual of all four covenants.

If the current pricing environment for oil and gas does not improve, and if our effortsOmaha Bank pursuant to sell certain assetswhich Mutual of Omaha Bank agreed to forbear on exercising its remedies under the Agreement are unsuccessful, it will be difficult for the Company to re-attain compliance with these covenants based our current debt levels. If we are not in compliance with these covenants in the credit facility we do not receive a further waiver fromcontingent upon the lender, then the due datesuccess of our debt could be acceleratedeffort to sell the Foreman Butte asset. This agreement, as amended, terminated in accordance with its terms on October 15, 2018. The $23.9 million outstanding under our credit facility was due for repayment October 31, 2018 but we did not repay it by that deadline. At March 31, 2019 Mutual of Omaha Bank has the lender. In addition,right to issue a notice of default and seek repayment of the facility or pursue alternative repayment methods, including the sale of the outstanding loan to a third party, at any failure to comply with these covenants adversely affects our ability to fund ongoing operations. We also must continue to improve our operations to address our working capital deficit.time. This loan was refinanced after March 31, 2019. See Note 12, Subsequent Events.

We incurred $0.6 million in borrowing costs (including legal fees and bank fees) in connection with the establishment of this facility. The remaining unamortizedThese costs have been expensed this quarter due towere written off in total during the nature of the loan..year ended June 30, 2018.

11. Derivatives

The Company has not designated any of its derivative contracts as hedges for accounting purposes. The Company records all derivative contracts at fair value. Changes in derivative contracts are recognized in earnings. Changes in settlements and valuation gains and losses are included in loss/(gain) on derivative instruments in the Statement of Operations. These contracts are settled on a monthly basis. Derivative assets and liabilities arising from the Company’s derivative contracts with the same counterparty that provide for net settlement are reported on a net basis in the Balance Sheet.

The Company is exposed to commodity price risk, which impacts the predictability of its cash flows from the sale of oil. The Company seeks to manage this risk through the use of commodity derivative contractscontracts. These derivative contracts allow the Company to limit its exposure to commodity price volatility on a portion of its forecasted oil sales. At

During the quarter ended March 31, 2018,2019, the Company’s commodity derivative contracts consistedCompany entered into a series of economic hedges for 771,000 bbl of crude oil production for the next four years at an average price of $55.54/bbl and for 466,200 MMcf of natural gas costless collars with a weighted average put at $2.60 per MMBTU and fixed price swaps, which are described below:a weighted average of call of $2.82 per MMBTU.

All of the Company’s previous derivative contracts arewere with the same counterparty (a large multinational oil company) and arewere shown on a net basis on the Balance Sheet. The Company’s counterparty has entered into an inter-creditor agreement with the Company’s primary lender, and as such, no additional collateral is required by the counterparty.

During the nine months ended March 31, 20182019 we recognized $2.1$0.9 million loss in loss on derivative instruments in the Statement of Operations. $1.0 million was realized during the period, while the remaining $1.1 million was unrealized.

At March 31, 2018, the Company’s open derivative contracts consisted of the following:

12. Subsequent Events

On April 9, 2019 Samson Oil and Gas, USA, Inc., a wholly owned subsidiary of Samson Oil and Gas Limited closed a $33.5 million refinancing with AEP I FINCO LLC. The new facility has a 5 year term and an interest rate of LIBOR + 10.5%. The proceeds of the new debt facility were used to retire the existing line of credit, repay outstanding creditor and to provide working capital to pursue an infill drilling program. The terms of the new facility include financial covenants measured quarterly as follows:

There are no subsequent events or material contingencies, other than as noted

The credit agreement also limits the amount of total capital expenditures and sets up a debt service capital reserve account. Beginning September 30, 2020, repayment of the loan is scheduled to be made on a monthly straight line amortization basis until maturity on April 9, 2024.

As a consequence of this refinancing the Company has embarked on an infill development program. The drilling program is designed to drill horizontal laterals from the existing well bores. The ability to drill out of an existing wellbore has made the economics of these development wells attractive, given the ability to use surface facilities associated with the existing well. The next 12 months should see a total of 8 similar lateral wells drilled within the Home Run Field, which is the largest (by area) of the oil fields in Samson’s portfolio. The Company has in its portfolio a total of 26 PUD locations that management expects will provide an excellent growth platform. The debt funding that has been achieved in this Quarterly Report on Form 10-Q.transaction is expected to provide sufficient working capital to initiate and maintain the planned development drilling program.

Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is management’s discussion and analysis of certain significant factors that have affected aspects of our financial position and the results of operations during the periods included in the accompanying Condensed Financial Statements. You should read this in conjunction with the discussion under “Management's Discussion and Analysis of Financial Condition and Results of Operations” and the audited Financial Statements for the year ended June 30, 2017,2018, included in our Annual Report on Form 10-K and the Consolidated Financial Statements included elsewhere herein.

Throughout this report, a barrel of oil or “Bbl” means a stock tank barrel (“STB”) and a thousand cubic feet of gas or “Mcf” means a thousand standard cubic feet of gas (“Mscf”).

Overview

We are an independent energy company primarily engaged in the acquisition, exploration, exploitation and development of oil and natural gas properties. Our principal business is the exploration and development of oil and natural gas properties in the United States.

In June 2018 we signed a purchase and sale agreement for the sale of the majority of our working interest in the Foreman Butte project in Montana and North Dakota for $40 million. This sale was expected to close on October 15, 2018 however the buyer failed to close. A non-refundable $1 million deposit placed into escrow by the buyer was released to us and as such we have included it in “other income”. Following the failure of the buyer to close, we are no longer holding the assets for sale in our balance sheet although efforts to sell the assets continued. We terminated the purchase and sale agreement with the buyer and engaged PLS Energy Advisors Group to remarket the asset. To the date of this report, we have not received any viable offers for the purchase of the assets and as such we continued our discussions with a non-bank lender to consider refinancing our current Mutual of Omaha Bank credit facility. Due diligence was completed during the current quarter and refinancing closed on April 9, 2019.

Foreman Butte Project

In March 2016 we closed on an acquisition (the “Foreman Butte Acquisition”) of certain producing and nonproducing oil and gas assets located in North Dakota and Montana which we refer to as the(the “Foreman Butte Project,”Project”) for a purchase price of $16 million.million (the “Foreman Butte Acquisition”). The acquired assets were comprised of producing oil and gas wells, shut in wells and associated facilities. The wells are located in the Madison and Ratcliffe formations. The majority of these wells are now operated by us,us; however, a number of non-operated wells were also included in this package.

We continue to concentrate our efforts on the operations of this field. Due to financial constraints we have not made substantial progress on the development of the PUD drilling program in the Home Run field.Field. Our development efforts are currentlywere constrained by our lack of access to capital to fund any development activities. Subsequent to closing the refinancing on April 9, 2019 we began implementing our drilling program. We have four current drilling permits for our Home Run field and anticipate drilling our first PUD well as soon as we obtainField, the necessary funding through a refinance of our credit facility or throughmost promising non-producing area within the partial sale of our North Dakota and Montana assets, through there can be no assurance this will be possible.

Based on our current financial position we may be required to accept terms less favorable than would otherwise be available to us.  There also can be no assurances that we will be successful in renegotiation or refinancing of our debt or our efforts explore the sale of some or all of our assets. These factors indicate there is substantial doubt about our ability to continue as a going concernForeman Butte Project.

Fiscal quarter overview

Our net oil production was 47,650 barrels of oil for the quarter ended March 31, 2019, compared to 34,450 barrels of oil for the quarter ended March 31, 2018, compared to 64,632 barrels of oil for2018. Production was higher during the quarter ended March 31, 2017.  Production was lower during the period ended March 31, 20182019 due to the impact of severe weather that was experienced in the Williston Basin. This weather caused several problems including freeze off, road closures and shut ins mandated by the North Dakotan authorities. ,By waya number of exampleworkovers completed during the period ended March 31, 2018 production at two of our more significant wells was halted for a period of time due to weather related production restrictions. In particular, the R Field did not produce for 24 days during the current quarter as it is located in a mandatory flood watch zone and has been shut in. The Evans well was shut in for 62 days due to the lack of road access to transport produced oil due to weather conditions, however this is expected to be returned to production during May 2018. Samson however employed its workover rig to service wells during the quarter and as a result the company’s operated production has increased dramatically in the current quarter were we are seeing production rates that have effectively doubled compared that observed in the March quarter.

Our net gas production was 6,361 Mcf for the quarter ended March 31, 2019 compared to 2,067 Mcf for the quarter ended March 31, 2018, compared to 58,209 Mcf for the quarter ended March 31, 2017. Coupled with the decrease in natural gas production following our North Stockyard sale, one of our significant gas wells, the Davis Bintliff well, has been down since October 2016 while undergoing workover operations. These workover operations were not successful and, as a result, this well was plugged and abandoned. Associated gas produced in the Foreman Butte project area is not as significant as it was2018. The increase in the oil andprice has meant that some of the more liquid rich gas properties previously owned by the Company, therefore the increased gas production from the acquisition has not offset the decline from the sale.been produced rather than flared. This value is immaterial to us.

Lease operating expenses (“LOE”) decreased from $1.9increased to $2.9 million for the quarter ended March 31, 2017, to2019, from $1.5 million for the quarter ended March 31, 2018 due to lower production. Costs per BOE, excludinggeneral operating expense increases in the impact of the workovers and production taxes were $29.44 a barrel. Costs have increased from $16.56 for the quarter ended March 31, 2017field due to lowerincreased production. The wells in the Foreman Butte project area are also older wells than those we have previously owned and require additional fresh water and hot oil cleanouts which may increase operating costs of the wells. We are continuing to review our lease operating expenses and will shut wells in that are not economic to produce in the current oil pricing environment.

During the quarter ended March 31, 2018 we continued with our water flood project for the Home Run field and successfully injected 5,720 barrels of water. The waterflood project utilizes an existing wellbore, the Mays 1-20H, which is located on the flank of the field and is uneconomic to produce for oil. The water flood is being used to add pressure to the reservoir which is expected to enhance the recovery of oil as well as lower salt water disposal costs although we can make no assurances as to whether it will be successful.

For the three months ended March 31, 20182019 and March 31, 2017,2018 we reported a net loss of $2.0$3.8 million from operations and a net gainloss of $0.2$2.0 million respectively. The loss in the current period reflects $0.3 million in depletion and amortization, $0.5 million in loss on derivative instruments and $1.5 million in lease operating expense (including workover expenses).

Fiscal year to date overview

Our net oil production was 134,366 barrels of oil for the nine months ended March 31, 2018 compared to 230,756 barrels of oil for the nine months ended March 31, 2017. Production has decreased as result of the sale of our North Stockyard property, which closed on October 29, 2016. Production has also decreased to weather related issues as mentioned above. We have re-commenced workovers and are seeing a positive impact on production subsequent to March 2018.

Our net gas production was 13,217 Mcf for the nine months ended March 31, 2018, compared to 93,526 Mcf for the nine months ended March 31, 2017. As discussed above, coupled with the decrease in natural gas production following our North Stockyard sale, one of our significant gas wells, the Davis Bintliff well, has been down since October 2016 while undergoing workover operations. These workoverfrom operations, were not successful and, as a result, this well was plugged and abandoned. Associated gas produced in the Foreman Butte project area is not as significant as it was in the oil and gas properties previously owned by the Company, therefore the increased gas production from the acquisition has not offset the decline from the sale.respectively.

LOE decreased from $7.6 million for the nine months ending March 31, 2017 to $4.4 million for the nine months ending March 31, 2018. Costs reduction is primarily due to tighter cost controls enforced in the field including shutting in wells that are uneconomic to produce and lower production.

Our ability to continue as a going concern is dependent on the renegotiation of our finance facilities to permit additional development of our oil and gas properties or a monetization of some or all of those properties.

On February 9, 2018, we entered into an agreement (the “Agreement”) with our principal lender, Mutual of Omaha Bank (the "Bank") that amended and supplemented our loan agreement with the Bank (the "Loan Agreement").   Under the Agreement, we were required to provide the Bank, on or before March 31, 2018, with either (a) an executed agreement evidencing the sale of Samson and its subsidiaries or its respective businesses and assets, or (b) a fully-executed letter of intent or other form of commitment letter from a credible lender or other financing source reflecting a proposed refinance or payment of Samson’s outstanding obligations to the Bank, in each case providing for the full repayment of the Bank on or before May 31, 2018.  Upon a failure to meet these deadlines, the Bank has the right to commence foreclosure proceedings or pursue alternative repayment methods, including sale of the loan.  Despite our best efforts, we were unable to meet the Agreement's March 31, 2018, deadlines. 

On March 31, 2018, the Company did enter into a subscription agreement with a private equity firm calling for a $5.5 million debt and equity investment in the Company in multiple installments (the "Securities Purchase").  The Company subsequently obtained a loan commitment from an institutional lender to replace the Bank, which by its terms is contingent upon the Company successfully closing the Securities Purchase.  The Company also soughta number ofnecessary changes to that loan commitment, which changes have not yet been made.  Finally, none of the scheduled installment purchases required by the subscription agreement for the Securities Purchases has yet to occur.  

As a result, the Company has refocused its efforts on seeking an outright sale of all or substantiallyall ofthe Foreman Butte Project assets in order to repay the Bank.  The Company is currently discussing such a sale witha number ofinterested potential purchasers. The Company has advised the Bank of these developments.  While the Bank may have the right to declare a default under the Loan Agreement and pursue the remedies described above, it has not yet done so. 

See “Results of Operations” below.

In the execution of our strategy, our management is principally focused on economically developing additional reserves of oil and on maximizing production levels through exploration, exploitation and development activities on a cost-effective basis.

Notable Activities and Status of Material Properties during the Quarter Ended MarchDecember 31, 2018 and Current Activities

Acquisition: Producing Properties

Foreman Butte Project, McKenzie County, North Dakota

Mississippian Madison Formation, Williston Basin

Samson 87% Operated Average Working Interest

During the quarter, we continued our water flood pilot project for the Home Run Field by successfully injecting over 5,270 barrels of water.Field. The waterflood pilot project utilizes an existing wellbore, the Mays 1-20H, which is located on the flank of the field and is non-economic to produce for oil. The water flood is being used to add pressure to the reservoir which is expected to enhance the recovery of oil. The well performance in the offsetting wells will be monitored to establish the viability of the flood. The water being used is produced formation water so that there is no chemical compatibility issue. In essence the water is being returned to the reservoir from which it originated. This water will beis trucked to the injector from the existing producing wells. We anticipate thisThe water flood will allowallowed us to resume production at certain wells that have been shut-in for the past 23 years. These shut-in wells were previously uneconomic to produce due to high water disposal costs. We cannot make assurances regarding the success of the water flood operation.

The Home Run Field (also known as the Foreman Butte Field) is the largest areal oil field in our portfolio.the Foreman Butte Project. It was developed on a 640-acre spacing pattern and our engineering and geologic analyses have determined that only 3.2% of the original oil in place has been recovered to date. Given that oil fields can recover up to 20% of their oil in place, there would appear to be significant un-developedundeveloped oil to be recovered from this field.

Accordingly, we are planning to drill our first development well this year, should we be able to access the necessary capital to allow us to fund the drilling cost. The first lateral will test the Ratcliffe Formation of the Mississippian Madison Group. Currently 26 Ratcliffe PUD (“proved undeveloped drilling”) locations have been identified. The second lateral will test an undeveloped reservoir in the Mission Canyon Formation of the Mississippian Madison Group. This lateral could prove up a new oil field with the potential for many additional well locations (up to 20 vertical wells or 8 drill-out laterals, although we can make no assurances regarding the success of this lateral). A 3,500 acre 4-way structural closure has been mapped from an abundance of existing well control in the area. In 2004, the Banks 1-18H well was planned to be drilled as a dual lateral in both the Ratcliffe and Mission Canyon reservoirs. The Mission Canyon lateral produced hundreds of barrels of oil while the lateral was being drilled. However, the well was completed as just a single lateral in the Ratcliffe zone due to the operator being unable to remove a stuck whipstock that was set above the Mission Canyon lateral in order to drill the Ratcliffe lateral. This stuck whipstock prevented the completion of the Mission Canyon lateral.

Undeveloped Properties: Exploration Activities

Hawk Springs Project, Goshen County, Wyoming

Permo-Penn Project, Northern D-J Basin

Samson 37.5% working interest

Following a delay due to bad weather in the latter part of 2016, the recompletion of the Bluff #1-11 well hasAll wells within this project have been further delayed due to our current focus on more capital efficient projects in the Foreman Butte project area. The Jurassic Canyon Springs Formation will be perforated and flow tested first. If this is unsuccessful, the Cretaceous Dakota Formation will subsequently be perforated and flow tested. This well will be plugged and abandoned should these two operationswith the final work expected to be unsuccessful.completed during the quarter.

Cane Creek Project, Grand & San Juan Counties, Utah

Pennsylvanian Paradox Formation, Paradox Basin

Samson 100% Working Interest

Our option to lease 8,080 net acres with Utah SITLA (Utah School and Institutional Trust Lands Administration) at a cost of $75 per acre expired on November 30, 2017, unexercised. $0.3 million in undeveloped capitalized costs was written off in the three months ended December 31, 2017.

Developed Properties: Drilling Activities

Rainbow Project, Williams County, North Dakota

Mississippian Bakken Formation, Williston Basin

Samson 23% and 52% working interest

Kraken Operating, LLC, the operator of the Gladys 1-20H well, has been producing this well at an average rate of 44146 BOPD and 52172 MCFPD during the quarter.

Results of Operations

For the three months ended March 31, 2018,2019 we reported a net loss of $2.0$3.8 million compared to a net gainloss of $0.2$2.0 million for the same period in 2017.2018.

For the nine months ended March 31, 2018,2019 we reported a net loss of $5.2$4.9 million compared to a net loss of $2.7$5.2 million for the same period in 2017.2018.

The following tables set forth selected operating data for the three and nine months ended: