AGM 15October, page-8

Ok...lets break this down. If all 32 million performance rights are vested as a result of meeting the various performance criteria, then 32 million shares are issued. On a base of 5.6b undiluted shares or 5.9b fully diluted shares, this represents a fraction over 0.5% dilution. In other words...bugger all.

However, it is prudent (IMO) as shareholders that we know what we are potentially getting for the dilution (albeit limited) that we are being asked to approve:

• 60% of the performance rights (19.2m) is based on hitting shareprice growth targets. It looks like this tranche is split into 3 x 20% lots (i.e. 6.4m share lots) over the first 3 years. Each sub-section of this tranch vests on a pro-rata basis according to the shareprice growth achieved - fair enough IMO. So if the SP is around 2.1c at time of performance rights being issued (if approved next month), SP needs to triple to 6.3c within the first 12 months for the first 6.4m shares to fully vest. What is not clear to me, are the metrics for the full vesting of the second and third lots of 6.4m shares each in this shareprice growth tranche: is it to maintain 6.3c SP at second and third anniversary of issue date or is it to triple (ie 200% growth) in each year? If the former, then it is an DP maintenance incentive, not a SP growth incentive. If the latter, then illustrative SP targets for full vesting are 18.9c at second anniversary and 56.7c at third anniversary. Any clarity that any London meeting attendees could get on this would be wonderful.

• 20% of the performance rights (6.4m shares) are dependent on amount of proven+probable reserves (2P), net to 88e, achieved by the first anniversary and determined by an independent audit. Sliding scale with 150 mmbbls required to get 100% of this trance vested. I do not believe 2P reserves can be achieved other than through the end of a drill bit, and given the time required to also get an independent reserves audit...and the likely anniversary being Oct/Nov 2019, this is a hugely positive indicator of the timing, urgency and confidence of Winx. IMO. But why rush the upcoming General Meeting and (subject to approval) set the 12 month clock running on this reserves tranche? Delaying till early in the new year, prior to Winx spud, could be a 'safer' bet to provide more time to hit the reserves target. Unless of course, the above SP growth target (which is 60% after all), would be better served for the recipient of the performance right if the clock was started earlier...and in particular, prior to any farm-in announcement and its expected boost value. If so, nothing wrong with that, IMO as all shareholders benefit if these vesting triggers are met.

• 10% (3.2m shares) are based on the 2C (best estimate) contingent resources trance, again on a sliding scale with the 100% trigger being 400 mmbbls of 2C resource - again, by the first year anniversary of rights award. While I suspect that in theory, 2C resources could be 'evaluated' by an independent auditor on the basis of the seismic analysis and vintage data reworking - I personally believe it is unlikely. More likely, IMO, that an independent auditor will require the results of the abovementioned drill that is seeking proven+probable reserves. Which is further incentive to get that drill bit going and perhaps even to accelerate any other activities that would support a ramping up of identified 2C resources.

• 5% (1.65m shares) is based on the production tranche - again with a sliding scale with the 100% trigger being 5,000 bopd by the 12 month anniversary. Highly unlikely IMO, hence why it is only 5%, but still nice to see.

• 5% (1.65m shares) is based on tenure - being around for 3 years after award date. Again, neither here or there for me. Not big enough to be either a hand-cuff to hold DW, or big enough for shareholders to fret about as being an easy 'survivor' fee.

So...all in all, I like it. Nice incentives at bugger all dilution. Whether it is an incentive from the BoD to focus management on SP and achieving reserves...or whether it is a quick attempt to lock-in some management reward for some expected results in the near term - is largely irrelevant to me as we all win whatever it is.

Keen to know if others have interpreted this the same way, or if anyone has a better understanding of the first tranche (SP growth).

GLTA.