Retail Entitlement Offer Booklet and Covering Letter - AJ Lucas

Key Risks
2. General risks relating to the operating businesses of AJL and the markets in which it operates (cont.)
2.11 Environmental (cont.)
Private entities, including the owners of properties upon which AJL’s wells (or the operations of an entity in which AJL has an interest) are drilled and
facilities where AJL’s hydrocarbons or waste materials are taken for reclamation or disposal, may also have the right to pursue legal actions to enforce
compliance as well as to seek damages for non-compliance with environmental laws and regulations or for personal injury or property damage. In addition,
the risk of accidental spills or releases of gas or hazardous materials could expose AJL to significant liabilities.
Any significant increase in the costs of compliance with, or the liabilities and costs associated with any failure to comply with, environmental and
operational safety laws and regulations could have a material adverse effect on AJL’s business, prospects, financial condition or results of operations.
2.12 Natural disasters and seasonal weather conditions
Some of the areas in which AJL has operations, particularly its drilling operations in Queensland, may be adversely affected by seasonal weather conditions.
AJL is seeking to incorporate, and in some cases has incorporated, ‘take or pay’ provisions and/or wet weather standby payments to mitigate risks
associated with wet weather events, thereby reducing the impact on its revenue stream.
The impact (directly or indirectly) of events beyond AJL’s control may adversely impact AJL’s operational and financial performance.
2.13 Availability of skilled employees, equipment and resources
AJL operates in sectors which are technically demanding and utilise a range of specialised equipment. To operate effectively, the business needs to
continue to source and commission new equipment as well as recruit, train and retain skilled employees to operate the specialised equipment. The
availability or supply of skilled personnel and the necessary equipment can be relevant to AJL’s future financial performance and growth.
The drilling industry in which AJL’s drilling division operates is capital intensive. The operating and financial performance of that division is partly reliant on
adequate capital investment.
AJL’s capital expenditure requirements may impact the cash flow available to service financing obligations and pay dividends. Incurred capital expenditure
may or may not deliver the expected operational benefits and may have a material adverse effect on AJL.
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