CAPITAL RAISING AND CORPORATE UPDATE 19 January 2018 Information Pack AJ Lucas Group LDS February 2016 AJ Lucas Group Limited (ACN 060 309 104) Disclaimer This Presentation has been prepared by AJ Lucas Group Limited (ACN 060 309 104) (AJL). Summary information • This Presentation contains summary information about AJL. This information is of a general nature and does not purport to be complete nor does it contain all the information which a prospective investor should consider when making an investment decision or that would be required in a prospectus or product disclosure statement prepared in accordance with the requirements of the Corporations Act. This Presentation should be read in conjunction with AJL’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. Not an offer • This Presentation is not a prospectus, product disclosure statement or other offering document under Australian law (and willnot be lodged with ASIC) or any other law. This Presentation is for information purposes only and is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction. Not investment advice • This Presentation does not constitute investment or financial product advice nor any recommendation to acquire entitlements or new shares in AJL (New Shares). It is not intended to be used as the basis for making a financial decision, nor is it intended to constitute legal, tax, or accounting advice or opinion.Any references to, or explanations of, legislation, regulatory issues, benefits or any other legal commentary (particularly in the “Key risks” section of this Presentation) are indicative only, do not summarise all relevant issues and are not intended to be a full explanation of a particular matter. Recipients should make their own enquiries and investigations regarding any investment, and should seek their own professional advice on the legal, financial, accounting, taxation and other consequences of investing in any securities in AJL. • This Presentation has been prepared without taking into account your investment objectives, financial situation or particularneeds. No reliance may be placed for any purpose whatsoever on the information contained in this Presentation or on its accuracy or completeness. Any reliance on this communication could potentially expose you to a significant risk of losing all of the funds invested by you in AJL or the incurring by you of additional liability. Investment risk • An investment in shares is subject to known and unknown risks, some of which are beyond the control of AJL, including possible loss of income and principal invested. AJL does not guarantee any particular rate of return or the performance of AJL, nor does it guarantee the repayment of capital from AJL orany particular tax treatment. • Investors should have regard to the risk factors outlined in this Presentation when making their investment decision. Forward looking statements • This Presentation contains forward looking statements. You should be aware that such statements are only estimates or predictions, which may be based on subjective judgments and assumptions as to future events, which may or may not occur and which are subject to inherent risks and uncertainties, many of which are beyond the control of AJL. Actual events or results may differ materially from the events or results expected or implied in any forward looking statement. No representation or warranty (whether express or implied) is made as to the accuracy or likelihood of fulfilment of any forward looking statement. Past performance • Investors should note that past performance, including past share price performance and historical information in this Presentation is given for illustrative purposes only and cannot be relied upon as an indicator of (and provides no guidance as to) future performance including future share price performance. This historical information is not represented as being indicative of AJL’s views on its future financial condition and/or performance. The historical information in this Presentation is, or is based upon, information that has been released to ASX. 2 Disclaimer (continued) Disclaimers • None of AJL’s advisers or PatersonsSecurities Limited, nor any of their respective affiliates, related bodies corporate, directors, officers, partners, employees,contractors, professional advisers or agents (“Limited Parties”), have authorised, permitted or caused the issue, submission, dispatch or provision of this Presentation and there is no statement in this presentation which is based on any statement by them. None of the Limited Parties take any responsibility for any information in this presentation or any action taken by investors on the basis of such information and, except to the extent referred to in this Presentation, none of them makes or purports to make any statement in this Presentation. • Not all of the information contained in this Presentation has been subject to independent audit or review. No representation or warranty, express or implied, is made as to the currency, accuracy, fairness, sufficiency, reliability or completeness of the information, projections, opinions or beliefs contained in this Presentation. To the maximum extent permitted by law, no liability (including without limitation, any liability arising out of mistakes, omissions, misstatements, misrepresentations in this Presentation or out of any other fault or negligence) is accepted by AJL, its officers, employees or contractors or the Limited Parties for any loss, cost or damage suffered or incurredas a result of the reliance on such information, projections, opinions or beliefs. The Limited Parties make no recommendations or endorsements as to whether any recipient should participate in the Offer and, to the maximum extent permitted by law, disclaim any fiduciary relationship with any recipient. • The information in this Presentation remains subject to change without notice. AJL reserves the right to withdraw the Offer and/or vary the timetable for the Offer without notice. AJL, its officers, employees and contractors and the Limited Parties undertake no obligation to provide any recipient with access to any additional information or to notify any recipient or any other person of any matter arising or coming to its notice after the date that this Presentation was issued. • Investors represent, warrant and agree that they have not relied on any statements made by any of the Limited Parties in relation to the issue of new shares or the Offer generally. Financial data • All dollar values are in Australian dollars (A$), unless otherwise stated. Financial data is presented at actual foreign exchange rates, unless otherwise stated. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this Presentation are subject to the effect of rounding. Accordingly, the actual calculations of these figures may differ from figures set out in this Presentation. • Unless specifically indicated in this Presentation, the financial information contained in this Presentation has not been audited, examined or otherwise reviewed in accordance with Australian Accounting Standards. • This Presentation presents financial information on both a statutory basis (prepared in accordance with Australian accountingstandards which comply with International Financial Reporting Standards (“IFRS”)) and non-IFRS basis. Distribution restrictions • Neither this Presentation, nor any copy of it, may be taken, transmitted into or otherwise made available in the United States or any jurisdiction where their issuance, distribution or transmission are prohibited under the law of that jurisdiction. Any failure to comply with any such restriction may constitute aviolation of relevant local securities laws. 3 Contents 1 Capital Raising 2 AJ Lucas Corporate Overview and Financial Update 3 UK Shale Gas Opportunity and Progress 4 Australian Operating Business Overview 5 Key Risks 6 Selling Restrictions 4 CAPITAL RAISING Preston New Road exploration site, Lancashire Entitlement offer and placement (Capital Raising) Offer summary • Pro-rata accelerated non-renounceable entitlement offer (Offer) to raise up to $31.2 million. • Offer to existing shareholders at $0.32 per New Share; 1 New Share for every 6 existing shares held. • The Offer is non-underwritten. Commitments for the Offer from investors representing approximately 75% of the existing share register • AJL and Patersons Securities (the Lead Manager) have received firm commitments to participate in the Offer from ten of AJL’s largest shareholders. • Substantial shareholders Kerogen Investments No.1 (UK) Limited (Kerogen) (58.6% stake prior to Capital Raising) and OCP Asia (Singapore) Pte. Limited (and associated entities) (OCP) (5.9% stake prior to Capital Raising) have agreed to take up their entitlements in full. Placement to institutional investors • Commitments have been received from institutional investors for the placement of 70.5 million shares, equivalent to $22.6 million, at the same price of $0.32 per share (Placement). – These commitments exceed AJL’s present placement capacity by 3.7 million shares, accordingly AJL has sought an ASX waiver to calculate its placement capacity taking into account shares to be issued under the Offer. In the absence of a waiver, the Placement will be limited to 66.8 million shares, within the existing placement capacity. • 40.5 million of the Placement shares, representing approximately 5.5% of the issued share capital of AJL after completion of the Capital Raising1, will be issued to a new institutional investor, RodDCO Property Holdings Limited. • Placement shares will settle at the same time as shares to be issued in the Institutional Entitlement Offer, and investors receiving Placement shares will not be entitled to participate in the Offer in respect of those shares. 1 Based on (i) the Placement of 70.5 million shares; and (ii) the Indicative Offer Size of 85.9 million shares, which is based on the commitments received prior to launch for approximately 75% of the Offer, and 50% take-up of the remainder of the Offer. 6 Proceeds to fund UK investment, debt reduction and Australian working capital • Net proceeds from the Capital Raising will be between approximately $45 million and $52 million depending on final take-up of the Offer, and approximately $49 million based on the Indicative Offer Size1. Use of Offer proceeds • Proceeds from Kerogen’s participation in the Offer ($18.3 million) will be used to reduce the existing Kerogen subordinated debt facility. • Remaining Offer proceeds after expenses, based on the Indicative Offer Size, will be approximately $8.8 million. These proceeds will be applied to partially repay the US$45 million (c.$58 million) secured senior loan note facility (Senior Loan Notes), as recently amended (see separate slide “Amendment to Senior Loan Notes”). • Based on the above assumptions, interest expense would be reduced by approximately $4.6 million per annum. Use of Placement proceeds • Net cash proceeds from the Placement of up to $21.6 million will be used to: – Fund AJL’s share of future capex for the Phase I exploration programme at Preston New Road, which has entered the horizontal drilling and hydraulic fracturing phase. Costs to complete Phase I are expected to be higher than initially budgeted due to unforeseen weather and technical issues delaying the drilling timetable; – Partially fund AJL’s share of other future commitments to UK investments, including potentially the partial funding of wells 3 and 4 at Preston New Road which Cuadrilla has permission to drill and test; – Fund working capital in the Australian operating businesses, in particular in the drilling division in response to increasing demand from existing customers; and – To further reduce debt as appropriate. 1 The Indicative Offer Size of 85.9 million shares, equating to gross Offer proceeds of $27.5 million, is based on the commitmentsreceived prior to launch for approximately 75% of the Offer, and 50% take-up of the remainder of the Offer. 7 Details of the Offer1  1 for 6 pro-rata acceleratednon-renounceable entitlement offer (Offer) to raise up to $31.2 million.  Up to 97.5 million new AJL shares to be issued under the Offer. The Offer is non-underwritten. Offer description  Offer Shares will rank equally in all respects with existing shares from the date of issue.  Record Date for the Offer is 7:00pm Sydney time, Wednesday, 24 January 2018.  $0.32 per Share: 22.9% discount to AJL’s closing price of $0.415 prior to announcement of the Offer on 5 January Offer price 2017, and a 13.5% discount to AJL’s closing price of $0.37 on 19 January 2018.  Institutional Entitlement Offer closes on Monday, 22 January 2018. Institutional  New Shares issued in the Institutional Entitlement Offer areexpected to settle on Tuesday, 30 January 2018, with Entitlement Offer allotment and commencement of normal settlement trading on Wednesday, 31 January 2018.  Retail Entitlement Offer opens on Tuesday, 30 January 2018 and closes at 5:00pm (Sydney time) on Friday, 16 February 2018.  Shareholders who take up their entitlement have the opportunity, under an over-allocation facility, to apply for additional sharesup to 100% of their entitlement under the Offer, subject to allocations under the facility being limited to a maximum of 2 million shares. Retail • As an example, If a shareholder’s original entitlement would enable them to subscribe for 2,000 shares they Entitlement Offer may apply for up to a further 2,000 shares, being up to 4,000 shares in total.  AJL will not issue any shortfall shares to any person under the Offer who has not elected to participate in the retail over-allocation facility. Allocations under this retail over-allocation facility will be determinedby AJL in its absolutediscretion. Any additional allotment of over-allocation shares is not guaranteed.  Any retail over-allocation shares will be limited to the extent that there are sufficient New Shares from eligible retail shareholders who do not take up their full entitlement. 1 Timetable is indicative and subject to change at discretion of AJL 8 Shareholder commitments to the Offer • AJL and the Lead Manager have received firm commitments from ten of AJL’s largest shareholders, representing approximately 75% of the share register (prior to Placement). – Kerogen (58.6% stake prior to Placement) has agreed to take up its pro rata entitlement of $18.3 million. – OCP (5.9% stake prior to Placement) has agreed to take up its pro rata entitlement of $1.8 million. – Other minority investors have agreed to take up their pro rata entitlements of approximately $3.6 million. • The issue of New Shares under the Entitlement Offer would potentially have the following effect on existing substantial shareholders who have committed to participate in the Offer: Indicative shareholding following Participating substantial shareholders Holding prior to Capital Raising Capital Raising1 Kerogen 342.8 million 58.6% 399.9 million 53.9% OCP 34.3 million 5.9% 44.6 million 6.0% 1 Assumes (i) 70.5 million shares issued in the Placement (subject to ASX waiver); and (ii) an Indicative Offer Size of 85.9 million shares,based on the commitments received prior to launch for approximately 75% of the Offer, and 50% take-up of the remainder of the Offer. Actual shareholding % could be higher or lower depending on final participation in the Offer. 9 Amendment to Senior Loan Notes • At the end of December 2017, AJL amended certain provisions that govern the Senior Loan Notes (Amendment). • The Amendment includes a commitment to reduce the principal from US$45 million ($58 million) prior to the Amendment to US$20 million (approximately $26 million) by 30 September 2018; with the balance of the Senior Loan Notes to be repaid by 22 July 2019. • US$5.1 million ($6.5 million) was initially applied to reduce the balance of the Senior Loan Notes upon execution of the Amendment, using cash balances previously restricted to service the Senior Loan Notes. • The remainder of the principal reduction commitment will be achieved through: i. The application of net cash proceeds from the Entitlement Offer, as described under “Use of Offer proceeds”; ii. The application of part of the net cash proceeds from any sale of the Engineering & Construction business1; and iii. Other initiatives as determined by the Board. • The testing of certain financial covenants (including an 8x leverage test and a 1x interest coverage test, which are calculated based on the financial performance of the Australian operations in the previous 12 months) will next be tested on 30 September 2018. 1 Please refer to slide 16 “Operational update –Australian business performance” for further detail. 10