Winchester Energy Limited (ASX:WEL) released its half-year report for the period ended 30 June 2026, with the directors' report and auditor's review dated 11 September 2026. Revenue from oil and Natural Gas sales was US$776,369, down about 5.1% from US$818,035, while the net loss before tax narrowed to US$263,430 from US$555,118. Working interest production fell to 11,444 barrels of oil equivalent from 13,297, and cash and bank deposits declined to US$141,321 from US$466,104 at 31 December 2025.

The average realised oil price rose to US$78.31 per barrel from US$66.85. The auditor's review report also included a material uncertainty related to going concern. The sections below set out the reported figures and the operational and funding developments.

Company Overview

Winchester Energy is an oil and gas operator with a Lease position in the Permian Basin in West Texas, United States. Its registered office and principal place of Business is in Perth, with a United States office in Houston. The chief executive is Rory McGoldrick, and the non-executive directors are David Wheeler, Chris Zielinski and Thomson Naude.

At half-year end the company operated 13 active wells and held a further seven non-operated wells. Its main Assets are the Varn Oil Field in Taylor County, where it holds a 70% working interest, and the Nolan County projects about 18 miles to the west. Its lease holding totalled 2,639 net acres at 30 June 2026. For the Jocelyn Varn field, reserves calculated by Mire Petroleum Consultants and referenced to an ASX release of 3 December 2021 are 443,000 barrels of oil equivalent on a proved basis, 1,068,000 on a proved plus probable basis and 1,829,000 on a proved, probable and possible basis. The company states it has no hedges or oil pre-sales.

Details of the Half-Year Report Dated 11 September 2026

Gross oil production for the half-year was 13,209 barrels of oil equivalent, down 7.6% from 14,294, and the Winchester working interest share was 11,444, down 13.9% from 13,297. That equates to an average of 64 barrels of oil equivalent per day. Quarterly working interest production was 5,813 in the June quarter and 5,631 in the March quarter.

Costs moved lower across most lines. Operating costs fell 10.4% to US$475,645 from US$530,939, administration expenses fell 25.5% to US$278,997 from US$374,671, depletion, Depreciation and Amortisation fell to US$279,819 from US$330,770, and there was no Impairment expense against US$129,647 a year earlier. Interest income fell to US$97 from US$1,883, and share-based payments fell to US$3,088 from US$8,358. Basic and diluted loss per share was 0.011 US cents, against 0.047 US cents.

Net cash used in Operating Activities was US$16,289 (prior period: US$50,226). Investing activities used US$397,871, mostly on exploration, oil and gas activities, whereas the prior period showed a net inflow of US$257,326 that included US$326,319 from term deposit withdrawals. Total assets were US$5,854,501 against US$5,930,022, total liabilities rose to US$1,534,456 from US$1,453,246, and net assets were US$4,320,045 against US$4,476,776. Exploration and evaluation assets increased to US$3,495,071 from US$3,186,095.

On operations, the JVU-4 water injection well at the Varn waterflood project reached a total depth of 4,905 feet on 25 March 2026 and has been tied in to the Varn tank battery with the JVU-11 water Supply well. Water injection is designed to support reservoir pressure and enhance oil recovery across the Upper and Lower Fry Sand, and the company will monitor its effect on the JVU-5 and JVU-6 production wells. The full waterflood plan covers 10 wells, and the next well, the JVU-9 production well, is planned for the March quarter of 2027. In Nolan County no new wells were drilled, but several workovers were completed to rectify down-hole production issues, and the wells are back online. The wells summary lists five wells as shut-in.

On funding, the company issued 145,000,000 fully paid ordinary shares on 10 April 2026 to raise A$145,000 before costs, equivalent to about US$102,530. It also entered an Unsecured Loan Facility of up to A$250,000 (US$175,000) with Petra Cotes Pty Ltd, a company controlled by Mr McGoldrick, to help with the costs of an Indonesian joint study, announced on 23 March 2026, and general working capital. Nothing was drawn at 30 June 2026; US$52,500 was drawn after the period, leaving US$122,500 available.

Industry Context

Oil prices are the main external variable in the report. The realised price of US$78.31 per barrel compares with US$66.85 a year earlier, and the Going Concern note refers to significant Volatility in world oil and gas pricing, adding that prices have recovered. Because Winchester has no hedges, its revenue follows the Market Price in both directions.

Waterflooding, the technique being applied at Varn, injects water into a reservoir to maintain pressure and move oil toward producing wells. The company's plan links this to the Fry Sand formations, and it says it will report on any effect on production rates. Winchester also describes reviewing new venture opportunities, including the Indonesian joint study.

Risks and Uncertainties

The going concern note states that the group's ability to continue depends on securing additional funding through equity, debt, joint ventures, profitable trading or asset sales as needed. It cites a net operating cash outflow of US$16,289, and the auditor drew attention to the same material uncertainty. Management points to Operating Cash Flow from wells, a history of raising capital, cost reductions following the 2024 restructure and the loan facility, and states it has prepared a 12-month cash flow forecast.

What to Watch Ahead

Items to follow include any change in Varn production after water injection, the March 2027 quarter drilling of JVU-9, further use of the loan facility, and progress on the Indonesian joint study.