🕐25.03.13 - 08:27 Uhr

NORTHCOTE ENERGY - PROJECT ACQUISITION & 51% HORIZON WI SIGNIFICANTLY INCREA
SES ACREAGE, RESERVES & PRODUCTION & CONFERS OPERATORSHIP IN OKLAHOMA ON BACK OF £1.5M RAISING



Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector: Oil & Gas 25 March 2013 Northcote Energy Ltd (Northcote or the Company) Significantly Increased Net Acreage, Reserves and Production through Acquisition of 1,040 Acres in Oklahoma & Exercise of Options to Increase WI in Horizon Project to 50.15% Placing to Raise �1.5 million Northcote, an onshore US oil and gas exploration and production company, is pleased to announce that it has entered into a number of transactions which will significantly increase its exposure to the proven and producing Mississippi Lime formation in Osage County, Oklahoma.

This will be achieved through an agreement to acquire 100 per cent.

of the outstanding membership interests of Oklahoma Energy LLC (OKE) (the OKE Acquisition or OKE Agreement) and through the exercise of the remaining Horizon option together with a further acquisition to increase the Companys working interest (WI) in the producing Horizon Project (the Horizon Project) from an average 37.5% to an average 50.15% (net revenue interest (NRI) - 39.80%).

OKE is the operator and holder of a 100% WI in 1,040 acres in Oklahoma that are currently held by production and, in the Boards view, have significant potential to produce from the proven Mississippi Lime formation (the OKE Project). In connection with these transactions, which are in line with the Companys strategy to grow net production and reserves in proven US onshore formations, the Company is also pleased to announce that it has raised �1.5 million (before expenses) through an oversubscribed placing by Shore Capital Stockbrokers Limited (Shore Capital) of 100,000,000 new ordinary shares of no par value in the Company (Ordinary Shares) at a price of 1.5 pence per new Ordinary Share (the Placing).

The funds raised will, in addition to the acquisition costs associated with the transactions and proposed work programmes thereon, be used to accelerate the Osage County work programme. OKE Acquisition Highlights
� Acquisition of OKE triples Northcotes net acreage in the Mississippian play in Osage County, Oklahoma: o Average gross current production of 12 barrels of oil per day (bopd) (5 bopd net to OKE) from the shallow Bartlesville formation which generates average gross revenue of over US$30,000 per month (over US$12,450 net to OKE per month) � The OKE Acquisition results in the Group becoming an accredited operator in Osage County � 3D seismic programme planned to assess targets in the highly prospective Mississippi Lime � Near term potential to increase daily production from existing wells via workover programme on existing wells at an estimated total cost of US$150,000 � Infrastructure in place to support existing and increased production from the Bartlesville and other formations including the Mississippi Lime and Cleveland Sands � Acquired through cash (US$50,000) and share (US$250,000) consideration totalling US$300,000 with a further US$200,000 to be paid from production � Assets are subject to a 41.5 per cent.

term overriding royalty interest which expires on the holder receiving the Production Payment (as defined below) at which time OKEs NRI increases from 41.5 per cent.

to 80 per cent. Horizon Highlights � 50.15 per cent.

interest in the Horizon Project will be acquired through the exercise of the Companys remaining Horizon Project option and a further purchase of an additional WI from Horizon Drilling Partners (Horizon) o exercise of Horizon Project Option to acquire average 7.25 per cent.

working interest in 10 wells for a $600,000 consideration payable in equity (at a price of 1.75 pence per new Ordinary Share) o acquisition of a further 6 per cent.

WI in 9 wells from Horizon for $480,000 cash consideration (together the Horizon WI Acquisitions) � On completion the combined impact on the Groups Horizon Project and Woods County Project P1 PV10 is to increase it to US$61.94 million - net oil and condensate reserves increase to 1,181 Mbbl and net natural gas reserves of 3,107 MMcf (not including impact from the OKE Acquisition) � Increased exposure to recently initiated workover and forthcoming fracture stimulation programme Northcotes Chief Executive Officer Randy Connally said, "These milestone transactions, conducted on the back of a successful and oversubscribed Placing to raise �1.5 million, will provide us with majority control over two projects in Osage Country, Oklahoma.

They also confirm our commitment to consolidate our position in the region where, by targeting the Mississippi Lime, we believe we can materially bolster both our net production and reserves. "Secured at an attractive price and held by production, OKE not only triples the Companys net acreage and adds considerably to our existing net production and revenues, but it also offers significant development potential to increase our production profile.

Additionally, our status as operator means there that we control the timing of future appraisal and drilling activities.

The identification and acquisition of OKE is testament to the calibre and contacts of our management team, and we view the decision by the vendor to receive payment in shares as a vote of confidence in our ability to create significant value for all shareholders going forward. "We are also delighted to increase our working interest in the Horizon Project which now confers a majority interest in the project on Northcote.

At the time of our admission to trading on AIM, our P1 reserves had been assigned a PV10 of US$33.8 million by our competent person.

Following completion of the Horizon WI Acquisitions, our P1 reserves at the Project will have almost doubled from the figures at the time of AIM Admission to US$61.96 million and to 1,182 Mbbl of oil and condensate and 3,109 MMcf of gas, increasing the significant asset backing to our market valuation.

We are continuing our development programme across all of our projects and also the evaluation of other opportunities in our area of focus and I look forward to updating the market on our progress in due course." Acquisition of OKE The Company has entered into the OKE Agreement to acquire from Mr.

Vince Coble ("Seller") 100 per cent.

of the outstanding membership interests of OKE for the following consideration:
1.

US$50,000 in cash (OKE Cash Consideration); 2.

US$250,000 to be settled by the issue of 9,523,809 new Ordinary Shares at 1.75 pence per new Ordinary Share (OKE Consideration Shares); and 3.

up to a maximum payment of US$200,000 in cash payable at the rate of US$10 per boed produced up until 4 March 2020. The OKE Acquisition will complete on payment of the OKE Cash Consideration and this is expected to occur on or prior to the admission of the Placing Shares to trading on AIM which is expected to occur on 3 April 2013.

Under the OKE Agreement, the OKE Consideration Shares must to be issued to the Seller within 120 days from completion of the OKE Acquisition.

The number of OKE Consideration Shares issued to the Seller may be reduced should the Company makes any claims under the OKE Agreement against the Seller during this 120 day period.

The Company will make a further announcement when the OKE Consideration Shares have been issued and will make an application for these shares to be admitted to trading on AIM. OKE is an approved operator in Osage County, Oklahoma and as such will on completion of the OKE Acquisition give Northcote operator status and capacity to operate new or existing projects.

OKE is a 100 per cent.

WI holder and operates the OKE Project which comprises 1,040 acres in Osage County, Oklahoma, of which the producing wells produce an average of 12 barrels per day of oil (gross) from the shallow Bartlesville formation, equating to average gross revenues of over US$30,000 per month. Prior to Northcote agreeing to purchase OKE, OKE had sold a term overriding royalty interest (Royalty) to BlueRock Capital, LLC (BlueRock).

This Royalty confers a direct NRI on BlueRock in the project assets.

The Royalty expires after BlueRock has received an agreed amount and an internal rate of return of 15 per cent.

per annum (together the Production Payment) out of its share of the projects gross revenues.

Northcote has agreed to pay BlueRock US$400,000 at completion to reduce the outstanding balance of the Production Payment to US$1.23 million.

Pursuant to the Royalty, BlueRock receives 41.5 per cent.

of gross project revenues.

Under certain circumstances, including higher oil prices, BlueRock will receive an additional 8.3% of gross revenues until payout, with a corresponding reduction in the gross revenues received by OKE.

After payout of the Production Payment, the Royalty expires and OKEs NRI reverts to 80 per cent.

At all times, OKEs working interest in the project is 100%.

The Production Payment is not a debt payable by OKE and, as such, the arrangement is non-recourse to OKE, unsecured and does not appear on OKEs balance sheet. All leases are held by production and OKE retains the ability to develop the Cleveland and Mississippian zones at its discretion.

Initially, Northcote intends to undertake a US$150,000 capital expenditure programme on the project aimed at increasing production from the existing wells.

The programme will comprise workovers of existing wells, installation of electric lines, pump replacement and perforation and testing of additional zones.

BlueRock has agreed to make US$150,000 available to OKE to fund this expenditure by way of an increase in the outstanding balance of the Production Payment to US$1.4million.

In addition, Northcote intends to undertake 3D seismic and additional work on the OKE Project The Project was initially developed by Halliburton in the 1980s and consequently there is excellent data in relation to the drilling and completion of a number of wells on the acreage.

Whilst not Halliburtons focus, the data indicates the area may be prospective for production from the Mississippi Lime formation through the application of horizontal drilling.

In addition, the Project is located two miles due east of existing production from the Mississippi Lime play. Horizon Project WI Acquisitions On completion of the Horizon Project acquisitions, the Companys average WI in the Horizon Project will increase to over 50 per cent.

through two separate transactions which increases its exposure to the recently initiated workover and forthcoming fracture stimulation programme.

The Companys interest in the Horizon Project will have a P1 PV10 of US$61.94 million (up from US$33.5 million on the Companys admission to trading on AIM).

Net oil and condensate reserves will stand at 1,181 Mbbl and net natural gas reserves at 3,107 MMcf.

Further details of this are set out in Appendix 1 of this announcement. Eagle Option As more fully described in paragraph 13.2(g) of Part V of the Companys AIM admission document, Eagle Production & Development LP (Eagle) granted Northcotes wholly owned subsidiary, Northcote Oklahoma, LLC, an option to acquire an average 7.25 per cent.

WI in the Horizon Project in Osage County for US$600,000 (Eagle WI).

Since admission Eagle has assigned the interests to Osage Energy Holdings, LLC. Nothcote Oklahoma LLC has exercised this option and expects to enter into a sale and purchase agreement with Osage Energy Holdings, LLC to acquire the Eagle WI shortly.

The consideration for the interest is US$600,000 and will be satisfied by the issue of 22,857,143 new Ordinary Shares at a price of 1.75 pence per new share (Osage Energy Holdings Consideration Shares).

The sale and purchase agreement will include the wells under option but also includes a small working interest of 2.52% in Burkhart #3 well.

The Company will make a further announcement when the acquisition of the interest has completed and will make an application to for the Osage Energy Holdings Consideration Shares to be admitted to trading on AIM. Horizon Acquisition Additionally, the Company has entered into a agreement with Horizon to acquire a further 6 per cent.

WI in the Horizon Project for US$480,000 payable in cash (the Horizon Acquisition).

The Company will make a further announcement when the Horizon Acquisition has completed. The Placing The Company has raised �1.5 million (before expenses) by way of an oversubscribed Placing by Shore Capital of 100,000,000 new Ordinary Shares (Placing Shares) with existing and new investors at a price of 1.5 pence per share, which is a discount of approximately 4.75 per cent.

to the closing middle market price of 1.575 pence per Ordinary Shares on 22 March 2013, being the last dealing day prior to the date of this announcement.

The Placing is conditional, inter alia, on admission of the Placing Shares to trading on AIM and it is expected that trading in the Placing Shares will begin, at 8.00 a.m.

on Wednesday 3 April 2013.

The Placing Shares will rank pari passu in all respects with the Companys existing Ordinary Shares. The net proceeds of the Placing are expected to be used by the Company as follows:
� to satisfy the OKE Cash Consideration, the OKE Debt Repayment and US$350,000 for 3-D seismic and additional work on OKEs assets; � to satisfy the cash consideration for the Horizon Acquisition; and � US$820,000 to fund an accelerated Osage County work programme. Further issue of equity The Company is also making an application for 1 million Ordinary Shares to be admitted to trading on AIM.

These Ordinary Shares are being issued in satisfaction of adviser fees in relation to the AIM Admission (Adviser Shares).

It is expected that admission will occur, and dealings in the Adviser Shares will begin, at 8.00 a.m.

on Wednesday 3 April 2013.

These shares will rank pari passu in all respects with the Companys existing Ordinary Shares. Share Capital Following admission of the Placing Shares and Adviser Shares (and prior to admission of the OKE Consideration Shares and the Osage Energy Holdings Consideration Shares) the Companys issued share capital will consist of 991,412,716 Ordinary Shares (Enlarged Share Capital).

The Placing Shares represent approximately 10.09 per cent.

of the Enlarged Share Capital. Following completion of the OKE Acquisition and the acquisition of the Eagle WI, application will be made for the 32,380,952 OKE Consideration Shares and Osage Energy Holdings Consideration Shares to be admitted to trading on AIM ("Admission") in due course, details of which will be included in a further announcement. All of the technical information, including information in relation to reserves and resources that is contained in this announcement has been reviewed internally by the Companys Technical Director, Mr.

Kevin Green.

Mr.

Kevin Green is a Petroleum Geologist who is a suitably qualified person with over 30 years experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information. TECHNICAL GLOSSARY bopd means barrels of oil per day boe means barrels of oil equivalent: a unit of energy based on the approximate energy released by burning one barrel (42 US gallons or 158.9873 litres) of crude oil. There are 42 gallons (approximately 159 liters) in one barrel of oil, which will contain approximately 5.8 million British Thermal Units (MBtus) or 1,700 kilowatt hours (kWh).

The value is necessarily approximate as various grades of oil have slightly different heating values.

BOE is used by oil and gas companies in their financial statements as a way of combining oil and natural gas reserves and production into a single measure. boepd means barrels of oil equivalent per day Mbbl means thousand barrels Mcf means thousand cubic feet Mmcf means million cubic feet 1P means Proved Reserves 2P means Proved plus Probable Reserves 3P means Proved plus Probable plus Possible Reserves P2 means Probable Reserves P3 means Possible Reserves PV10means net present value using an annual discount on cashflow of 10% per annum. WI means Working Interest, a percentage of ownership in an oil and gas lease granting its owner the right to explore, drill and produce oil and gas from a tract of property.

Working interest owners are obligated to pay a corresponding percentage of the cost of leasing, drilling, producing and operating a well or unit.

After royalties are paid, the working interest also entitles its owner to share in production revenues with other working interest owners, based on the percentage of working interest owned APPENDIX 1 - COMPETENT PERSONS REPORT UPATE The following has been extracted from Moyes & Cos Revision Letter dated 13 March 2013. Northcote has exercised two agreements effective March 1, 2013 allowing for the acquisition of additional working, revenue, and override interests in its Horizon Project, Osage County in the amount of a 6.00%/4.50% working/revenue interest and in the amount of a 7.88%/6.04% (average) working/revenue interest in the nine leases in Osage County producing from the Mississippian formation.

An additional 2.52%/2.27 revenue/working interest has been acquired for the Burkhart #3 well, targeting the Layton formation.

These increased interests are outlined in the following table.
Ownership interest as previously announced (28 February 2013) (%age) Ownership interest post completion of Horizon Project acquisitions (%age) Well WI NRI ORRI Total NRI WI NRI ORRI Total NRI Big Hill1H-12 37.875 28.406 2.228 30.634 51.750 38.931 2.228 41.158 Big Hill 2H & 4H-12 37.875 28.406 2.228 30.634 51.750 38.931 2.228 41.158 Burkhart #3 29.938 21.915 1.845 23.760 32.458 24.183 1.845 26.028 Little Drum & Sarah (MS1) 37.875 28.406 2.228 30.634 51.750 39.049 2.228 41.276 Steele 2-11H 37.875 28.406 2.228 30.634 51.750 39.018 2.228 41.246 Steinberger 1H-10 37.875 28.406 2.228 30.634 51.750 39.018 2.228 41.246 West Little Drum & Lauren (MS2) 39.938 29.953 2.103 32.056 53.375 40.254 2.103 42.357
Detailed below is the updated table from the Moyes Revision letter dated 13 March 2013 that shows the updated reserve and cash flow summaries including Northcotes properties in Osage (not including impact from the OKE Acquisition) and Woods County: (Grand Total) As of November 1, 2012
Gross Reserves Net Reserves Net Cash Flow
Oil & Condensate
Natural Gas
Oil & Condensate
Natural Gas Future Net Revenue Future Net OPEX & Taxes Future Net Capital Future Net Cash Flow NPV Discount @ 10 % Reserve Class / Category (Mbbl) (MMcf) (Mbbl) (MMcf) ($000) ($000) ($000) ($000) ($000) Proved Developed Producing 418 1,413 40 192 4,314 2,530 - 1,784 1,178 Proved Developed Behind Pipe 2,491 6,571 1,030 2,714 102,920 13,777 1,854 87,290 56,372 Proved Shut In 300 944 1 2 57 8 - 48 33 Proved Underdeveloped 3,464 9,830 111 199 10,625 1,587 949 8,089 4,359 Total Proved 6,672 18,758 1,181 3,107 117,916 17,902 2,803 97,211 61,942 Probable Behind Pipe - - - - - - - - - Probable Undeveloped 1,800 5,366 3 8 259 38 41 179 102 Total Probable 1,800 5,366 3 8 259 38 41 179 102 Total 2P 8,472 24,124 1,184 3,115 118,175 17,940 2,844 97,390 62,044 Possible Behind Pipe - - - - - - - - - Possible Undeveloped 2,100 6,210 3 9 300 44 48 208 117 Total Possible 2,100 6,210 3 9 300 44 48 208 117 Total 3P 10,572 30,335 1,187 3,124 118,475 17,984 2,892 97,598 62,161
All reserve estimates have been prepared using standard engineering practices generally accepted by the petroleum industry and conform to the guidelines adopted by the Society of Petroleum Engineers.
**ENDS** For further information visit www.northcoteenergy.com, see below, or contact the following: Randy Connally Northcote Energy Ltd +01 214 675 7579 Ross Warner Northcote Energy Ltd +44 7760 487 769 Dan Jorgensen Northcote Energy Ltd +44 (0) 20 7024 8391 Roland Cornish Beaumont Cornish Ltd +44 (0) 20 7628 3396 James Biddle Beaumont Cornish Ltd +44 (0) 20 7628 3396 Jerry Keen Shore Capital Stockbrokers Limited +44 (0) 20 7408 4090 Bidhi Bhoma Shore Capital Stockbrokers Limited +44 (0) 20 7408 4090 Hugo de Salis St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Elisabeth Cowell St Brides Media and Finance Ltd +44 (0) 20 7236 1177
Notes: Northcote Energy Ltd is a revenue generative US onshore oil and gas production company focussed on the rapidly emerging Mississippi Lime formation in Oklahoma.

The Company participates with leading operators, including Midstates Petroleum and Chesapeake Energy, in low risk development plays where advanced techniques, such as horizontal drilling and fracing, are used to unlock known oil accumulations and dramatically improve recovery rates.

Northcote has a balanced mix of production and development projects with net proven reserves of 1,182 Mbbl of oil and condensate and 3,109 MMcf of gas and a P1 PV10 of US$61.96 million (as per CPR).

Management is focused on increasing production through a multi-well drilling and fracing campaign in 2013.



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