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NORTHCOTE ENERGY LIMITED: Operations Update

Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector:   


                                   Oil & Gas                                   

20 February 2013
              Northcote Energy Ltd (`Northcote' or `the Company')              
                               Operations Update                               

Northcote (AIM: NCT), the listed onshore US oil and gas exploration and
production company, is pleased to provide a positive update on its operations
in Oklahoma, where it produces from the proven Mississippi Lime and Layton
formations.

Update

  * Preparation for fracture stimulation programme on Horizon Project
    proceeding according to plan with the first frac expected to begin late
    February/early March 2013;
      * Acquired a 3.125% working interest in the Bird Creek Prospect in Osage
    County. The project comprises 800 gross acres and the drilling programme
    will initially target the Bartlesville Sand. Northcote expects to
    participate in two wells, the Bray #1 and the Keese #1 in the first half of
    2013;
      * Elected to participate in the deepening of the Burkhart # 1 well on its
    Horizon Project acreage. This well, was originally drilled to and produced
    from the Mississippi Chat formation and will be further deepened to
    evaluate the Mississippi Lime, Wilcox and Arbuckle formations. Northcote
    has a 3.69% working interest in the well;
      * Busse and Bouziden wells in Woods County are in process of being tied in to
    gas sales lines and the Company expects to be able to announce initial
    production rates from both wells in due course.


Northcote's Chief Executive Officer Randy Connally said, "Northcote's Horizon
Project assets currently produce from two pay zones and by participating in the
Burkhart #1, we will gain exposure to additional zones. The presence of
multiple pay zones in many areas of Oklahoma is one of the reasons the state
has historically, and continues to be, one of the most prolific oil and gas
producing states in the U.S. Exploiting the entire well bore to leverage
existing investment and generate returns from other objectives, where
economically justified, is a core part of our strategy to maximise returns and
generate internal cash flow to help fund our higher impact Mississippian
projects. 
"Additionally, taking small interests in new prospects, as we have done in the
Bird Creek Project, with an eye toward increasing our interest as the prospect
is de-risked is an important part of our growth strategy. We plan to continue
to participate in new wells, which are not part of our current lease and
reserve base, when we have confidence that low cost incremental production has
a high likelihood of success. 
"At listing our net reserves were assigned a P1 PV10 of US$33.8 million by our
competent person. Since then, having exercised the option to materially
increase our average working interest in the Horizon Project, Osage County,
this has increased and our participation in these new wells, alongside our
fracture stimulation programme, provides us with confidence that we are on
course to further increase our net production and net reserves by the end of
the year." 
Horizon Project, Osage County 
Northcote has elected to participate in the deepening of the Burkhart # 1 well
(`the Well') on the Horizon Project to evaluate the proven Mississippi Lime,
Wilcox and Arbuckle formations. Originally, the Well was drilled to and
produced from the Mississippi Chat formation. Northcote has a 3.69% working
interest in the Well, and as a result drilling and completion costs are
expected to approximate US$15,000 net to Northcote's working interest. 
Preparation for the fracture stimulation on two existing horizontal wells on
the Horizon Project is proceeding according to plan. The first frac is expected
to commence in late February/ early March 2013. As part of its strategy to
significantly increase production, Northcote intends to utilise hydraulic
fracturing techniques in relation to the unfracked horizontal wells on the
Project. Hydraulic fracturing is the primary choice for enhancing production,
and typically has the effect of increasing productivity 2 to 30 times compared
to an untreated well, by increasing the amount of contact that the well bore
has with high quality reservoir rock. Northcote's average working interest in
the 10 wells currently producing in the Horizon Project is 37.5%. 
Bird Creek Project, Osage County 
The Company has acquired a 3.125% working interest in the 800 gross acres, Bird
Creek Prospect which has near term production potential. Northcote expects to
participate in two wells, the Bray #1 and the Keese #1 in H1 2013. Both wells
will initially be targeting the Bartlesville Sand formation. The combined cost
of drilling both wells net to Northcote's working interest is estimated at
US$30,000. 
DeAgua Project, Woods County 
The Busse and Bouziden wells in the DeAgua Project are in the process of being
tied in to gas sales lines. Initial production rates for both wells are
expected shortly. 
                               **ENDS**                                     
For further information, visit www.northcoteenergy.com, or contact: 
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 8395   
                                                                           
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     +44 (0) 20 7408 4090   
                      Limited                                               
                                                                           
Bidhi Bhoma               Shore Capital Stockbrokers     +44 (0) 20 7408 4090   
                      Limited                                               
                                                                           
Hugo de Salis             St Brides Media and Finance    +44 (0) 20 7236 1177   
                      Ltd                                                   
                                                                           
Elisabeth Cowell          St Brides Media and Finance    +44 (0) 20 7236 1177   
                      Ltd                                                   
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 fracking, are used to unlock known
oil accumulations and dramatically improve recovery rates. Management is
focused on increasing production through a multi-well drilling and fracking
campaign in 2013. 
END 
-0- Feb/20/2013 07:00 GMT