NORTHCOTE ENERGY LIMITED: 40% Increase in Value of Total Net Proved Reserves

NORTHCOTE ENERGY LIMITED: 40% Increase in Value of Total Net Proved Reserves
Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / 

                              Sector: Oil & Gas

28 February 2013
             Northcote Energy Ltd (`Northcote' or `the Company')
        40% Increase in Value of Total Net Proved Reserves to US$47.5m

Northcote (AIM: NCT), an onshore US oil and gas exploration and production
company, is pleased to report the findings of a revision to the Competent
Person's Report dated 20 December 2012 by Moyes & Co. which confirms a 40%
increase in the value of Northcote's net attributable proved reserves from
US$33.8 million to US$47.6 million. The reserves upgrade follows the exercise
of two of the Company's options to acquire an additional 10% working interest
(the `Horizon Option') to an average 37.5% and an average 2.2% royalty
interest (the `WCR Royalty Option') in the Horizon Project in Osage County,
Oklahoma (`Horizon' or `the Project').

Key Highlights

- US$13.7 million increase in value of net attributable proved
reserves to US$47.6 million following completion of the acquisition of Horizon
and WCR Royalty Options

- Based on upgraded net attributable oil and condensate proved reserves of 914
Mbbl and net attributable gas proved reserves of 2,376 MMcf

- Further growth potential through exercise of additional option to
increase working interest in Horizon by 8.33% to an average of 45.83%

- Expected increase in net production and reserves as a result of
larger exposure to recently initiated workover and imminent fracture
stimulation programmes at the Horizon Project

Northcote's Chief Executive Officer Randy Connally said, "Within weeks of our
Admission to AIM in January 2013, we have already increased the value of our
net proved reserves by almost half to US$47.6m. As a result, we have
substantially increased the asset backing of the Company, which remains
considerably higher than our current market valuation. There is another option
in place to increase our interest in Horizon by a further 8.33% which, subject
to being exercised, should also result in a significant increase in net
reserves and underlying value.

"With the fracture stimulation programme due to commence shortly and the
workover operations that are currently underway on four producing wells at
Horizon, where we have already seen a small increase in net production at one
of these, we are highly confident that we will deliver a substantial increase
on our production by the end of 2013. With all this activity in mind, we hope
to maintain the excellent momentum behind the Company since Admission."

Reserves and Resources

The following has been extracted from Moyes & Co's Revision Letter dated 20
February 2013*:

Northcote has exercised two option agreements effective 1 March 2013 allowing
for the acquisition of additional working, revenue, and override interests in
Osage County in the amount of a 10.00%/7.50% working/revenue interest and in
the amount of a 2.20% (average) overriding royalty interest in the nine leases
in Osage County producing from the Mississippian formation. These increased
interests are outlined in Table 1.

                   Ownership As of November 1, 2012    Ownership As of 
March 1, 2013 
Well        WI         NRI        ORRI         WI         NRI       ORRI    
Total NRI 
Big Hill    27.875000 20.906250   0.000000    37.875000   28.406250  2.227500  
Big Hill 2H 27.875000 20.906250   0.000000    37.875000   28.406250  2.227500  
& 4H-12 
Little Drum 27.875000 20.906250   0.000000    37.875000   28.406250  2.227500  
& Sarah
Steele      27.875000 20.906250   0.000000    37.875000   28.406250  2.227500  
Steinberger 27.875000 20.906250   0.000000    37.875000   28.406250  2.227500  
West Little 29.937500 22.453125   0.000000    39.937500   29.953125  2.103000  
Drum &
Lauren (MS
Table 1 - Northcote's increased interest in the Osage wells. 
The additional interests acquired by Northcote will increase their
NPV10 in the Osage wells from US$28.74 million to US$42.50 million. These
figures are representative of the proved producing properties plus their
respective behind pipe reserves. These wells have water fracture treatments
planned throughout 2013 and 2014 that will significantly increase production
accounted for in the behind pipe category. 
Northcote holds another option agreement allowing for the
acquisition of up to an additional 8.33% working interest in the nine leases
in Osage County producing from the Mississippian. 
Detailed below are the updated tables from the Moyes Revision letter dated 20
February 2013 that show the updated reserve and cash flow summaries including
all properties on Osage and Woods County: 

                                 As of November 1, 2012
                 Gross Reserves      Net Reserves               Net Cash Flow

             Oil &    Natural   Oil &    Natural Future  Future Future  
Future  NPV 
           Condensate   Gas   Condensate   Gas     Net    Net     Net    
Net   Disc @ 
             (Mbbl)   (MMcf)    (Mbbl)   (MMcf)  Revenue OPEX & Capital  
Cash   10% 
                                                 ($000)  Taxes  ($000)   
Flow  ($000) 
Proved            417      1,411      33       146    3,507  1,920     -    
1,587  1,035
Proved           2,491     6,573     769      2,029  76,907  10,218  1,430  
62,259 42,129
Behind Pipe 
Proved Shut In    300       944       1         2      57      8       -      
48     33 
Proved           3,464     9,830     111       199   10,625  1,587    949   
8,089  4,359
Total Proved   6,671    18,757     914      2,376  91,096  13,733  2,379  
74,983 47,556 
Probable           -         -        -         -       -      -       -      -  
Behind Pipe 
Probable         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   8,471    24,124     916      2,384  91,354  13,771  2,421  
75,162 47,658 
Possible           -         -        -         -       -      -       -      -  
Behind Pipe 
Possible         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   10,571   30,334     919      2,392  91,654  13,815  2,469  
75,370 47,775 
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. 
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 Company's 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. 
* The revision to Northcote's net reserve P1 PV10 is based solely on the
increase in the Company's interest in the Horizon Project following the
exercise of the Horizon Option and the WCR Royalty Option. All other inputs
remain the same as at the time of the original report dated 20 December 2012. 
For further information and the full Admission document visit, 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 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 
Bidhi Bhoma         Shore Capital Stockbrokers    +44 (0) 20 7408 4090 
Hugo de Salis       St Brides Media and Finance   +44 (0) 20 7236 1177 
Elisabeth Cowell    St Brides Media and Finance   +44 (0) 20 7236 1177 
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. 
The Horizon Project, Osage County Oklahoma 
Northcote's interests in Osage County comprise working interests in 10
producing wells, of which nine are unfracked horizontal wells producing from
the Mississippian formation and one is a vertical well producing from the
shallower Layton formation (Burkhart #3). 
The workover programme was initiated based on evaluation of wells and
bottomhole pressure tests run in December 2012 in preparation for the fracture
stimulation programme. As part of the evaluation of wells, it was determined
that Northcote could materially increase production from wells that were not
part of the planned four well fracture stimulation programme through a
workover programme that consisted of, depending on the well, re-acidizing,
pumping down fluid levels and in some cases installing larger submersible
Northcote intends to utilise hydraulic fracturing techniques in relation to
the unfracked horizontal wells. Hydraulic fracturing (`fracking') is the
primary choice for enhancing production, and typically has the effect of
increasing productivity 2 to 20 times compared to an untreated well, by
increasing the amount of contact that the well bore has with high quality
reservoir rock. 
The Company has commenced an evaluation of a number of low cost opportunities
to develop other prospective formations on Northcote's existing lease
portfolio and other properties. As with the successfully producing vertical
Burkhart #3 well, new well opportunities are targeted based on information
obtained through the on-going Mississippian programme and are undertaken only
in situations where Northcote believes the well will generate compelling
economics to Northcote shareholders. 
-0- Feb/28/2013 07:00 GMT
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