NORTHCOTE ENERGY LIMITED: Acquisition of Project & Options & GBP1.5m Placing

NORTHCOTE ENERGY LIMITED: Acquisition of Project & Options & GBP1.5m Placing
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 Company's 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 Board's 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
Company's 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 Northcote's net acreage in the Mississippian play
in Osage County, Oklahoma:

- 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 OKE's 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 Company's remaining Horizon Project option and a
further purchase of an additional WI from Horizon Drilling Partners
(`Horizon')

  * 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)

  * 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 Group's 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

Northcote's 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 Company's 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 project's 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 OKE's NRI reverts to 80 per cent. At all times, OKE's
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 OKE's 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 Halliburton's
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 Company's
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
Company's interest in the Horizon Project will have a P1 PV10 of US$61.94
million (up from US$33.5 million on the Company's 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
Company's AIM admission document, Eagle Production & Development LP (`Eagle')
granted Northcote's 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 Company's 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 OKE's 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 Company's 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 Company's 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 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.

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

`PV10'means 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 PERSON'S REPORT UPATE

The following has been extracted from Moyes & Co's 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       Ownership interest post
                         previously announced (28      completion of Horizon
                              February 2013)            Project acquisitions
                                  (%age)                       (%age)

Well                   WI     NRI    ORRI  Total    WI     NRI    ORRI  Total
                                           NRI                          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    37.875 28.406 2.228 30.634   51.750 39.049 2.228 41.276
(MS1)

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 &     39.938 29.953 2.103 32.056   53.375 40.254 2.103 42.357
Lauren (MS2)

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 Northcote's 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 
                                                   Future  Future Future  
Future   NPV 
                                                     Net    Net     Net    
Net   Discount 
             Oil &    Natural    Oil &    Natural  Revenue OPEX & Capital  
Cash   @ 10 % 
           Condensate   Gas    Condensate   Gas            Taxes           
Flow 
Reserve Class    (Mbbl)    (MMcf)    (Mbbl)    (MMcf)  ($000)  ($000) ($000)  
($000)  ($000)
/ Category 
Proved                418    1,413         40      192   4,314  2,530       -  
1,784    1,178
Developed
Producing 
Proved              2,491    6,571      1,030    2,714 102,920 13,777   1,854 
87,290   56,372
Developed
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
Underdeveloped 
Total Proved        6,672   18,758      1,181    3,107 117,916 17,902   2,803 
97,211   61,942 
Probable                -        -          -        -       -      -       -    
-        -
Behind Pipe 
Probable            1,800    5,366          3        8     259     38      41   
 179      102
Undeveloped 
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            2,100    6,210          3        9     300     44      48   
 208      117
Undeveloped 
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    +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 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. 
END 
-0- Mar/25/2013 07:00 GMT