88 Energy Regulatory News (88E)

20 November 2014 TANGIERS PETROLEUM LIMITED TANGIERS WINS BID FOR SIGNIFICANT INTEREST IN US OIL AND GAS PROJECT **A full pdf version of this announcement including images is available fromthe Company's website at www.tangierspetroleum.com.au SUMMARY: *Successful bid for large acreage position onshore Alaska in prolific liquids-rich area *Significant working interest in strategic asset with world class potential *Excellent fiscal terms, with cash rebate of up to 85% of explorationexpenditure *Experienced U.S. partner to work with Tangiers "on the ground" *Long primary term leases (10 years), Operatorship and high working interest(87.5%) provide maximum financial flexibility to Tangiers Tangiers Petroleum Limited ("Tangiers" or the "Company") is pleased to announcethat it has entered into Binding Agreements to acquire a significant workinginterest in a large acreage position on a multiple objective, liquids-richexploration opportunity in onshore North America known as Project Icewine (the"Project"). PROJECT ICEWINE HIGHLIGHTS *High working interest (87.5%) in strategic asset with a world class prize *Up to 86,940 net acres of a gross 99,360 acre (400 km2) opportunity *Near ground-floor entry with average price per acre of approximately US$30 *10 year primary term with no mandatory relinquishment *Low 16.5% royalty (materially lower than most U.S. opportunities) *Large acreage position and Operatorship provide flexibility for possiblefarm-down \* The primary objective is an untested, unconventional liquids-rich shale playin the prolific shale complex that sourced the largest oil field in NorthAmerica \* The shallower conventional opportunity is a high-porosity, deepwater sandcomplex that is the hottest play on the North Slope and locally highlighted bythree undeveloped discoveries on adjacent acreage *Organically generated by the principal of BEX (and an AEM founding partner)that spearheaded ConocoPhillips' 2005-2008 Industry entry into the sweetspot ofthe Eagle Ford Shale play, South Texas, US *Internal analysis indicates the North Slope acreage is similarly located in ahigh-liquids, vapour phase shale sweetspot with Tier One in-place resource,maximizing the potential for compelling delivery rates and recoverable volumes *Advantageously situated adjacent to the Dalton Haul Road and TransAlaskaPipeline (TAPS), resulting in all year round access for operations andimmediate market access *Up to 85% of exploration expenditure in 2015 is cash-refundable by the Stateof Alaska through the Alternative Credit for Exploration and Carried ForwardLoss Credit *Alaska is currently the only US State approved for oil export, giving Tangiersexposure to international oil pricing *Full independent technical report underway Tangiers' Managing Director, Dave Wall said "Project Icewine is the first steptowards rebuilding the Company. Icewine ticks three of our key boxes for astart-up project: funding flexibility, ground floor entry and huge upsidepotential. In addition, the Project is located in a prolific oil producingregion, with good infrastructure and significant nearby activity by majorindustry players. The Board is looking forward to working with our US partnersin order to unlock the substantial value we believe resides within theProject." Figure 1 - Project Icewine Location (please refer to the pdf version of thisannouncement available from the Company's website) DEAL METRICS Tangiers, through its Houston based agent in the bid process, BurgundyXploration LLC ("BEX"), was the apparent high bidder* on 90,720 acres at theAlaska North Slope Areawide Sale on 19 November 2014. BEX will contribute its8,640 acres and initially receive 12,420 acres across the entire Project inreturn. Post the swap, Tangiers' wholly owned subsidiary, Accumulate EnergyAlaska Inc., will own up to 86,940 net acres of a gross 99,360 acre (400 km2)opportunity. Accumulate Energy Alaska will be the Operator of record and willexecute the Project in conjunction with Arktos Energy Management LLC ("AEM") ofHouston Texas, a company that specializes in generating, capitalizing andmanaging new upstream ventures. Tangiers is gaining ground floor entry through the bid round with minimalpromote on the acreage swap with BEX. Tangiers will also carry BEX on the firstUS$2m of expenditure. On spud of the first well on the acreage BEX will beassigned an additional 9,660 acres. The up-front cost to Tangiers is a 20%deposit paid to the Department of Natural Resources Alaska (US$520,000) withthe balance of ~US$3m (including first year rental cost of US$10 per acre)likely to be paid in Q2 2015 post formal Award. The US Partner, AEM, will receive a 4% Overriding Royalty and a Net ProfitInterest ("NPI") that scales with Return on Invested Capital, generatingrevenue to the US partner only on a success basis. The NPI starts at 5% on aMultiple on Invested Capital ("MOIC") of 1x, increasing by 5% with each MOICincrement up to a maximum of 45% at 10x MOIC. Real world examples show thatshareholders enjoy substantial increases in share price as MOIC increases. (Theshare price of ASX listed Aurora Oil and Gas Ltd increased by 30x over 4 yearswith an ultimate MOIC of greater than 3x). The NPI is recalculated on a six monthly basisand paid out of Project profits, including proceeds from any sale. Further, the American concept generators become "boots on the ground" in theU.S. for Tangiers through Board seats on the subsidiary and a consultancyagreement. *apparent high bidder is announced to those present, in person, at the saleprocess in Anchorage, Alaska. Formal high bidder is officially notified by mailseveral weeks later. WORK PROGRAM The initial work program is focused on moving the Project forward towardsdrilling of the first well and/or attracting a farm-in partner in the near tomedium term. The estimated CY2015 budget of US$2.1m comprises the purchase,reprocessing and re-interpretation of existing 2D seismic in addition to wellplanning activities and overheads. In order to complete the transaction, Tangiers will require shareholderapproval in a general meeting. It is anticipated that this meeting will be heldin January 2015. A more detailed presentation on the asset will be released in the coming weeks. DAVE WALLMANAGING DIRECTOR Media and Investor Relations AustraliaTangiers Petroleum LimitedLevel 2, 5 Ord StreetWest Perth WA 6005, AustraliaPh: + 61 8 9485 0990www.tangierspetroleum.com Hartleys LtdAs Corporate AdvisorMr Dale Bryan+ 61 8 9268 2829 United KingdomRFC Ambrian LimitedAs Nominated AdviserMr Oliver Morse / Ms Trinity McIntyre+61 8 9480 2500 As Corporate BrokerMr Charlie Cryer+44 20 3440 6800