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

14 January 2015

Northcote Energy Ltd ('Northcote' or the 'Company')

Acquisition of US assets of North American Petroleum Plc ('NAPP')

Northcote (AIM: NCT), an onshore US oil and gas exploration and production company, is pleased to announce that it has signed an agreement with NAPP (ISDX: NAPP) to acquire the entire issued share capital of NAPP's wholly owned US subsidiary, NAP USA Inc. (the 'Acquisition').

Highlights

· Acquisition significantly enhances Northcote's field level cash flow, lease acreage and net production, providing the enlarged Company with a robust platform for future production and cash flow growth even during times of oil price weakness:

o materially increases working interests ('WI') in core producing projects;

§ a 100% increase in working interest from 35% to 70% at Shoats Creek

§ a 55% increase in working interest from 55% to 85% at Zink Ranch

o Northcote has been high-grading its portfolio and has identified a number of low cost conventional drilling candidates with strong economics at current and lower oil prices, particularly at Shoats Creek

o The low-cost high impact Shoats Creek wells are expected to be the initial focus for the enlarged group

o pro-forma net production to 174 BOEPD (54.9% oil) as at 31 December 2014

· The consideration for the Acquisition will be the issue and allotment of shares in the Company to NAPP equal to 29.9% of Northcote's enlarged issued share capital as of the date of closing (the 'Consideration Shares')

· Upon issue of the Consideration Shares, NAPP will be subject to a 12 month lock-in period as well as being party to a relationship agreement with the Company in respect of its shareholding. NAPP plans to liquidate in Q2 2015 and distribute the consideration shares to its underlying shareholders, whereupon the lock-in will terminate

· Acquisition is conditional on NAPP shareholder approval at forthcoming NAPP General Meeting and certain other conditions including the raising of a minimum amount of £1 million to provide full settlement of the outstanding Darwin Strategic Limited ('Darwin') loan note of £1.05 million between signature and closing.

o This will be achieved through asset sales and equity and/or debt. The disposal process of certain non-core assets is underway to pay down Darwin and fund ongoing work on core Company assets. Furthermore on closing, NAP USA, Inc.'s non-core assets are also expected to be sold.

· NAPP will have the right, subject to NOMAD approval, to appoint up to two new directors on the Northcote Board

Northcote Managing Director Randall Connally said, "The combination of North American Petroleum's US assets with our own creates a larger and stronger company that still retains its focus on the development of its core assets in Oklahoma and Louisiana. This transaction makes sense in any environment but particularly in the current low oil price backdrop. We believe bulking up production, revenues and assets without having to increase our cost base makes considerable sense and will allow us to realise higher per barrel margins on many projects and to internalise more cash flow for funding overhead and development expenses. Considering our mutual operational interests, we expect the integration of NAP USA Inc. into Northcote's business to be relatively simple and highly beneficial both in terms of cost synergies and cash flow. At the same time we plan to repay the Darwin facility resulting in a larger, still focused company with a simplified balance sheet and substantial low cost conventional opportunities to grow production in 2015."

Further Information

To view an interview with Northcote Energy Managing Director Randy Connally in which he discusses the Acquisition, please follow this link: http://www.brrmedia.co.uk/event/133382?popup=true. The interview will also be available on the Company's website today.

Information on NAP USA, Inc

NAP USA, Inc has working interests in the following common fields with Northcote and the table below presents the interest being acquired under the acquisition and the post-acquisition combined interest in these fields.

The small WI projects represent various non-operated minority working interests ranging from 0.13% to 6.27% in 18 wells in the US that have been estimated to be producing an average of 10 bbls of oil per day. It is intended that these assets will be placed for sale to raise additional working capital for the enlarged group to focus on its core assets.

The unaudited management accounts for NAP USA, Inc. for the year ended 31 December 2014 reported loss on ordinary activities of $200,000 on turnover of $384,000 and has as at that date total assets of $3,477,000. NAP USA, Inc. does not have an up to date reserve report covering its assets.

Current Production

As at 31 December 2014, the combined group's net production on a pro forma basis would have stood at 174BOEPD (54.9% oil), which represents a 34% increase to levels achieved by Northcote as a standalone entity. At the time of the Company's Interim Report, Northcote's production was 190.9 BOEPD and this reduction relates to:

(i) Certain wells, both in Louisiana and Oklahoma, being down in December for maintenance and / or work over;

(ii) Lower natural gas volumes than previously reported at Shoats Creek due to gas volumes offline awaiting completion of sales facilities; and

(iii) Some decline related to higher initial production rates associated with newly recompleted wells.

The Company is confident that, upon completion of the work outlined above, total production will increase.

Further Closing Announcement

The Company anticipates making a further announcement when the conditions to closing have been satisfied with proposed dates for settlement of outstanding loan note with Darwin and the issue of Consideration Shares to NAPP.

**ENDS**

For further information visit www.northcoteenergy.com or contact the following:

Notes:

Northcote Energy Ltd is a producing oil & gas company with a portfolio of US exploration and production assets in Oklahoma and Louisiana. The Company has substantial acreage in the US where its primary focus is on the Pennsylvanian and Mississippi Lime formations. Northcote is currently undertaking a continuous 2014 work programme which includes recompletions, new wells, fracks and workover programmes in order to grow Northcote's production and reserves.