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

9 May 2014

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

Agreement to acquire 35% Interest in Shoats Creek Oil Field, Louisiana

Northcote (AIM: NCT) is pleased to announce that it has entered into a heads of terms agreement to acquire a 35% interest in and become operator of the producing wells at the 1,670 gross acre Shoats Creek Oil Field in Beauregard Parish, Louisiana. Shoats Creek represents a low cost acquisition opportunity to bolster both existing and long term production and reserves and the deal has been structured to allow the Company to continue to focus on its operational and financial resources through its 2014 work programme across its Oklahoma properties.

· Northcote will initially acquire a 70% interest in the Shoats Creek Field from Springer Oil & Gas, LLC ("Springer") and will simultaneously farm-down 50.0% of this interest (35%) to North American Petroleum plc ('NAP') on the same terms

· The acquisition of the 70% interest is to be satisfied as follows:

o The issue of Northcote ordinary shares valued at US$350,000 (valued at the date of closing); and

o A production payment of $10.00 per barrel up to a maximum of US$3.15 million ("production payment")

· On completion of the farm-down to NAP, NAP will make a payment to Northcote of US$175,000 in cash and will assume 50% of Northcote's production payment (US$1.575million)

· In parallel Springer has agreed to acquire 100% of the ordinary share capital of Aminex USA Inc for total consideration of $5,000,000. This acquisition by Springer is subject to Aminex shareholder approval and Northcote's aforementioned 70% interest will be acquired simultaneously on the closing of the Springer and Aminex transaction

· Northcote to become operator of the producing assets at Shoats Creek Field and it has committed US$275,000 towards its share of a US$1million development capital commitment.

Northcote's Chief Executive Officer Randall Connally said, "The Shoats Creek transaction provides Northcote with an opportunity to expand into a new, highly prolific U.S. onshore oil and gas region with partners equally focused on exploiting an oilfield with great potential and a production history estimated at over 2 million barrels.

"Our partnership with Springer Oil & Gas, LLC and NAP provides the substantial portion of initial capital expenditures to facilitate early development of the project, ensuring that the addition of this property to our portfolio will not divert Northcote's financial resources from our ongoing 2014 work programme in Oklahoma. This property is attractive due to the multiple payzone opportunities present, as well as the exploitation potential from existing well bores. Following our extensive due diligence on the project, Northcote and its partners believe that a systematic development programme will offer substantial production upside from near term exploitation of existing wellbores and longer term from the multiple drilling locations remaining in the Frio, Cockfield and the deeper Wilcox formations. Our high expectations for the continued development of Shoats Creek are supported by the recent success of Midstates Petroleum, Inc., an NYSE listed US independent oil and gas company, whose core property in Louisiana is contiguous with the Shoats Creek Field."

The Shoats Creek field consists of 1670 contiguous acres that has multiple payzones including the Frio, Cockfield and Wilcox. Upon completion of the transaction Northcote will become operator of and have a 35% working interest (26.35% net revenue interest) in the 1670 acres targeting the producing Frio and Cockfield zones.

Roughly a quarter of the Shoats creek field has been contributed to an area of mutual interest ("AMI") agreement to explore the Wilcox sands which are deeper than existing producing formations in the field. The AMI is with EP Energy, a private US Oil & Gas company owned by Apollo Global management and Riverbend holdings. Northcote will have a 17.5% non-operated working interest (13.125% NRI) in the Wilcox project.

The Shoats Creek field consists of 1670 contiguous acres located in Beauregard Parish in Southwestern Louisiana and is held by production from one producing well with opportunities to significantly increase production from a number of currently shut it well bores. Importantly, the project is highly attractive for continued development as it offers workover and recompletion opportunities, new shallow and deeper drilling targets, as well as a long term waterflood potential and multiple pay zones.

Nine of the 22 wells drilled in the field were completed before 1960, eleven wells were drilled and completed from 1979 to 1989. Two wells were added in 2010. The main phase of work-over and recompletion of the twenty two wells now within the leasehold took place between 1979 and 2005. Currently, one well is producing and there is an active salt water disposal well.

Regional 3-D seismic was conducted over the leases in the area by TGC for Forest Oil in 2006 and 2007. Aminex USA was given the full-fold coverage for the Shoats Creek leasehold with an appropriate margin of "pad" acreage. Subsequent interpretation of the 3D data revealed a previously unknown or unrecognized fault in the southeast corner of the leasehold, and affirmed the previous thought that several "compartments" in the southeast and south central portions of the lease existed. These virgin compartments are highly attractive Cockfield formation exploratory areas. The seismic also supports potential shallow Frio locations.

Development of the Upper Wilcox formation commenced in 1990 with the drilling of the LL&E Lutcher Moore #1 well, which was unsuccessful due to location. The interpretation of 3D seismic data led to the successful completion of the El Paso Olympia Minerals 10-1 well in 2010. Additionally, Midstates Petroleum (NYSE: MPO) has had an active and successful Upper and Lower Wilcox development programme ongoing less than one-half mile east of the Shoats Creek central tank battery.

Pursuant to the transaction Northcote will acquire a 70% interest from Springer Oil & Gas, LLC, a private US oil and gas company that is buying Aminex USA, Inc. The 70% interest will be satisfied through the issue of ordinary shares valued at US$350,000 (as at the date of closing) and a proportionate share of a production payment of $10.00 per barrel. Simultaneously, Northcote will farm-down 35% to NAP in return for a cash consideration of US$175,000 and NAP will assume its proportionate share of the production payment. The consideration shares will be subject to a 12 month lock-in.

Considering the strong prospectivity of the asset, Northcote and its partners are committing to invest US$1 million within the twelve months following closing of the transaction. This development capital will be secured by 100 million Northcote shares pledged by Northcote's 12.58% shareholder, Riverbend Energy, LLC. ("RiverBend"). RiverBend shall receive no compensation for this pledge, which it has made based on its assessment that the transaction contemplated represents a material and compelling opportunity for enhancement of value for it and other Northcote shareholders.

Northcote, NAP and Springer will initially commit US$600,000 to initiate operations of the field, of which US$75,000 be funded by Northcote; US$75,000 by NAP and US$450,000 by Springer. Northcote's costs will be covered by the cash provided by NAP as part of the farm-down. The remaining US$400,000 expenditure commitment will be split equally between Northcote and NAP, bringing Northcote's cash commitment to US$275,000 for this initial programme.

Northcote will then be responsible for 50% of the next US$900,000 after which the partners will participate on future expenditures on a pro-rata basis. These costs, are anticipated to commence in 2015, thereby allowing Northcote to focus on its continuous 2014 work programme across its Oklahoma portfolio. The programme will focus on exploiting new well opportunities in the previously untapped Frio formation and new seismically identified Cockfield drill opportunities.

**ENDS**

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

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.

Notes:

Northcote Energy Ltd is a producing oil & gas company with a portfolio of US exploration and production assets principally focused in Osage County, Oklahoma. 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.