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Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector: Oil & Gas 4 October 2013 Northcote Energy Ltd (`Northcote Energy' or `the Company') Intention to drill first Horizontal well targeting the Mississippi Lime formation Northcote Energy (AIM: NCT), an onshore US oil and gas exploration andproduction company, is pleased to announce plans to drill its first horizontalwell targeting the Mississippi Lime formation on its 100% owned Mathis leaseprior to end of December 2013. In addition as part of the well planningprocess, the first two undeveloped locations on Mathis have been designated P1PV-10% reserves of US$14.8million, which combined with the previously announcedreserves brings the value of the Northcote's P1 reserves to US$76.7 million. Highlights * New horizontal well, targeting the Mississippian, anticipated to spud prior to the end of December 2013 * First well location designated proved undeveloped (P1) status by Moyes & Co with: * + 200,000 barrels of oil, 1.7Bcf of natural gas and a PV-10% of US$9.7million * Total Mathis lease assigned P1 reserves of 328,000 barrels of oil and 2.79Bcf of natural gas and a PV-10% of US$14.8 million * Mathis lease acquired for US$325,000 - Reserves assigned by Moyes & Co validate strategy to acquire and develop leases in Oklahoma and grow net production and reserves through drilling * Advanced discussions to sell at least a 50% working interest in the well as part of our strategy for balancing upside with the management of financial risk * Total value of P1 reserves (PV10%) assigned by Moyes across Northcote's portfolio of 2,895 net mineral acres now stands at US$76.7million compared to its current market capitalisation of £12.24 million Northcote Energy Managing Director Randall Connally said "As the firsthorizontal well drilled by Northcote since listing this is a very exciting nextstep in the evolution of our company and we are excited about the prospects forcompleting this well during our first 12 months on AIM. This has the potentialto be a high impact well for us and on a net basis to significantly contributeto meeting our newly established 250 BOE/d production target by mid-2014. Inthe meantime the Mathis Oil & Gas reserves, estimated by Moyes, represent on agross basis a 24% increase in our P1 PV10 to US$76.7m, further strengtheningthe asset backing behind our current market valuation of £12.24 million." Further Information Northcote holds a 100% interest in the Mathis project which was acquired in May2013 for US$325,000 and covers 960 acres contiguous to the Company's 51% ownedHorizon Project in the producing Mississippi Lime formation in Osage County,Oklahoma. Management's rationale for the acquisition of Mathis, as announced inMay 2013, was that for a relatively small investment it provided shareholderswith exposure to significant value upside potential through the development andworkovers of existing wellbores alongside at least two horizontal drillinglocations. As part of the Company's diligence in preparing for this well, the project hasnow been evaluated by Moyes & Co and we are delighted that they have validatedour assessment of the Mathis project's potential. The first location has beendesignated as a proved undeveloped location (P1) with 200,000 barrels of oiland 1.7Bcf of natural gas and a PV-10% of US$9.7 million, net of expecteddrilling and completion costs. In addition to this first horizontal well, Northcote has been given a secondproven undeveloped location with the combined proven undeveloped reserves forboth locations totalling 328,000 barrels of oil and 2.79Bcf of natural gas anda PV-10% of US$14.8 million, net of expected drilling and completion costs.This represents a 28% increase in total oil reserves and 90% increase in totalnatural gas reserves. The surface location for the first well will be located near the Company'sexisting producing Steele and Steinberger wells to the west of the Horizonproject, Osage County, Oklahoma. The two horizontal locations identified wereeach selected based on the same 3-D seismic used to identify the Steele andSteinberger well locations. Northcote intends to drill the well using an existing vertical well pad site todrill a new well to test the Mississippi lime formation at an approximate truevertical depth of 3,000' with a contemplated 3,500' cased horizontal extensionto target unexploited reservoir identified on existing 3-D seismic. Amulti-stage fracture stimulation will be undertaken as part of the completionof the well. By utilizing an existing pad site, Northcote will save time andcapital in drilling the well as it eliminates the need to prepare a newlocation, does not require additional permitting and eliminates the need for anarchaeological survey on a new well site. The estimated completed well cost is US$3.25 million on a 100% working interestbasis. As part of our strategy for managing our portfolio and balancingretention of upside with management of financial risk, Northcote intends tosell at least 50% working interest in the well while retaining between 30% and50% working interest as well as operational control of the project. The Company is presently in advanced discussions with a number of industry andprivate investors regarding farming into the 50% working interest being offeredin the well. Subject to completion of the farm-in, the anticipated spud datefor the well is prior to the end of December 2013. All of the technical information, including information in relation to reservesand resources that is contained in this announcement has been reviewedinternally by the Company's Technical Director, Mr. Kevin Green. Mr. KevinGreen is a Petroleum Geologist who is a suitably qualified person with over 30years' experience in assessing hydrocarbon reserves and has reviewed therelease 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 theapproximate energy released by burning one barrel (42 US gallons or 158.9873litres) of crude oil. There are 42 gallons (approximately 159 liters) in one barrel of oil, whichwill contain approximately 5.8 million British Thermal Units (MBtus) or 1,700kilowatt hours (kWh). The value is necessarily approximate as various grades ofoil have slightly different heating values. BOE is used by oil and gascompanies in their financial statements as a way of combining oil and naturalgas 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% perannum. `WI' means Working Interest, a percentage of ownership in an oil and gas leasegranting its owner the right to explore, drill and produce oil and gas from atract of property. Working interest owners are obligated to pay a correspondingpercentage of the cost of leasing, drilling, producing and operating a well orunit. After royalties are paid, the working interest also entitles its owner toshare in production revenues with other working interest owners, based on thepercentage of working interest owned **ENDS** For further information visit www.northcoteenergy.com 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 20 7024 8391 Roland Cornish 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 productioncompany focussed on the rapidly emerging Mississippi Lime formation inOklahoma. The Company participates with leading operators, including MidstatesPetroleum and Chesapeake Energy, in low risk development plays where advancedtechniques, such as horizontal drilling and fracing, are used to unlock knownoil accumulations and dramatically improve recovery rates. Management isfocused on increasing production through a multi-well drilling and frackingcampaign in 2013.