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NORTHCOTE ENERGY LIMITED - Lutcher Moore #20 Well Production Rates

PR Newswire

London, March 6

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

7 March 2016

Northcote Energy Ltd

(‘Northcote’ or ‘the Company’)

Lutcher Moore #20 Well Production Rates

Northcote Energy Limited is pleased to announce that, further to the announcement of 2 February 2016, the Lutcher Moore #20 (‘LM#20’), located on the Shoats Creek Field in Louisiana (‘Shoats Creek’), has been added to production. Northcote directly owns a 70% working interest (‘WI’) and 52.8% net revenue interest (‘NRI’) in the well.

Following initial start-up of production operations certain changes to surface equipment were necessary to achieve consistent and sustainable production rates. These changes have been made and the well is currently being produced using a unidraulic jet pump and has been tested at a rate as high as 325 barrels of oil per day with a 30/64th inch choke; and for the last three days produced in excess of 200 barrels per day on an 18/64th inch choke (105.6 barrels per day net to Northcote) with a 30% oil cut. The operator, Shoats Creek Development, Inc., has advised Northcote that it intends to produce the well consistently at between 200 and 225 barrels of oil per day. In addition to oil production, gross natural gas volumes in excess of 250 thousand cubic feet per day (which are not presently being sold) have been metered.

The operator has elected to produce the well at a rate that it believes will maximise total recovery from the well and thus peak potential daily production rates substantially exceed current production levels. However, the objective is to produce at the maximum rate that can be sustained thereby minimising decline, optimising cumulative production and investment returns from the well. The operator of the well, Shoats Creek Development, Inc., has advised Northcote that it believes this rate of production to be in the 200 to 225 barrels of oil per day range. The Frio is a formation characterised by a strong water drive. Northcote believes, based on performance of the Lutcher Moore #16 well and experience of other local operators, that pulling the well too hard could result in pulling water from deeper in the formation outside the oil saturated pay zone which could have negative implications for cumulative life of well performance and result in substantially higher operating costs while pumping the well at lower pressure could result in a flatter decline curve.

In addition to a direct interest of 70% WI / 52.8% NRI in the well, Northcote also owns 48% of Springer Energy Partners, LP (“SEP”), a partnership established with private US investors to participate in the development of the LM#20 and three other wells through ownership of a 7% WI / 5.04% NRI in the first four wells at Shoats Creek Field. Northcote’s equity interest in SEP effectively contributes an additional 4.8 net barrels of production per day for the benefit of Northcote. On a combined basis, direct and equity interests in the LM#20 well, Northcote’s net share of the well is 73.4% WI and 55.3% NRI and hence net production to Northcote is 110.4 barrels of oil per day. After completion of the first four wells at Shoats Creek Field, Northcote retains the 7% WI and 5.04% NRI in future wells.

At current levels it is anticipated that the well will have a relatively flat production profile for an extended period of time. Together with the net 39 barrels of oil equivalent per day (‘BOEPD’) producing from the Company’s Oklahoma portfolio, Northcote’s net production is now 149 BOEPD (not including natural gas volumes at Shoats Creek which are not currently being sold). Northcote has plans to commence sales of natural gas at Shoats Creek in conjunction with bringing production from the next two wells to be drilled online and is in discussions with parties about the infrastructure and access to pipelines to sell natural gas.

Northcote is planning additional development activities for 2016 and will provide an update on future development activities and expected timing of such in due course. A new CPR on Shoats Creek has been initiated by the Company with results to be released in due course.

For 2016 Northcote intends to initiate quarterly production reports at the end of each quarter reporting net volumes sold during the period.

Northcote Managing Director Randall J Connally said "The results from the LM#20 validate the potential of the Shoats Creek Field where we have identified a number of high grade drilling locations. The strong well performance and modest cost to drill and complete a Frio well at the Shoats Creek Field allows for economic development at current oil prices and as such, planning and work continues with respect to the next phase of development. Details regarding the timing, intended next drilling location and financing of such will be forthcoming in due course."

**ENDS**

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

All of the technical information 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 Limited is an entrepreneurial energy company with diverse interests. The Company combines a portfolio of US exploration and production assets in Louisiana and Oklahoma with the development of new business opportunities in the US and also in Mexico as well as Indonesia via a strategic relationship with Andalas Energy and Power Plc.

Glossary:

BOE: barrels of oil equivalent, gas is converted at its energy equivalent of 6000 cubic feet per barrel of oil

BOEPD: barrels of oil equivalent per day

BOPD: barrels of oil per day, abbreviation for barrels of oil per day, a common unit of measurement for volume of crude oil. The volume of a barrel is equivalent to 42 US gallons

Choke: A wellhead choke controls the surface pressure and production rate from a well. Chokes usually are selected so that fluctuations in the line pressure downstream of the choke have no effect on the production rate.

Mcfd: Thousand Cubic Feet per Day

NRI: Net Revenue Interests

Oligocene: a geologic epoch that extends from about 33.9 million to 23 million years before the present

Pay or Payzone: an interval within a rock formation that contains quantities of hydrocarbons thought to be economically viable. This interval is commonly determined using various logging tools run by the operator prior to making the decision to complete a well for production.