AOGL.L Regulatory News (AOGL)

Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector: Oil & Gas 4 July 2013 Northcote Energy Ltd (`Northcote' or `the Company') Northcote Drilling Partners LP Established Northcote Energy (AIM: NCT), an onshore US oil and gas exploration andproduction company, is pleased to announce the establishment of NorthcoteDrilling Partners LP (`Northcote Drilling Partners' or `the Partnership'), inwhich Northcote Energy Development, LLC (`Northcote Energy Development'), awholly owned subsidiary of Northcote, will be the managing general partner ofthe Partnership. This is in line with the Company's strategy to build existingnet production and reserves through the development of its interests. Key Highlights * The Partnership will de-risk Northcote's development programme by providing it with a non-dilutive source of capital and a risk free interest in additional production * The Partnership has closed initial partnership subscriptions of US$1.7 million from US investors and is now actively considering initial investments. It is seeking total subscriptions of US$6 million, which it will close in a series of tranches, and the offering will remain open to US investors until 31 August 2013 * Northcote Energy Development will earn 10% of the Partnership's production and cash flow, rising to 20% once the partners have received distributions equal to 100% of their initial capital contributions * The Partnership will contribute to Northcote's monthly overhead * Northcote Energy Development will be the managing general partner and have sole discretion in selecting Partnership investmentsThe Partnership may participate by: * + acquiring interests in assets or properties already held by Northcote + acquiring interests in properties from third parties alongside Northcote + through participation in projects independently * The Partnership provides U.S. only investors with a vehicle to participate with Northcote in the development of oil and gas assets located onshore US, initially in Oklahoma Chief Executive Officer Randy Connally said, "This is an important step forNorthcote as it allows us to expand our asset base, leverage corporateinfrastructure and significantly strengthen our business while creating directvalue for our existing shareholders. In particular, as managing generalpartner, the Partnership provides the Company with a source of non-dilutivecapital that offers direct upside participation in additional assets, whilstalso reducing our exposure to higher risk opportunities. With this in mind, weare looking forward to closing what we expect to be the first of severalpartnership vehicles. "The establishment of the Partnership and the associated interest of the USinvestment community is a valued endorsement of the Northcote story and weexpect the Partnership to be a great ally as we continue to rapidly develop ourprojects. In this vein, the operational achievements to date have significantlylifted our production towards our 12 month target of producing 100 boepd and wewill build upon this over the coming months through development andacquisition. "The Partnership benefits from the platform that Northcote has assembled tosource, evaluate, acquire and develop oil and gas properties as well as being atax effective way for US citizens to invest in oil and gas opportunities.Partnerships have been, and continue to be, a key way to finance ventures inthis sector, and provide an alternative funding option to raising capital atthe corporate level. With this in mind, we are excited to have successfullyexecuted our first partnership and look forward to reaching the US$6 milliontarget." The Partnership Northcote Drilling Partners, LP, a Texas limited partnership (the`Partnership') has been formed to enable U.S. investors (`the Investors') toparticipate with Northcote Energy and its wholly owned subsidiary, NorthcoteEnergy Development, LLC, in the development of oil and gas assets locatedonshore United States, initially in Oklahoma. Northcote Energy Development willbe the managing general partner of the Partnership. Northcote currently has in excess of 2,800 net acres of oil and gas leases innorthern Oklahoma, primarily Osage County, Oklahoma, where it is developingmultiple objectives including the Bartlesville, Layton and Mississippianformations. It is envisaged that the Partnership will primarily participatealongside Northcote in the development of its existing properties but alsoproperties in which it may acquire an interest in the future. The Partnershipwill participate by either acquiring an interest in properties already held byNorthcote or by acquiring an interest in properties from third partiesalongside Northcote. Northcote Energy Development will have sole discretion inthe selection of Partnership investments. If the Partnership acquires interests in leases or wells directly fromNorthcote, the Partnership will acquire such interests at the price paid byNorthcote, adjusted for any investment in the property. In instances where thePartnership is acquiring an interest in a set of properties along withNorthcote from a third-party seller, the Partnership will acquire suchinterests at either (i) the same cost as Northcote (if acquired at the sametime) or (ii) on terms Northcote Energy Development, in its capacity as themanaging general partner, believes to be fair and reasonable (if acquired at alater date). From time to time the Partnership may acquire interests in oil and gasproperties in which Northcote is not participating if Northcote EnergyDevelopment believes the interests to be attractive and appropriate given theobjectives of the Partnership. While the Partnership is primarily being formedto participate as a working interest partner in oil and gas projects, from timeto time the Partnership may be involved in oil and gas projects throughacquisition or ownership of royalty, over-riding royalty and other interests inproduction from producing or non-producing properties. The cash distributions from the Partnership will generally be payable 90% tothe Investors and 10% to Northcote Energy Development, until Investors havereceived distributions equal to 100% of their initial capital contributionswithout regard to tax benefits (`Capital Payout'), and 80% to the Investors and20% to Northcote Energy Development after Capital Payout. As a result, thePartnership will provide Northcote Energy with an additional revenue stream. Northcote Energy Development, as the managing general partner, will receivereimbursement monthly, in arrears, for direct third party costs, including, butnot limited to, legal costs, accounting and preparation of tax returns,engineering reports, consultants' reports, and any other direct third partyadministrative costs. In addition to providing services to the Partnership,Northcote Energy Development will receive an administrative fee of $2,500 permonth in lieu of allocation of general overhead items associated withadministering the affairs of the Partnership. **ENDS** For further information and the full Admission document visitwww.northcoteenergy.com, see below 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 (0) 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.