AOGL.L Regulatory News (AOGL)

Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector:Oil & Gas 18 November 2013 Northcote Energy Ltd (`Northcote' or `the Company') Over 600% Increase in Oil Production at West Little Drum Well, Oklahoma Northcote (AIM: NCT), an onshore US oil and gas exploration and productioncompany, is pleased to announce the successful fracture stimulation of the WestLittle Drum Well on its 51% owned Horizon Project, which has resulted in asignificant increase in production compared to pre-frac levels. Highlights * West Little Drum oil production increase of over 600% from pre-frac levels * Oil production continues to fluctuate but the well reported an average of 40 (18 net) bopd for the most recent 7 days and an average of 35 (15 net) bopd over the entire 20 day post frac period * Natural gas production at the four well Little Drum unit, which includes the fracked West Little Drum well, has increased from a pre-frac average of 43 Mcf/day (19 net) in September to an average of 118 (52 net) Mcf/day since resumption of natural gas sales and averaged 171 (75 net) Mcf/day for the first week of November, the most recent data available * Frac completed at a gross cost of US$150,000 - expected to pay back from net operating cash flows within 90 days * West Little Drum is the third of a four well frac programme for 2013 - the next well will be fracked before the end of the year * Five additional horizontal wells on Horizon currently producing from the Mississippi Lime remain to be fracked Northcote's Chief Executive Officer Randy Connally said, "At IPO, the fracprogramme at Horizon was initially our core focus and we are pleased that theprogramme is delivering on its objective to significantly increase existingproduction at low cost and we look forward to completing the final frac of our2013 programme before the end of the year. "Reflecting on the substantial progress made since IPO, the frac programme isnow just one part of our focus across what is now a much enhanced anddiversified asset base covering over 4,000 net mineral acres. We are extremelyexcited by the development potential across our portfolio and expect tosignificantly add to our production, with our ongoing programme which includesthe drilling of our first Mississippian horizontal well this year, as werapidly advance towards our 250 BOEPD target." West Little Drum The frac at West Little Drum commenced on 9 October and was completed in linewith expectations at a gross cost of US$150,000, substantially under originalbudget estimates. The approach to the West Little Drum frac was to stimulatethe well by pumping approximately 5,000 barrels of water, along with certainchemicals and rock salt, into the well in multiple stages. The well was put back on production on 13 October 2013, at which point it wasprincipally producing the frac load water. As the bulk of load water wasrecovered, the well showed substantial increases in oil cut and whilst oilproduction continues to fluctuate the well produced 40 (18 net) bopd over thepast 7 days and for the entire 20 day post frac period the production averaged35 (15 net) bopd. There is the potential for production to increase furtherfollowing the completion of the Little Drum pipeline project earlier this year.As a result of the increased water disposal capacity resulting from thisproject, the formation continues to de-water, which typically leads toincreasing oil cuts over an extended period of time, permitting higher overallproduction rates. Based on the actual cash cost for the frac of US$150,000, the well is expectedto pay back on a net cash flow basis within 90 days, which is evidence of thestrong investment rationale for the frac programme and evidence that productionat Horizon can be increased in a highly cost effective fashion. The planningfor the frac of the fourth well, the final frac of our 2013 programme, is wellunderway and will be completed before the end of the year. Further details onthis will be provided in due course. West Little Drum gas is reported as part of the Little Drum Unit, which meansthat the gas production from the unit's four wells, including West Little Drum,is pooled and reported together, however we believe the frac has positivelyaffected gas production. Since the frac, the entire Little Drum unit hasreported substantially increased natural gas production from an average of 43(19 net) Mcf per day in September to an average of 118 Mcf per day sinceresumption of natural gas sales and production averaged 171 Mcf/d for the firstweek of November, the most recent data available. 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. 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 litres) in onebarrel of oil, which will contain approximately 5.8 million British ThermalUnits (MBtus) or 1,700 kilowatt hours (kWh). The value is necessarilyapproximate as various grades of oil have slightly different heating values.BOE is used by oil and gas companies in their financial statements as a way ofcombining oil and natural gas reserves and production into a single measure. `boepd' means barrels of oil equivalent per day `Mcf' means thousand cubic feet **ENDS** For further information visit www.northcoteenergy.com, see below or contact thefollowing: 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 Stefan Olivier Cornhill Capital Limited +44 (0) 20 7710 9618 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 fracingcampaign in 2013.