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NORTHCOTE ENERGY LIMITED - Operational Update

PR Newswire

London, March 12

13 March 2013

Northcote (AIM: NCT), an onshore US oil and gas exploration and productioncompany, is pleased to provide a positive update regarding its operations inOklahoma, where it produces from the proven Mississippi Lime and Laytonformations.

Highlights

Northcote's Chief Executive Officer Randy Connally said, "The forthcomingcommencement of Northcote's first fracture stimulation programmes at theHorizon Project signals an exciting time in the Company's development, which weare confident will result in substantially enhanced net production and grouprevenues. Fracture stimulation can initially increase the productivity of apreviously untreated well by 2 to 30 times, and with this in mind, we lookforward to announcing the outcome of these initiatives after production volumeshave stabilised.

"We have already substantially increased production at Horizon having recentlyexercised an option to increase our working interest in the Horizon Project to37.5% combined with the receipt of positive results from workover programmes atthe project. We believe that this success, along with our decisions to deepenand drill wells across our entire Oklahoman portfolio and the range ofcorporate and acquisition opportunities currently available to the Company,bodes well for Northcote as we focus on exceeding our production targets forour first year of listing."

Horizon Project, Osage County: (average 37.5% working interest)

The fracture stimulation of the Big Hill #1, the first of two programmestargeted for this well and the Big Hill #2 well, is expected to commence duringthe week beginning 18 March 2013. The Big Hill frac tank liner project is nowcomplete and the necessary water volumes are currently being procured fromlocal sources. Results from the fracture stimulation will be announced in duecourse on the first 30 day average production rate after injected water volumeshave been recovered. This usually occurs around 35 to 45 days afterstimulation.

Northcote intends to utilise hydraulic fracturing techniques in relation to theunfracked horizontal wells on the Horizon Project as part of its strategy tosignificantly increase production. Hydraulic fracturing is the primary choicefor enhancing production, and typically has the effect of increasingproductivity 2 to 30 times compared to an untreated well, by increasing theamount of contact that the well bore has with high quality reservoir rock.Northcote's average working interest in the 10 wells currently producing in theHorizon Project is 37.5%.

The workover programme was initiated based on the evaluation of wells andbottomhole pressure tests run in December 2012 in preparation for the fracturestimulation programme. Whilst the work programme contained in the CPR in theAIM Admission Document detailed Steele 2-1 1H and Sarah (MS1) as being theinitial two wells targeted for fraccing, the focus now is on fraccing Big Hill#1 and Big Hill #2 first, with further fracs to follow dependant on the resultsof these initial two. As part of the evaluation of wells, it was determinedthat Northcote could materially increase production from wells that were notpart of the planned four well fracture stimulation programme through a workoverprogramme that consisted of, depending on the well, increasing water disposalcapacity, re-acidizing, pumping down fluid levels and in some cases installinglarger submersible pumps.

In line with this, the workover programme on Little Drum unit is progressingwell with the completion of a salt water disposal pipeline system expected inthe next 30 days. This will enable disposal of substantially increased watervolumes and, based on the relationship between water and hydrocarbon productionin these assets, substantially higher oil and gas production rates.

Additionally, the Burkhart#1 well has successfully reached its target depth of4,226 feet. This was an existing well that was originally drilled to andproduced from the Mississippi Chat formation. As announced on 20 February 2013,the decision was made to deepen it to evaluate further formations. The wellintercepted oil shows in multiple objectives and the Company is now evaluatingcompletion options in the Viola and Mississippi Lime formations. Furtherinformation will be provided at the appropriate time. Northcote has a 3.69%working interest in the well.

Bird Creek Prospect, Osage County: (average 3.125% working interest)

As announced upon acquiring a 3.125% working interest in the Bird Creek Projecton 20 February 2013, the Company is participating in the drilling of two wellsin H1 2013. The Bray #1 has been drilled to target depth of 1,820 feet withgood oil shows across 10 feet of pay from 1,704 to 1,714 feet. The Company nowplans to drill the Keese #1 well which is currently being permitted anddrilling is expected to begin later in March/ April 2013. Once the Keese #1 isdrilled to target depth, the better of the two wells will be completed as aproducer and the other well will be completed as a salt water disposal well tosupport future production.

DeAgua Project, Woods County: (average 0.348 % working interest)

The salt water disposal well to service the Woods County wells, the Busse #1Hand the Bouziden #1H-17, is complete. These wells will be added to productionstarting this month and the production rates will be announced in due course.

Issue of Equity

In addition, further to the announcement made on 13 February 2013, with respectto the exercise of an option to increase its interest in the Horizon Project,Oklahoma, Northcote has now applied for 23,508,138 new Shares to be admitted totrading on AIM with admission expected to commence on 15 March 2013. Followingthe issue of the new Shares, the Company's issued share capital now consists of890,412,716 Shares.

As detailed on 13 February 2013, Horizon is now the holder of 85,025,917 fullypaid Shares representing approximately 9.55 per cent. of the enlarged issuedshare capital of the Company and WCR is the holder of 5,424,955 fully paidShares representing approximately 0.61% of the enlarged issued share capital ofthe Company.

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.

For further information and the full Admission document visitwww.northcoteenergy.com, see below or contact the following:

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 fracking, 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.

The Horizon Project, Osage County Oklahoma

Northcote's interests in Osage County comprise working interests in 10producing wells, of which nine are unfracked horizontal wells producing fromthe Mississippian formation and one is a vertical well producing from theshallower Layton formation (Burkhart #3).

The workover programme was initiated based on evaluation of wells andbottomhole pressure tests run in December 2012 in preparation for the fracturestimulation programme. As part of the evaluation of wells, it was determinedthat Northcote could materially increase production from wells that were notpart of the planned four well fracture stimulation programme through a workoverprogramme that consisted of, depending on the well, re-acidizing, pumping downfluid levels and in some cases installing larger submersible pumps.

Northcote intends to utilise hydraulic fracturing techniques in relation to theunfracked horizontal wells. Hydraulic fracturing (`fracking') is the primarychoice for enhancing production, and typically has the effect of increasingproductivity 2 to 20 times compared to an untreated well, by increasing theamount of contact that the well bore has with high quality reservoir rock.

The Company has commenced an evaluation of a number of low cost opportunitiesto develop other prospective formations on Northcote's existing lease portfolioand other properties. As with the successfully producing vertical Burkhart #3well, new well opportunities are targeted based on information obtained throughthe on-going Mississippian programme and are undertaken only in situationswhere Northcote believes the well will generate compelling economics toNorthcote shareholders.