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Northcote Energy Ltd / Index: AIM / Epic: NCT / ISIN: VGG6622A1057 / Sector:Oil & Gas 22 January 2014 Northcote Energy Ltd (`Northcote Energy' or `the Company') Operations Update Northcote Energy (AIM: NCT), an onshore US oil and gas exploration andproduction company, is pleased to provide a positive update on its interests inOklahoma which cover 6,058 net mineral acres. This includes an overview of its2014 drilling/frack and well workover programmes focused on significantlyincreasing production and proving up the reserves on its leases, which areprimarily targeting the producing Mississippi Lime Formation. Overview * 2013 saw the Company successfully achieve its stated objectives of increasing production to over 100 net BOEPD and also expand its oil and gas portfolio to over 6,000 net mineral acres. The impact on the Company's portfolio since listing in January 2013 was significant: + Over 40 producing wells up over 300% from 12 producing wells at listing + Proven net reserves of 2.49 million BOE increased from 0.94 million BOE at listing. Further reserve potential exists from properties still to be engineered + Over 40 potential drilling locations with over 20 new drilling locations added in Osage and Kay Counties since listing + Over 14 low cost workover opportunities added since listing + At least 6 remaining fracture stimulation opportunities of Mississippian wells * 2014 focus is to monetise the value across recently acquired acreage: + On track to hit 250 net BOEPD by 31 July 2014 - up from 100 BOEPD level achieved in 2013 + At least 3 new wells to be drilled in 2014 including the first Mississippian well at Horizon and new wells at Zink Ranch + Workover of at least 14 existing wells and the continuation of the fracture stimulation programme at Horizon, commencing February 2014 with the frack scheduled for December 2013 delayed due to adverse weather Northcote's Chief Executive Officer Randall Connally said, "2013 saw ussignificantly expand our acreage, proven reserves, well count, production andfuture development opportunities in both Osage County and beyond at arelatively low cost. Having achieved our stated ambition of increasing theoperating footprint to over 6,000 acres, in 2014 Northcote will focus on theconsiderable development potential on our leases and in the process crystallisethe value of our expanded asset base through higher production and internalcash flow levels. Over the coming 12 months we will implement a number ofinitiatives in Osage County including drilling, workovers of existing wells,and frack programmes, as we look to hit our July 2014 250 BEOPD productiontarget, and build on our proven reserves which currently stand at 2.49 millionBOE." Osage County Properties Northcote holds approximately 4,620 net acres in Osage County, which iscomprised of four core properties, these are: * Horizon Project (50.15% WI and 39.8% NRI); * Mathis Project (70% WI and 54.6% NRI) * OKE Project (100% WI and 41.25% NRI); and * Zink Ranch Project (formerly North Cleveland) (78% WI and 54% NRI) This provides the Company with interests in 36 producing wells across thecounty which together account for 90% of the Company's total production. During 2014 the Company's first target is to achieve 250 net BOEPD ofproduction by 31 July 2014 and Northcote's planned work programme is focussedon achieving that target. The planned programme includes the completion ofnumerous production-enhancing workovers, the continuation of the frackingcampaign and also the completion of new well drilling, where the wells will betargeting either the Mississippian or other shallower zones. Northcote has a number of ongoing initiatives which include the fracturestimulation of the Moursand A-2, the fourth well in its 2013 programme. Thiswas originally intended to have been initiated in December 2013 but wasunfortunately delayed because of the severe winter ice storms that impactedmuch of the mid-west and east coast regions of the United States. This fracturestimulation is being rescheduled for early February 2014. Furthermore the Company also elected to participate in the deepening of theBurkhart#1 well on the Horizon Project to target the Mississippi Limeformation. Having originally been drilled to and produced from the MississippiChat formation, the well successfully reached its target depth of 4,226 feetand is to be completed in Q1 2014. The major focus of Northcote's 2014 work programme will be at the newlyacquired Zink Ranch project where at least two new wells will be drilled in2014 in addition to 14 workovers of existing well bores. Additionally, theCompany intends to complete the previously announced Mathis well and possiblydrill one additional well on the Mathis lease in 2014. Finally, the Company isassessing the potential to drill one new well on the OKE properties followingcompletion of an infrastructure upgrade currently underway on these properties. The farm-out of up to 70% of the Company's working interest in the Mathis wellhas been increased slightly, with the Company now seeking to farm-out up to 80%of its working interest in the well. This process is well-advanced with themajority of the targeted working interest having been allocated to farm-outpartners. The Company expects that the farm- out will be completed and the wellwill spud in Q1 2014. After completion of the Moursand A-2 frack, six horizontal wells located withinthe Osage County Properties remain unfracked and with this in mind, Northcoteintends to continue the frack programme during 2014, which it expects todeliver cost-effective incremental production. As mentioned above, Northcote is also currently undertaking improvements toinfrastructure at the OKE Project focussed on improving the long termdevelopment potential of the asset. This work is progressing well and followingits completion, expected by mid-February 2014, the site will have asignificantly enhanced production capacity. The infrastructure upgrade includesinstallation of additional electric lines, additional pipeline capacity tomanage increased volumes of both natural gas and salt water for disposal andworkover of the salt water disposal wells used to dispose of produced watervolumes from producing oil and gas wells. As a result of this upgrade work,production at the OKE project was disrupted during Q4 2013. The Company has continued to produce at approximately 100 BOEPD despite the OKEproject upgrade work. Approximately half of the wells will be restored to fulltime production at the end of January 2014 with the remainder back in full timeproducing status in February 2014. The Company plans to refinance the BlueRockfacility during the course of 2014, the completion of which will improveNorthcote's net production from the OKE project. Northcote expects to realise ahigher overall production level for the Company as a whole when the OKEproperties are restored to full time production and once the effect of the 2014work programme continues to increase our production. Additional Properties The Company's operations outside of Osage County include working interests inthree properties namely; the East Blackwell Skinner Sands Unit (`EastBlackwell') in Kay County (80% WI); the Woods County Project (0.125% WI); andthe South Weslaco Project in Texas (25% WI). The South Weslaco project in Texas generates material revenues net to theCompany. The asset is performing in line with expectations and with this inmind, there is no work planned at this site in 2014. The Directors believe East Blackwell in particular has the potential to providesignificant value through the implementation of relatively low costinitiatives. Minimal expenditure to improve the efficiency of the existingwells on the site has already doubled production to 6 BOPD since the projectwas acquired which contributes positively to the Company's overall cash flow.Combined with the proceeds from the farm-out completed in tandem with theacquisition, it is expected Northcote will earn back the original cashinvestment before the end of 2014. **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 (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: 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. 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.