Issue of Equity and Corporate Update

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

23 November 2015

Northcote Energy Ltd ('Northcote' or 'the Company')

Issue of Equity and Corporate Update

Northcote, the AIM listed energy company, announces that it has raised £750,000 (gross) through a placing of 833,333,333 new nil par value ordinary shares ("Placing Shares") at a price of 0.09 pence per share. In addition, the Company is pleased to provide an update on its operations.

Highlights:

· £750,000 (gross) raised to support initiatives at Shoats Creek and the Mexico bid round

o Funds will be applied to building greater infrastructure capacity to support the LM#20 and beyond (up to an estimated production capacity of 1,500 BOPD)

o Prepare for the commencement of new drills in the new year at Shoats Creek

· Adjustment of production payments with Aminex plc to help accelerate development (total consideration remains the same)

· Progress being made in sell down of Oklahoma portfolio to streamline operations. Any proceeds from sell down will be applied to developing Shoat's Creek.

Northcote Managing Director Randall J. Connally said, "The placing demonstrates support for our development plans at Shoats Creek and will enable Northcote to maximise production from the LM#20 and prepare the field for future drilling at Shoats Creek in early 2016. The success of the LM#20 well demonstrated the potential of Shoats Creek and we are therefore keen to advance our plans to realise the field's company-making credentials. 

"While we are in a difficult market, Shoats Creek represents an excellent opportunity for Northcote to rapidly deliver sustainably positive cash flow generation at current (or even lower) oil price levels, and we look forward to completing the infrastructure work in the near term. This will increase the production capacity of our Frio infrastructure unit to up to 1,500 BOPD and allow future drills to be brought into full production in short order."

Use of Funds; Shoats Creek; and Proposed Sale of Oklahoma Assets

The proceeds of the Placing will be used to complete the infrastructure upgrades at the Shoats Creek Project in Louisiana with a second well targeting the Frio formation at Shoats Creek expected to be financed through asset sales. The upgrades being undertaken include:

· Expansion of salt water disposal capacity

· Expanding oil and salt water storage capacity

· Installing electric service at the field to allow for use of electric pumps and equipment which will optimise consistency of production and lower long term operating costs

· Preparation of pad sites for the next two Frio wells to be drilled, the LM #21 and LM #22.

The Company is also pleased to announce that the per barrel production payment obligation (as agreed under the terms of the farm-in with Shoats Creek Development, Inc.) is to be adjusted from US$10 per barrel of oil equivalent (where natural gas volumes are converted based on 22 thousand cubic feet of natural gas per barrel of oil equivalent) to the following:

· US$2 per barrel where WTI1 is less than US$45 per barrel;

· US$5 per barrel where WTI is in the range of US$45 per barrel to US$65 per barrel;

· US$10 per barrel where WTI exceeds US$65 per barrel

Total consideration for the production payments payable to Aminex plc by Northcote and its partners remains $4.5million ($3.15 million net to Northcote).

1 (WTI is in reference to West Texas Intermediate Crude Oil and the relevant price is the average price for the previous month).

During this lower oil price environment, the lower per barrel production payment will allow for more field level cash flow, allowing Northcote and its partners to accelerate investment leading to increases in production at the field. By way of an example at US$40 oil the saving for a field producing 250 BOPD equates to an additional US$730,000 (gross) of free cash flow per annum or approx. 60%+ of the cost of a new Frio well.

The Company continues to actively market its Oklahoma properties in line with its previously stated strategy to rationalise its upstream portfolio and free up its people and financial resources to focus on those assets with the greatest upside potential. Northcote anticipates announcing further details regarding the sale in due course.

Mayan Drilling Fluids, Mexico

Progress continues with the Company's investment at Mayan Drilling Fluids' ('MDF'), the first scalable environmental waste remediation facility ('the Facility') in the State of Tabasco, Mexico. Once operational, the Facility will recycle oil cuttings and provide other oil field services to both onshore and offshore wells. Considering the transformational impact that production from the Lutcher Moore #20 and further Shoats Creek wells can be expected to have on corporate cash flow generation in the near term, the Company is prioritising the infrastructure work on Shoats Creek. Therefore development of the Facility has been slowed whilst we complete our work at Shoats Creek. Further updates will be provided on our MDF Joint Venture with our partner Gaia Ecologica S.A. DE C.V in due course.

Issue of Equity

Subscribers to the Placing have been awarded one three year warrant with a strike price of 0.15 pence for every two Placing Shares issued ('the Placing'), equating to warrants over 416,666,667 shares. The issue of the Placing Shares which will rank pari passu with existing Shares, is subject to admission to AIM ("Admission") and application will be made for Admission to trading on AIM, such trading is expected to come effective on 27 November 2015.

Share Capital

Following the issue of the 833,333,333 Placing Shares, the issued share capital of the Company will consist of 6,981,874,882 Ordinary Shares. No shares were held in treasury at the date of this announcement. The total current voting rights in the Company are therefore 6,981,874,882.

The above total current voting rights number is the figure which may be used by shareholders as the denominator for the calculation by which they will determine if they are required to notify their interest in, or a change to their interest in the Company.

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

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 CEB Resources.