Operations and Production Update

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

30 September 2014

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

Operations & Production Update

Northcote (AIM: NCT) is pleased to provide a positive operations update primarily in respect to its Shoats Creek Project, Louisiana, in which the Company has a 35% Working Interest ('W.I.') and a production update in respect to its entire portfolio of US onshore oil and gas assets.

Overview

· Excellent initial gross flow rates from the workover of the first two Shoat's Creek wells: Lutcher Moore #9 and Lutcher Moore #14 well, each over a 72 hour test:

o Lutcher Moore #9 - gross production of 67.3 BOPD and metered 117 MCF/D equating to 86.6 BOEPD (net: 22.75 BOEPD)

o Lutcher Moore #14 - gross production of 40 BOPD and metered 145.5 MCF/D equating to 64.25 BOEPD (net: 16.8 BOEPD)

o Production and sale of produced oil volumes to begin immediately and production and sale of natural gas volumes will commence on completion of infrastructure to permit sales

o Wells #9 and #14 represent two of five Cockfield Sands workover opportunities identified by the Company

· Including production from Lutcher Moore #14 and #9, total daily net production across Northcote's US onshore oil and gas properties currently stands at 190.9 BOEPD, comprising of 97.6 BOPD and 560.2 MCF/D net to Northcote

· Commenced workover of the Lutcher Moore #12 well, originally completed in the Frio formation - further Frio workover opportunities are currently being identified

· Permit received to drill the Lutcher Moore #20, a twin to the Lutcher Moore #16

· Having completed the infrastructure projects at Zink Ranch, Northcote and its partners are reviewing previously completed wells and planning additional operations - further updates will be made in due course

· Options over a total of 5,521,473 Ordinary Shares exercisable at 1 pence each have been granted to certain key employees

Northcote Chief Executive Randall Connally said, "The results of both these low cost workovers is hugely encouraging and bodes well for the development of the Shoats Creek Project. Along with restoring production at our Oklahoma properties following the completion of infrastructure upgrades, these initiatives have allowed us to achieve a company-wide production rate of 190.9 BOEPD and the increased cash flow in recent months positions Northcote well for continued growth. Considering the significant impact from the initial two workovers, we are keen to accelerate our Shoats Creek programme and have already initiated work on the Lutcher Moore #12 well. Thanks to an extensive inventory of workover and new drill opportunities, we believe Shoats Creek represents a very exciting opportunity and having only completed the acquisition a month ago, I am particularly pleased with our operational progress on the ground here.

"The success of these workovers can be accredited to three factors: firstly, Northcote has total operational control; secondly, it has been implemented by an excellent team built by Northcote which has conducted extensive preparation and applied new internal procedures throughout the programme; and thirdly, the asset is very high quality and demonstrates considerable upside potential. The internal processes implemented have allowed us to run our operations at Shoats Creek smoothly, on time and on budget and we are focussed on maintaining this model across the management of all of our properties both in Oklahoma and beyond in the coming months."

Shoats Creek Project

Northcote has completed the workover of its first two Shoats Creek wells: the Lutcher Moore #14 and #9 wells. Both wells have delivered highly positive initial gross flow rates. At Lutcher Moore #9, gross production of 67.3 BOPD and metered 117 MCF/D of natural gas per day metered has been received over a 3 day test equating to (86.6) BOEPD (net: 22.75 BOEPD). This well was originally completed in the Cockfield Sands formation.

At Lutcher Moore #14, gross production of 40 barrels of oil per day and 145.5 mcf of natural gas per day metered and has been received over a 3 day test, providing a total test rate of 64.25 BOEPD (net: 16.8 BOEPD). This well was originally completed in the Cockfield Sands formation at 9,300 feet in 1981.

Although the field does not have the infrastructure to permit gas sales straight away, the Company will start producing and selling oil immediately using existing infrastructure. The Company is currently testing its gas to evaluate the economic return associated with the future installation of natural gas production infrastructure.

Lutcher Moore wells #9 and #14 represent two of five workover opportunities identified across the Cockfield Sands formation by the Company at Shoats Creek. The Company has commenced the workover of Lutcher Moore #12, which was originally completed in the Frio formation and is currently evaluating further workover opportunities across this formation.

Additionally, the Company has received a permit to drill a new vertical well which will be the Lutcher Moore #20. This will be a twin to the Lutcher Moore #16 well, located on the existing Lutcher Moore #16 pad site and will target multiple Frio sands at a depth of 4,500 to 5,030 feet. The Lutcher Moore #16 vertical well targets multiple Frio sands at depths of approximately 5,000 feet. However, the decision has been made to twin this well due to the fact that the Lutcher Moore #16 well was suspected to have had casing failure, causing water to rapidly increase and stifling hydrocarbon production that was nearly 100 BOPD at the time. Therefore this indicated that a substantial in place resource remains. The orientation of the Lutcher Moore #20 well is to the north-northwest of the Lutcher Moore #16 in consideration of the management's belief that this will allow the Company to get slightly higher on structure and pick up remaining in place oil from the Lutcher Moore #21 and perhaps additional attic oil in the structure.

Total Company Production

Net production across the Company's entire US onshore oil and gas acreage, which is currently comprised of 9 properties across 6,159 net acres, currently stands at 190.9 BOEPD, comprising of 97.6 BOPD and 560.2 MCF/D net to Northcote. This includes initial flow rates from the recently recompleted Lutcher Moore #9 and #14 well at Shoats Creek.

Issue of Share Options

The Company is pleased to announce that it has issued options in respect of 5,521,473 ordinary shares to three key employees. The exercise price is 1 pence per share and they vest in three equal tranches on the first, second and third anniversaries of grant subject to remaining in employment with the Company.

**ENDS**

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

All of the technical information, including information in relation to reserves and resources that is contained in this announcement has been reviewed internally by the Company's Technical Director, Mr. Kevin Green. Mr. Kevin Green is a Petroleum Geologist who is a suitably qualified person with over 30 years' experience in assessing hydrocarbon reserves and has reviewed the release and consents to the inclusion of the technical information.

Notes:

Northcote Energy Ltd is a producing oil & gas company with a portfolio of US exploration and production assets principally focused in Osage County, Oklahoma. The Company has substantial acreage in the US where its primary focus is on the Pennsylvanian and Mississippi Lime formations. Northcote is currently undertaking a continuous 2014 work programme which includes recompletions, new wells, fracks and workover programmes in order to grow Northcote's production and reserves.