Everest Energy Limited Acquisition of Northcote Energy Ltd

Posted: 22nd October 2012 08:38

Everest Energy Limited, the PLUS Stock Exchange listed investment company, is pleased to announce that it has conditionally agreed to acquire Northcote Energy Ltd (`Northcote'), a US focussed on-shore oil exploration and production company, for a consideration of US$10 million, to be satisfied through the issue of 645,084,519 ordinary shares in the Company, to a number of vendors (`Acquisition').
Northcote, established in 2009, is an exploration and production company focussed primarily on the producing Mississippi Lime formation in northern

Oklahoma, USA. Its assets currently comprise:
  The total portfolio currently produces 29 BOED (Barrels of Oil Equivalent per Day) net to Northcote. This is expected to increase significantly through the implementation of a development programme consisting of fracture stimulation of existing unfrac'ed wells, participation in new wells and an aggressive growth strategy, aimed at acquiring further working interests, royalty interests and leases.
Charlie Wood, Director of Everest Energy, said, "Northcote is an establishedoil & gas company operating in a low risk environment, with producing assets, cashflow, major partners and scalability. The planned acquisition has the potential to expose our shareholders to the on-going revolution that is transforming the energy landscape in the US. In recent years, the application of advanced techniques such as horizontal drilling and fracture stimulation has led to a significant jump in hydrocarbon recovery rates at proven US onshore reservoirs, including the Bakken which, almost singlehandedly, has propelled North Dakota to the number two producing state in the US, behind Texas.
"Being considerably cheaper to drill than a number of other US formations, including the Bakken, and with thousands of historic vertical wells providing a valuable source of data, the economics of applying these techniques to the Mississippi Lime are compelling. The presence of leading operators including Midstates Petroleum and Chesapeake, our partners in the De Agua Project, demonstrates we are not alone in recognising the huge opportunity that the Mississippi Lime offers. With Northcote's on-going drilling campaign and leasing activity, as well as a proven management team and Board, we are now well placed to deliver on our objectives to create substantial value for shareholders."
The Mississippi Lime is a proven oil rich formation covering 17 million acres predominantly in Oklahoma and Kansas. During the last century, thousands of vertical wells produced from the play and until recently, the reservoir was considered to be historic and in decline. The advent of new technologies including horizontal drilling and multi stage fracture stimulation techniques has transformed recovery rates and as a result, activity in terms of production and number of wells being drilled has soared. The Mississippian oil trend is an
expansive carbonate stratigraphic trap producing at shallow depths ranging from 4,500 to 7,000 feet below the surface. As a result, the cost to drill a well in the Mississippi is considerably cheaper than in other US onshore reservoirs, particularly shale formations such as the Bakken, North Dakota.
The Acquisition is conditional on Everest's issued share capital being admitted to trading on the AIM Market of the London Stock Exchange plc. Additionally the transaction constitutes a reverse takeover within the meaning of the PLUS Rules for Issuers and is therefore conditional on Shareholder approval. Accordingly, trading in the Company's shares on the PLUS Stock Exchange has been suspended
with effect from 8.00am on 22 October 2012 pending publication of an AIM Admission Document constituting a PLUS reverse takeover document, which will contain further information on Northcote, the deal rationale and seek Shareholder approval for the Acquisition.
This Acquisition will constitute a related party transaction for the purposes of the PLUS Rules for Issuers as one of the vendors is connected to Ross Warner, a director of the Company. As a result, Mr Warner recused himself from the approval of the entering into the Acquisition by the Company.

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