Sacramento Basin Gas Update Acquisition of Additional ... located nearby the Company’s existing...

ABN96009217154

Level2,55CarringtonStreet,NedlandsWA6009|Tel+61894233200|Fax+61893898327www.xstate.com.au

29March2017ASXLimited Electroniclodgement

SacramentoBasinGasUpdateAcquisitionofAdditionalLeaseswithassociatedProductionandFacilities

• XstatehasexerciseditsoptionfromSacgascotoacquirevariousworkinginterestsrangingfrom10-30%ofwellsinfiveproducinggasfields.

• Modestupfrontcashconsiderationandtheassumptionoffuturewellabandonmentliabilities.

• The acquisitions materially add to current gas production and include strategically locatedinfrastructure, gas processing plants, meter stations and pipelines adjacent to existingproducingassets.

• Doublestheleaseareaovermulti-TcfDempseyNaturalGasProspect.

Xstate Resources Limited (ASX:XST) (“Xstate” or “the Company”) is pleased to confirm that it hasexerciseditsoptiontoacquirevariousworkinginterestsfromSacgascoLimited(“Sacgasco”or“SGC”)in five gas producing fields that significantly strengthen the joint ventures asset base in theSacramentoBasin,California.

TheCompanyhasagreedtoacquirebetween10-30%ofSacgasco’sworkinginterestinfiveproducinggasfieldsthatSacgascosourcedandnegotiatedonbehalfofthejointventurepartners.Theassetsare located nearby the Company’s existing production in the Sacramento Basin onshore northernCalifornia.

The assets include all associated leases, production and facilities, including meter stations andpipelines in five gas fields, and access to proprietary 3D seismic data over 41 square kilometres,includingseveralattractivemappedprospectsforconventionalnaturalgas.

Access to thesenewassets addsdiversity and thereforede-risking to theCompany’s conventionalnaturalgasassetbaseintheSacramentoBasin.Importantlyintheneartermthetwoacquisitionswilladdmaterially toXstate’scurrentgasproduction fromRanchoCapayandLosMedanosGasFields.Afterthisacquisition,TotalGrossProductionwillbeapproximately900mcfperday.

Intotal,thejointventurenowhasaportfolioof25naturalwellsintheSacramentoBasinwith10inproduction and a further 15wells that have the potential to be brought back into production. Allproduction assets have material infrastructure, which can be used in the event of explorationsuccess.TheoperatorhasadvisedthepotentialdrillingoftheDempseywellinthecomingmonths.

Xstate’sworkinginterestinallitnaturalgaswellsrangesfrom10to30%andNetRevenueInterests(afterRoyalties)areintherangeof68%to83%(of100%).

The Company looks forward to providing shareholders with further updates in the near term asdevelopment,production&explorationstrategiesareprogressed. F

or p

erso

nal u

se o

nly

Sacramento Basin Gas Update

Level2,55CarringtonStreet,NedlandsWA6009|Tel+61894233200|Fax+61893898327www.xstate.com.au

NewProjectAreas-Xstate30%workinginterest

WorkingInterestsin13WellswereacquiredbySacgascofromABAEnergy.Themajorityofthewellsare located near the Company’s existing production in the Sacramento Basin, onshore northernCalifornia.UnderthetermsoftheacquisitionXstatehasagreedtopayamodestsumofUS$21,000toacquireitsworkinginterestof30%.

The assets include all associated leases, production and facilities, including meter stations andpipelines in three gas fields, and access to proprietary 3D seismic data over some 41 squarekilometres,includingattractivemappedprospectsforconventionalnaturalgas

Currentgross(100%)productionfromjustthreewellsisaround520mcfgasperday.Theoperatoradvises there are a number of opportunities to bring other wells back into production throughworkovers and/or new pipeline connections for modest expenditures. This will add materially toXstate’scurrentgasproductionfromRanchoCapayandLosMedanosGasFields.

Xstate will assume its share of future liabilities for plugging the wells acquired, and removingassociated facilities,estimated tobeUS$20,000 to$60,000perwell gross,andwhichwilloccuratsomeundeterminedfuturetimethat isdependentonoperationaldecisionsonfutureutilisationofthe wells for production, workovers or new drilling. Furthermore, there is a small royalty notexceeding3%onproductionfromexistingandfuturewells intheleaseareasandmodestprospectfeesarealsotobepaidonrelatedgasprospectsthatmaybedrilledinthefuture.

Figure1:LocationmapofXstate’sSacramentoBasinProjects

AcquiredAssetsHighlightedinRed–ABAEnergy

Figure2:MeterStation

Figure3:GasProductionFacility

Source:SacgascoLimitedASX,February7th,2017

Gary Jeffery Ben Jarvis Managing Director Six Degrees Investor Relations +61 8 9388 2654 +61 413 150 448 Sacgasco Limited Company Background

Sacgasco Limited (ASX: SGC) is an Australian-based energy company focused on conventional gas exploration in the Sacramento Basin, onshore California. SGC has an extensive portfolio of oil and gas prospects at both exploration and appraisal stages, including a number of multi-Tcf opportunities. The Company is targeting gas supply to the local Californian gas market and burgeoning LNG market in North America. SGC is of the view that the size of the prospects in California have the potential to supply both the domestic Californian gas market and export LNG markets.

www.sacgasco.com

Twitter: @SacGasCo

Fig 1: Location of SGC Sacramento Basin Projects Acquired Assets Highlighted in Red

        Fig 2: Fig 3: SGC Sacramento Basin Meter Station SGC Sacramento Gas Production Facility

        Fig 2: Fig 3: SGC Sacramento Basin Meter Station SGC Sacramento Gas Production Facility

For

per

sona

l use

onl

y

Sacramento Basin Gas Update

Level2,55CarringtonStreet,NedlandsWA6009|Tel+61894233200|Fax+61893898327www.xstate.com.au

DempseyProspectArea–Xstate10%workinginterest

TheDempseyProspectAreaacquisitioncomprisesleasesandgasproductioninfrastructureacquiredaboveoradjacenttothemappedDempseyNaturalGasProspect,andisahighlystrategicadditiontotheCompany’sleaseholdingsintheprolificSacramentoBasin.

Thejointventurehasacquiredthepropertiesinreturnforassumingfutureliabilitiesforpluggingthewells,andremovingassociatedfacilities,estimatedtobeapproximately$50,000perwellgross.Thiswilloccuratsomeundeterminedfuturetimethat isdependentonoperationaldecisionsonfutureutilisationofthewellsforproduction,workoversornewdrilling

The assets also include all associated leases, production facilities, including meter stations andpipelines in two gas fields Rancho-Capay, adjacent to existing production and East Rice CreekGasField,immediatelynorthofRancho-Capay.

Currentgross(100%)productionfromjusttwowells inthelatestacquisitionisaround120mcfgasperday.Thereareopportunitiestobringotherwellsbackintoproductionthroughworkoversand/oralternativegasgatheringpipelineconnectionsformodestexpenditures.

SacgascowilloperatealloftheacquiredwellsunderitscurrentserviceagreementwithDeroParker’sIntegrityManagementServices.

TheeffectivedateforbothacquisitionswasFebruary1,2017.

Figure1:LocationmapofXstate’sSacramentoBasinProjects

AcquiredAssetsHighlightedinRed–DempseyProspectArea

Source:SacgascoLimitedASX,March20th,2017

For

per

sona

l use

onl

y

Sacramento Basin Gas Update

Level2,55CarringtonStreet,NedlandsWA6009|Tel+61894233200|Fax+61893898327www.xstate.com.au

XSTATERESOURCESLIMITED–SACRAMENTOBASINTENEMENTLIST Projectname Location Working

InterestAlvaresProspect SacramentoBasinOnshoreNorthernCalifornia 21%

DempseyProspect SacramentoBasinOnshoreNorthernCalifornia 10%

CaliforniaAMI SacramentoBasinOnshoreNorthernCalifornia 30%

CaliforniaAMI9Prospects SacramentoBasinOnshoreNorthernCalifornia 24%*

Rancho-CapayGasField SacramentoBasinOnshoreNorthernCalifornia 10%

LosMedanosGasField SacramentoBasinOnshoreNorthernCalifornia 10%

NewProjectAreaAcquisition SacramentoBasinOnshoreNorthernCalifornia 30%#

DempseyProspectAreaAcquisition

SacramentoBasinOnshoreNorthernCalifornia 10%#

*Aftersatisfactionofpreviouslyannouncedfarmout.#GrossWIinterestsacquiredvaryfrom67.5%to100%;XstateWIisofthegrossWIasitappliesfromleasetoleaseandwelltowell.Projectsarecontinuouslyreviewedfortheirstrategicfitandareexpectedtobemodifiedovertimetoreflectindustryconditions.

ForandonbehalfoftheBoardofXstateResourcesLimited

Forfurtherdetailspleasecontact:CosimoDamiano ChrisHodgeManagingDirector NonExecutiveDirectorXstateResourcesLimited XstateResourcesLimitedTelOffice:+61894233200 TelOffice:+61894233200Email:cosimodamiano@xstate.com.au Email:chrishodge@xstate.com.auAboutXstateResourcesLimited

XstateResources(ASXCode:XST) isanASX listedcompanyfocusedontheoilandgassector. TheCompanyhasexistinggasexplorationassets located intheSacramentoBasin,Californiaandminorassociatedgasproduction.

For

per

sona

l use

onl

y