New Standard Energy Limited

NEW STANDARD ENERGY LIMITED

Research Note

A VERY DIFFERENT NEW STANDARD

• The following note provides an overview of New Standard Energy 29 October 2014 (ASX: NSE) which we rate as SPECULATIVE BUY. Over the past 12 months, NSE has transformed from a pure high-risk, high-reward 12mth Rating SPECULATIVE BUY junior explorer in frontier Canning and Carnarvon basins into a Price A$ 0.08 producer with production in the liquids-rich Eagle Ford Shale in Target Price A$ 0.30 Texas and a foot-hold in the better known Cooper basin. 12m Total Return % 400

• The current portfolio provides investors with exposure to near RIC: NSE.AX BBG: NSE AU term production and cashflow whilst maintains exposure to high Shares o/s m 386.2 impact exploration successes in the medium to long term. Free Float % 83 Market Cap. A$m 30.9 • NSE is an independent oil and gas production and exploration company operating in in four primary basins: Eagle Ford Shale, Net Debt (Cash) A$m (7.0) Texas, USA; Cooper, South Australia; and the Canning and Net Debt/Equity % 1.5 Carnarvon, Western Australia. The Company is focused on the 3m Av. D. T’over A$m 0.05 newly acquired production assets in the Crude Oil Window of the 52wk High/Low A$ 0.20/0.07 Eagle Ford Shale. NSE currently holds a 5,585 net acreage 2yr adj. beta na position and has Proved Reserves of 3.58 mmboe and Proved & Probable Reserves of 4.89 mmboe in Atascoca County, Texas, Valuation: acquired from Magnum Hunter Resources in January 2014. NSE Methodology DCF also holds a combined 63,000 km 2 in the Canning and Carnarvon basins as well as 17.5% working interest in 2,400 km 2 in the Value per share A$ 0.30 Cooper Basin. Analyst: Anh Dang • NSE exited the June 2014 quarter with gross production of 41,882 Phone: (+61 3) 9242 4059 boe, having successfully drilled, fracture stimulated and brought Email: [email protected] two wells into production, adding to the existing five production wells in Eagle Ford Shale. NSE intends to drill a total of 6-8 wells

in the next 18 months and is targeting production of ~1,500 boepd by mid 2015 and ~2,000 boepd by end 2015. The drilling program will be funded from cash on hand of A$16m, US$36 undrawn portion of the Company’s credit facility and cashflow from current production.

• The Cooper Basin acquisition provides NSE the opportunity to access one of the few remaining substantial acreage positions within the Cooper Basin, which is a part of a producing petroleum system and adjacent to pipeline infrastructure and markets.

• Early October 2014, NSE assumed 100% ownership of the Southern Canning Project after both joint venture partners, ConocoPhillips and PetroChina, exited from the project following two disappointing exploration wells. The Company intends to 12 Month Share Price Performance package the project with other WA projects and farm-out the assets. This will enable NSE to potentially eliminate any major 0.20 9000 capital commitment towards the acreage and focus on the 0.18 8000

Company’s Eagle Ford Shale assets 0.16 7000

0.14 • Our valuation indicates material upside potential from the Eagle 6000 Ford assets which are largely undeveloped. Further successful 0.12 5000 drilling and testing of 6-8 wells in the next 18 months should 0.10

4000 Volume '000

enable NSE to book a significant increase in Eagle Ford Shale Share A$ Price 0.08 reserves, driving up acreage value, and in turn boosting NSE’s 3000 valuation. 0.06 2000 0.04 • NSE looks cheap against our valuation. However, we think it will 0.02 1000 remain cheap until there is more visibility on farm-out of WA 0.00 0 assets, Cooper Basin exploration programme, and successfully 12 Months deliveries of the next two wells that are currently underway in the Eagle Ford Shale. Performance % 1mth 3mth 12mth

Absolute -9.6 -15.5 -25.6 Rel. S&P/ASX 300 -8.2 -17.6 -27.4

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All information and advice is confidential and for the private information of the person to whom it is provided and is provided without any responsibility or liability on any account whatsoever on the part of this firm or any member or employee thereof. 29 October 2014 New Standard Energy LimitedAtlas Iron Limited

NEW STANDARD ENERGY LIMITED (NSE)

New Standard Energy (NSE) is an onshore hydrocarbon producer, developer and explorer with a commitment to develop and realise the oil and gas potential of the most prospective shale and tight gas basins across the US and Australia.

NSE currently operates in four primary basins: Eagle Ford Shale, Texas, USA; Cooper Basin, South Australia; and the Canning and Carnarvon Basins, Western Australia.

The Eagle Ford acreage is a development and production project, in the oil window of the Eagle Ford shale, which is currently producing and generating revenue. At time of writing, the project has seven production wells.

The Cooper Basin Project is a later stage exploration project which is situated to take advantage of existing infrastructure and the domestic and export opportunities available in the Australian East Coast gas market.

The Canning and Carnarvon Projects are frontier basin plays, providing New Standard’s investors with exposure to high risk, high reward exploration. NSE intends to package these projects and farm them out, eliminating the need for a major capital commitment.

In addition to the above portfolio, NSE has an 11.8% equity interest in ASX listed Elixir Petroleum Limited (ASX: EXR) and is continuing to actively assess other opportunities to complement and expand its portfolio.

NSE Strategy

NSE has undertaken a substantial corporate transformation in the past 12 months as it grew from a Western Australian focussed junior oil and gas explorer into an international exploration, development and production company. Its core focus is now on driving production in the oil rich window of the Eagle Ford Basin in the United States.

In January 2014, NSE purchased from the US-based Magnum Hunter Resources Corporation (NYSE: MHR) interests in three permits in the liquids-rich Atascosa Project in the Eagle Ford in Texas, US. NSE also acquired 52.5% interest in PEL 570 in Cooper Basin, Australia which required the Company to spend $42.5m over a five-year period. However, post-acquisition, having changed direction and focused on the development of the Eagle Ford acreage, NSE explored opportunities to partner with other parties to mitigate exploration commitments. In late October 2014, NSE farmed out to Santos Ltd (ASX:STO) 35% interest in the permit and retained 17.5%, reducing commitment expenditure to just over $3.0m.

The acquisitions see the Company enter into the producing oil fields of the Eagle Ford Shale, Texas, while gaining a footprint in the Cooper Basin, which according to MHR, is the best opportunity outside the US for shale gas as well as containing good additional potential for shale oil.

In addition, as a part of the transactions, MHR became the largest NSE shareholder and a strategic alliance partner to help develop the Atascosa Project in the Eagle Ford and the Cooper Basin, using its existing technical skillset and local knowledge base.

NSE’s change in direction was a part of a strategic decision by its Board, which sought to diversify risk away from a 100 percent focus on high cost, early stage exploration wells in remote locations towards opportunities that were closer to production with cashflow to support the high impact exploration projects in the future.

NSE’s current strategy focuses on three areas:

1. Eagle Ford: Generate value through effective execution of an ongoing drilling program in the Eagle Ford to drive up reserves and acreage value and seek opportunities to grow the position to 8,000-10,000 net acres (currently 5,641 net acres) and accelerate the drilling program over the next 12 months. In particular, the Company has commenced drilling two wells in late October targeting longer laterals and higher proppant concentrations. In the next 18 months, NSE intends to drill a total of 6-8 wells and is targeting production of ~1,500 boepd by mid-2015 and ~2,000 boepd by end 2015.

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2. PEL 570: NSE is currently working with MHR and joint venture partners, Santos and Drillsearch (ASX:DLS) to develop a unconventional program for PEL 570 in the Cooper Basin.

3. WA Assets: NSE is planning to package its WA assets and farm down, reducing the risk of any large capital commitment in this region.

Recent Events

During early October 2014, NSE announced that it had negotiated with ConocoPhillips and PetroChina to restructure the Southern Canning Project and has now assumed 100% ownership. The Company intends to package the project with the remaining WA assets, the Laurel project and the Merlinleigh project, and farm-out the assets. This will enable NSE to potentially eliminate any major capital commitment towards the acreage and focus on the Company’s Eagle Ford Shale assets. The restructure removes the requirements for NSE to spend more than $10m to drill a third well to complete Phase 1 of the Southern Canning Joint Venture (SCJV). The terms of the restructure also stipulate that no claims will be made by the SCJV partners for any monies spent to date or any outstanding work that is yet to be performed pursuant to the Farm-Out Agreement. The entire package of WA assets will cover 15.6m acres (63,400 km 2) in three prospective basins and sub- basins.

Production

With the Eagle Ford acquisition, NSE has transformed itself from a pure exploration company to an exploration, development and production company. The Company reported gross production of 21,180 boe in the first (March) quarter of 2014 from five existing production wells from the Eagle Ford acreage. In the second quarter of 2014, NSE reported gross production of 41,882 boe from 7 production wells, including two new wells, Peeler Ranch 5H and 6H, that were successfully drilled, hydraulically fractured and brought into production.

At time of writing this report, NSE has started drilling the next two wells in the Eagle Ford acreage. We assume NSE will deliver 5 Eagle Ford wells by year-end 2015, with the first two well commencing production in March 2015. We assume production will increase as NSE employs the highly efficient zipper-frack completion technique it used in the commercially successful Peeler Ranch 5H and 6H wells.

Figure 1: Gross Quarterly Production and Number of Production Wells

Source: New Standard Energy Limited and Patersons Securities estimate

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NSE Valuation

Figure 2 below shows our risked sum-of-the-parts valuation of NSE. This underpins our A$0.16 price target. The valuation consists of 4 parts:

1. The valuation for Eagle Ford’s proved and probable reserves which include current producing wells. 2. Value of future production from Eagle Ford’s identified drilling locations, 3. Australian exploration assets, 4. Net cash position.

Figure 2: Sum of Parts Valuation Asset NPV NPV ps Risk Factor NPV Risked NPV ps Unrisked Unrisked (A$m) Risked Eagle Ford Recoverable Reserves (P1 + P2) 79 0.20 90% 71 0.18 Eagle Ford Future Drilling Locations 195 0.39 10% 20 0.05 Cooper Basin Assets 20 0.05 100% 20 0.05 W.A Exploration Assets 37 0.10 10% 4 0.01 Total Asset Valuation 293 0.76 110 0.29 Cash 16 0.02 100% 8.6 0.02 Debt 9 0.01 100% 9.2 0.01 Total Enterprise Value 242.5 0.63 106.1 0.30

Source: Patersons Estimates

Valuation Assumptions

Eagle Ford: We assume NSE will be able to fund 5 wells to the end of 2015, based on the current available debt facility, available cash on hand and cashflow generated from producing wells. We assume each well will cost US$6.5m and Lease Operating Expense (LOE) of US$15/boe. Each well will have a 30-day Initial Production (IP) of 385 boe/d, a 90:10 oil:gas ratio and an EUR of 331,900 boe. We understand that NSE’s new wells will have slightly longer lateral lengths and will be fractured with higher proppant volume which will deliver much higher IPs and EURs than Peeler Ranch 5H and 6H. We will update our model once the data for these wells become available.

W.A Exploration Assets: Given the changing focus of NSE, and the early exploration stage nature of these assets with no clear forward programs, we discounted NSE’s year-end 2014 reported book value of the W.A Exploration Assets to arrive at the current unrisked value. We understand that the Company is in the process of farming-out these assets. We will update the value of these assets once there is proposed interest in these assets.

Cooper Basin

NSE’s 17.5% working interest in PEL 570 carries a current market value of A$19.58m based on the latest transaction in the permit between Santos and NSE.

Figure 3: NSE’s Cooper Basin Current Market Value Transaction Date Company Farm-in Cash & Work Commitment Value per Interest Shares (A$m) (A$m) % point (A$m) Jan-2014 New Standard Energy 52.5% 5.0 42.5 0.90 and Ambassadors Aug -2014 Drillsearch and 47.5% n/a 487 1.03 Ambassadors

Oct-2014 Santos and New 35% 7.5 31.7 1.12 Standard Energy

Source: New Standard Energy Limited

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Reserve Position

Figure 4: NSE Net Eagle Ford Reserves as at 28 November 2014 Oil reserves Gas Reserves Natural Gas Mboe Liquids mmbbl BCF mmbbl mmboe Proven 2.65 2.76 0.47 3.58 Probable 0.96 1.05 0.18 1.31 Possible 9.72 10.67 0.06 4.70 TOTAL 13.33 14.49 0.7 16.45

Note: Conversion rate of 6MMcf:1Mboe Source: New Standard Energy Limited

Acreage Position

USA

Figure 5: United State Acreage Position Eagle Ford Project Area Gross acres Wells Operator Eppright Prospect 2,285.95 Lagunillas Camp #1H Shale Hunter, LLC (includes 1 lease) Lagunillas Camp #2H Shale Hunter, LLC

Alright Prospect 3,108.56 McCarty Unit A #1H Marathon Oil EP, LLC (includes 73 leases)

Peeler Ranch Prospect 1,895.25 Peeler Ranch #3 Shale Hunter, LLC (includes 2 leases) Peeler Ranch #4 Shale Hunter, LLC Peeler Ranch #5 Shale Hunter, LLC Peeler Ranch #6 Shale Hunter, LLC Colorado County Project Well Interest held Joint Venture Partner Heintschel-1 32.5% Burleson Energy Ltd, AKG Energy & minority interests Heintschel-2 32.5% Burleson Energy Ltd, AKG Energy & minority interests D Truchard-1 32.5% Burleson Energy Ltd, AKG Energy & minority interests Joann-1 32.5% Burleson Energy Ltd, AKG Energy & minority interests

Source: New Standard Energy Limited

Eagle Ford

NSE’s Eagle Ford acreage is located in Atascosa County, Texas and is situated within the Eagle Ford Shale and Pearsall Shale Formations. The Company’s total Eagle Ford acreage position is 7,379 gross acres and 5,585 net acres.

The Eagle Ford Shale was first recognised as a major natural gas play, but is now being considered the sixth largest oilfield discovery in the United States and is a significant contributor to the exponential increase in Texas crude oil production that has occurred over the last few years.

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The Company also has access to the Pearsall Formation, situated below the Eagle Ford, providing significant upside potential. The Pearsall was actually recognised before the Eagle Ford was developed but to date has largely been overlooked.

A large portion of the acreage is currently undeveloped and up to 55-60 additional well locations have been identified for development drilling, providing low risk, low cost appraisal and development opportunities with short term cash flow benefits for NSE. Importantly, this is in the oil window (95%+ revenue from oil and NGLs), so revenue is significantly higher than in the dry gas sections of the Eagle Ford.

NSE, alongside strategic alliance partner Magnum Hunter Resources Corporation (NYSE:MHR), has already commenced additional drilling activities since obtaining the acreage in January 2014.

Figure 6: Eagle Ford and Pearsall Shale location

Source: New Standard Energy Limited

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Figure 7: NSE’s acreage position within the oil window of the broader Eagle Ford play

Source: New Standard Energy Limited

The partnership between MHR and the Company represents a unique operating model - building the foundations of a positive business alliance:

• NSE retains Operator status and control of the program – contracting Magnum Hunter (MHR) under a Services Agreement

• Eagle Ford wells managed and drilled by the same Magnum Hunter team that drilled its own Eagle Ford wells

• NSE able to take advantage of existing relationships, contracts and lower costs associated with MHR’s existing US position and large scale operations

• Eliminating the risks associated with entering a new jurisdiction

• NSE transitioning key technical staff from MHR to NSE to take over operations directly

• MHR able to introduce new opportunities and acreage that will complement NSE’s current portfolio

• MHR alignment as major shareholder (17%) and via NSE Board positions

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Colorado County

New Standard also holds a 32.5% working interest in the Colorado County Project located in Colorado County in the heart of the onshore Texas Gulf region (one of the world’s most prolific onshore production regions). The Heintschel field was discovered with the Colorado County Project area in 2010 and has undergone a small amount of appraisal and development since then. The Project is operated by AKG Energy (also an equity participant) who has in excess of 35 years of experience in onshore USA.

The initial drilling campaigns during 2010 and 2011 delivered encouraging results and the Company has achieved its aim of becoming a producer from an onshore project with significant upside potential. Of the initial exploration wells drilled, four are currently tied into production (Heintschel #1, Heintschel #2, D.Truchard #1 and Joann #1). We note that NSE has stated that these assets are immaterial and are cash flow break even.

Figure 8: Joint Venture acreage within the onshore Guld Coast of Texas

Source: New Standard Energy Limited

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AUSTRALIA

Figure 9: Australian Acreage Position Australian Oil & Gas Exploration Type Interest Operator Canning Basin, Western Australia EP 417 Exploration permit 100% New Standard Onshore Pty Ltd STP-SPA-0017 Special Prospecting 100% New Standard Onshore Pty Ltd EP 443 Exploration permit 100% New Standard Onshore Pty Ltd EP 450 Exploration permit 100% New Standard Onshore Pty Ltd EP 451 Exploration permit 100% New Standard Onshore Pty Ltd EP 456 Exploration permit 100% New Standard Onshore Pty Ltd STP-EPA-006 Application area 100% New Standard Onshore Pty Ltd STP-EPA-007 Application area 100% New Standard Onshore Pty Ltd STP-EPA-010 Application area 100% New Standard Onshore Pty Ltd STP-EPA-0092 Application area 100% New Standard Onshore Pty Ltd Carnarvon Basin, Western Australia EP 481 Exploration permit 100% New Standard Onshore Pty Ltd EP 482 Exploration permit 100% New Standard Onshore Pty Ltd Cooper Basin, South Australia PEL 570 Licence area 17.50% Santos Ltd

Source: New Standard Energy Limited

Cooper Basin

The Cooper Basin is a major oil and gas producing basin, located in the central Australia, situated in the northeast of South Australia and southwest of Queensland.

The Cooper Basin has developed into a major production and processing hub, with approximately 630 producing gas wells. Two gas processing hubs in Moomba and Ballera, operated by Santos, are connected to an extensive feed-in network and several long-distance pipelines to the main population centres on the east and south coast of Australia. Domestic gas demand is increasing and some domestic customers have commented on an inability to contract the necessary gas volumes to meet their needs beyond 2015.

PEL 570

Figure 10: Cooper Basin Project details

Size: 2,400km² Ownership 17.5% New Standard Energy Operator Santos Ltd Targets Liquids rich shale gas (principal), shale gas Location Cooper Basin, South Australia Partner Drillsearch Energy Limited

Source: New Standard Energy Limited

The Cooper Basin acquisition provides NSE the opportunity to access one of the few remaining substantial acreage positions within the Cooper Basin. Adjacent to a producing petroleum system and pipeline infrastructure, PEL 570 has a combination of attractive components, which made the acreage so appealing to the Company.

A large and rising east coast gas demand market, with multiple pathways to accessing that market, has triggered significant corporate activity in the Cooper Basin in the past two years.

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Through the acquisition of PEL 570, NSE has secured a foothold in the Basin with a relatively quick path to market for future exploration success.

Licence area PEL 570 is on trend of a proven, producing petroleum system and also pipeline infrastructure. It consists of five parts; two in the core of the Patchawarra trough and three located north of the Patchawarra trough. The Patchawarra trough is the source for the oil and liquids rich gas fields such as Tirrawarra, Fly Lake and Moorari fields, owned and operated by the Cooper Basin Joint Venture. These fields are located in the southern part of the trough and NSE intends to target the Patchawarra tight gas sands. Studies conducted by AWT International indicate that PEL 570 may contain >20 tcf of gas (13 tcf in the coals and >8 tcf in the tight rocks and shale).

Figure 11: PEL 570 showing surrounding permits and well

Source: New Standard Energy Limited

Canning Basin

Southern Canning Project

Figure 12: Sothern Canning Project details

Size 48,000km² (11 million gross acres) Ownership 100% New Standard Energy Operator New Standard Onshore Pty Ltd Targets Liquids rich shale gas (principal), shale gas Location Canning Basin, Western Australia. (Great Sandy Desert, East of Port Hedland)

Source: New Standard Energy Limited

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The Southern Canning Project spans the largest and most prospective sections of the Goldwyer formation in the Canning Basin. In a review of world shale gas resources, the United States Department of Energy’s Energy Information Administration (EIA) estimated the Goldwyer shale contained 764Tcf of risked gas in place and 229Tcf of risked recoverable gas – the largest estimate placed on any basin in Australia.

Figure 13: Western Australia Project locations

Source: New Standard Energy Limited

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Laurel

Figure 14: Laurel Project details

Size: 5,900km² (1.46 million gross acres) Ownership: 100% New Standard Energy Operator: New Standard Onshore Pty Ltd Targets: Tight gas and shale gas (principal) and conventional hydrocarbons Location: Canning Basin, Western Australia (180km south of Fitzroy Crossing)

Source: New Standard Energy Limited

The hydrocarbon qualities of the Laurel formation prompted NSE to establish a strategic position in the northern section of the Canning Basin.

The Laurel formation is a rich regional source rock that is comprised of a stacked series of reservoir sands and shales. The Laurel formation, which is more than 1,300m thick in parts, extends throughout the Fitzroy Trough in the Canning Basin, including NSE’s EP417 and the Seven Lakes SPA, which comprise the Company’s Laurel Project.

Carnarvon Basin

The onshore Carnarvon Basin covers about 115,000 km 2 and is located approximately 1,000 kilometres north of Perth. NSE’s acreage is ideally located on major gas infrastructure and within proximity to the Pilbara mining centre and the emerging Mid-West mining province. To date, we understand that c.75 onshore and 2 offshore wells have been drilled in the Carnarvon Basin.

Merlinleigh

Figure 15: Merlinleigh Project details

Size: 5,800km² (1.36 million gross acres) Ownership: 100% New Standard Energy Operator: New Standard Onshore Pty Ltd Targets: Conventional reservoirs and shale & tight gas formations Location: Onshore Carnarvon Basin, Western Australia. (150km north east of Carnarvon)

Source: New Standard Energy Limited

The Merlinleigh Project acreage is located adjacent to the Dampier to Bunbury Natural Gas Pipeline and lies between the intensive energy demand areas of Western Australia’s Pilbara and Mid West, providing both infrastructure and marketing options for the Company.

NSE is focussed on finding the gas to meet the growing demand from the domestic Western Australian market. The Company’s exploration team has identified a highly prospective shale gas opportunity in addition to several prospective conventional targets within the Merlinleigh Project’s acreage.

The project is likely to predominantly comprise of gas with the possibility of liquid hydrocarbons being present across portions of the acreage.

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Figure 16: Merlinleigh Project area

Source: New Standard Energy Limited

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EQUITY INVESTMENTS

Elixir Petroleum

NSE’s recent investment into Elixir Petroleum Limited (ASX:EXR) for a 11.8% corporate equity stake in the company offers exposure to a 100% owned Moselle Project in the Paris Basin in France. The Moselle Project spans an area of 5,360km² and is the largest single exploration block in onshore France, and has the potential for both conventional and unconventional exploration opportunities.

This opportunistic investment positively met assessment criteria, project evaluation and the long term strategy goals for NSE.

Elixir recently announced that a combination of an independent consultant’s report and Elixir’s technical studies estimated three targeted conventional prospects in the Moselle Project contained mean unrisked prospective recoverable resources of 861 Bcf if entirely gas filled, or 805 Bcf of gas and 76mmbbls of oil if the Lower Triassic ‘Paris Basin’ reservoirs (targeted in the Bullseye and West Chaumont prospects) are oil filled.

The conventional opportunity is in addition to the substantial tight gas and shale gas prospectively of the Moselle Project.

Figure 17: Elixir Petroleum (ASX:EXR) Share price (A$): 0.004 Shares outstanding 1,031,278,356 Market cap (A$): 5,156,392 Stake: 11.78% Value of NSE Stake $485,938

Source: IRESS

CORPORATE AND FINANCE

The Company has negotiated a debt facility with Credit Suisse for up to US$45 million, with the first draw of US$9 million already made.

The facility is based on reserves related to five existing wells with future drawdowns to be subject to increasing reserves as more wells are drilled. We believe that there is opportunity to renegotiate over time as reserves grow and risk reduces.

Figure 18: Shareholders Shareholders Holding (%) Magnum Hunter Resources 17.0 Buru Energy Limited 4.7 Acorn Capital 4.1

Source: Bloomberg

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DIRECTOR AND MANAGEMENT PROFILES

Mr Arthur Dixon, AM Non-Executive Chairman

Arthur Dixon graduated from Melbourne University as a Chemical Engineer and joined Shell as a refinery engineer in 1964, at Geelong. He spent time in Shell’s technical head office in The Hague and in the early ‘70s returned to Australia as Industrial Chemicals Manager in Shell’s refinery in Sydney, responsible for the operation of a number of chemical plants.

In 1978, Arthur joined the 5-participant (later 6) North West Shelf LNG Project in the Project Co- ordination Group based in Melbourne and became Project Co-Coordinator in 1981. He was seconded to Shell’s London headquarters during the period the venture went to Final Investment Decision on the LNG Phase, returning to Australia as Leader of the NWS Sellers’ Team up to delivery of the first LNG cargo in 1989.

He was then again seconded to Shell’s London Office where he filled a number of roles over the next ten years, including representing Shell within joint ventures and as LNG marketing manager. In 1996, Arthur was made a Director of Shell International Gas (later known as the Gas and Power Executive Committee) with regional responsibility for the performance and expansion of Shell’s gas business in the Asia Pacific region and functional responsibility for LNG, a position he held until late 1999, when he returned to Australia, as the inaugural President of Australia LNG Pty Ltd, located in Perth; ALNG was a marketing company representing all six NWS Venture partners.

Under his leadership, ALNG concluded a 25-year deal to supply LNG from Australia to China’s first import facility constructed in Guangdong and a 7-year deal with Korea Gas Corporation.

In 2003 and 2004, Arthur was seconded by Shell to Chevron Texaco Australia as Senior Advisor to the Gorgon Gas Project.

Arthur has had over 40 years with Shell and of that, more than 20 years in the LNG business. He has served on the boards of Australia LNG Ship Operating Company (ALSOC), Brunei LNG, Brunei Shell Tankers and Shell International Gas and has considerable experience working with joint venture partners.

Arthur was made a Member of the Order of Australia in January 2008.

Mr Phil Thick, Managing Director

Phil followed a 20 year career with Shell with a very successful 4 year stint as CEO of Coogee Chemicals Pty Ltd. Phil also acted as Managing Director of MHM Metals Limited (ASX: MHM) from July 2012 to March 2013 before being appointed Managing Director of New Standard Energy in April 2013.

During his time with Shell Phil worked in the downstream business around Australia and overseas, culminating in a position as one of four directors of Shell Australia Limited. His Shell roles were largely senior operational positions covering logistics, transport, terminals and engineering, with extensive experience in contract negotiations, contractor management and joint venture partnerships. As a director he had responsibility for the downstream business, including refineries and service stations.

After leaving Shell in 2006 Phil joined a number of boards including the board of Coogee Chemicals, and later took over as CEO. Coogee Chemicals is a privately owned Western Australian company and is one of Australia’s largest petrochemical businesses, with manufacturing, storage and distribution facilities in WA, Queensland, Victoria and Malaysia. Coogee Chemicals has an annual turnover of over $200 million, employs 300 staff and is a significant Western Australian gas user reliant on the domestic downstream energy market.

Mr Samuel Willis, Director

Sam has been on the board of New Standard since 2004 and in the role as Managing Director from 2007 to early 2013. In March 2013 Sam informed the board of his intention to step back from the position of Managing Director and to continue in his capacity as a director of the Company to work alongside Phil Thick focusing on strategic and corporate matters. Prior to his role at New Standard, Sam worked as a corporate and financial advisor for the preceding 10 years, largely focussing on ASX listed micro-cap and small cap companies in the resources sector. His principal focus during this period included completing opportunity evaluation, investment analysis, capital raising and co- ordination, broker liaison and deal negotiation and structuring.

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Sam has previously held positions as a private client advisor with stockbroker Hartley Poynton, a financial and corporate advisor with Red Dingo (Venture Capital Advisers) as well as financial analyst positions with both Deutsche Bank and Schroders Investment Management in London. Sam is currently non-executive director of ASX-listed mineral sands developer Base Resources Limited (ASX: BSE).

Sam holds a Bachelor of Commerce from the University of Western Australia where he majored in Accounting and Finance with a minor in Marketing.

Mr H.C. Kip Ferguson III, Director

Kip currently serves as the Executive Vice President of Exploration for strategic alliance partner Magnum Hunter Resources Corporation (NYSE: MHR). Kip brings more than 24 years of exploration and development experience in several major U.S. basins to New Standard. As a third-generation geologist and earning his degree in Geology from the University of Texas at Austin, Kip has an excellent foundation of technical background and experience in the oil and gas sector. Kip was also formerly the President of Sharon Resources, Inc.

Kip’s practical experience in the development of oil and gas fields will be critical to New Standard as it seeks to unlock the value across its Australian acreage positions.

Mr Chris Sadler, Non-Executive Director

Chris has considerable experience in both the corporate finance and energy sectors, through his role on the Eastern Star Gas board prior to the takeover by Santos, and involvement in various mergers and acquisitions as a non-executive director at Gloucester Coal, Mitre 10 and Austock.

With approximately 20 years experience in investment banking, working for Deutsche Bank, JP Morgan, SG Warburg and Salomon Brothers in Melbourne, London, New York and Sydney, Chris brings extensive experience in mergers and acquisitions, corporate restructurings, equity and debt financings.

Chris is currently a director of Jireh Group Pty Limited (owner of Gloria Jean’s Coffees) and an adviser for Daniels Group in the healthcare sector, and has previously been a director at other publicly listed companies. Mr Sadler also possesses significant experience working with corporations throughout Asia and a history of work for charitable organisations.

Mr Jeffrey Swanson, Non-Executive Director

Jeffrey Swanson brings to New Standard and its Board of Directors more than 34 years of oil and gas experience, with strong commercial and operational experience in both conventional and shale oil and gas exploration and production in the US, as well as extensive knowledge of the service provider sector.

Jeffrey is a leader in the development and application of innovation and technology to the exploration and production businesses of the oil and gas industry. He founded, and is Chairman, CEO and President of GrailQuest Corp, a company set up in 2002 as a software and service provider to meet various needs in the oil and gas industry.

He also co-founded Stratamodel, the first commercial 3-D geocellular software provider and is the author of two patents, “Computer System and Method for Modelling Fluid Depletion” and “Modelling Clastic Reservoirs.”

As a consultant, Jeffrey has broad experience internationally, primarily in South and Latin America where he consulted for Petroleos De Venezuela, Pemex, Exxon, Mobil, Kerr McGee, Pennzoil and others. He is also Chairman, CEO and President of Durango Resources Corp, an oil and gas operator and producer predominantly in Texas, and a Non-Executive Director at Magnum Hunter Resources Corporation (NYSE: MHR).

Mr Greg Channon, Non-Executive Director

Mr Channon is a geologist with more than 29 years of experience in the oil and gas industry and will provide New Standard with vast technical and operational knowledge and experience, particularly in the Cooper Basin.

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Greg worked for Santos Ltd for 13 years with geological responsibility for its Cooper Basin program. He has since held a number of senior roles with oil and gas listed companies, including at CEO and Managing Director level.

Greg brings extensive experience in both onshore and offshore exploration and production management, leasing, mergers and acquisitions and farm-in/farm-out agreements and is currently the Vice President of New Business at Pathfinder Energy Pty Ltd.

Investment Risks

The key investment risks for NSE include:

Commitment risk – a number of their assets require minimum commitment such as exploration, drilling, production to keep. A component of NSE’s strategy is to seek out farminees for the WA permits in which it has a 100% equity stake. Each of these permits have a minimum level of work commitment, which includes the drilling of an exploration well. If NSE is unable to secure a farminee for one or more of these then it will have to fund these activities itself, which would most likely require further capital raisings.

Geological risk – the actual production characteristics of an oil reservoir may differ significantly from initial interpretations and expectations.

Timing risk – the ability of NSE to secure quality drilling and completion services in a timely and cost effective manner.

Capital expenditure & operating risk – the risk that capital and or operating costs exceed budget and/or exhaust available funding due to unforeseen circumstances before project completion and before further exploration drilling, and reduce the profitability and free cash generation of the project.

Commodity Price and Exchange Rate risk – as with oil and gas exploration companies, commodity price and exchange rate risk should also be considered.

Liquidity Risk – the ability of NSE to pay its coupon and interest from its cash generation.

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