ABN 50 009 126 238 QUARTERLY REPORT September 2014 HIGHLIGHTS Signing of Binding Investment Agreement with Strategic Asian Investor First Stage Share Placement concluded for $2.5 million Appointment of new CEO and Management team Focus now wholly on Indonesia CHAIRMAN’S COMMENTS NuEnergy was pleased to conclude the first stage share placement for $2.5 million under the binding Investment Agreement with New Century Energy Resources Limited. New Century provides impressively strong technical capabilities and service skills for Coal Bed Methane drilling and well completion. They have extensive operating experience in China, Australia, Malaysia and Indonesia. The Board also welcomes new CEO, Dr Ian Wang, who has hands-on experience with CBM drilling and completion in China and Australia. His skills, plus a new senior management team together with New Century and our partner, PERTAMINA, provide an exciting formula as NuEnergy progresses to successfully develop CBM in South Sumatra and enhance value to shareholders. INVESTMENT AGREEMENT - FIRST STAGE SHARE PLACEMENT COMPLETE During the quarter NuEnergy signed a binding Investment Agreement, as amended, with a strategic Asian investor, New Century Energy Resources Limited (“NCE”), to fund the development of the Indonesian CBM program through recapitalisation of NuEnergy. Under the terms of the Agreement, NuEnergy has successfully completed an initial share placement of 83,333,333 shares at 3 cents per share raising $2.5 million, representing 19.9% of the expanded share capital of the Company (“First Stage”). Upon completion of the First Stage share placement during the quarter, NCE appointed two of its nominees, Mr Yong Wah Kee and Mr Kok Keong Kong, as directors of NuEnergy. Mr Peter Cockcroft resigned as director to leave NuEnergy with a five member Board. Further terms for completion under the Investment Agreement are as follows: Subject to shareholder and regulatory approval (where necessary), NCE shall (A) subscribe for shares via a share placement and/or (B) fully participate in and underwrite a rights issue in respect of shares in NGY, for a total minimum commitment of A$10,000,000, to be completed by 31 December 2014 at a minimum price of A$0.03/Share (“Second Stage”). For personal use only Subsequent to shareholder approval for completion of the Second Stage, Graeme Robertson will resign as Non-Executive Chairman and remain as a non-executive director of NuEnergy. Upon completion of the Second Stage, NCE shall be entitled to appoint three directors out of a total number of four directors of the NuEnergy board, by appointing one more director to the NuEnergy board whilst two existing directors of NuEnergy (not including ABN 50 009 126 238 the directors appointed by NCE) shall resign. The chairman of the NuEnergy board shall become one of the directors appointed by NCE. NCE has extensive experience in the Coal Bed Methane (CBM) exploration and production industry, including subsurface (geological, geophysical & reservoir), well drilling, completion and production techniques that can significantly enhance the productivity of CBM wells. NCE is 60% owned by Globaltec Formation Berhad (MYX:5220), a public company listed on the Bursa Malaysia main market. NEW CHIEF EXECUTIVE OFFICER During the quarter, the Board of NuEnergy Gas Limited (ASX:NGY) welcomed the For personal use only appointment of Dr Ian Wang as Chief Executive Officer. Dr Wang has more than 30 years of experience in the oil and gas Industry and previously held the position of General Manager of Greka Exploration & Production (Green Dragon Gas). Prior to joining Greka Exploration & Production in August 2012, Dr Wang was employed Corporate Office T: (+612) 9199 5522 Suite 2001, Level 20 Australia Square F: (+612) 9247 8966 264 George Street, SYDNEY 2000 E: [email protected] AUSTRALIA https://twitter.com/NuEnergyLtd www.nuenergygas.com ABN 50 009 126 238 as General Manager of Clarke Energy China. Dr Wang has held senior exploration roles at Sino Gas & Energy, Sydney Gas and Molopo. He also held roles as Regional Manager with In- Situ Australia providing consultancy to Lowell Petroleum on Coal Bed Methane (CBM) projects in China and Operations Manager for Huawell CBM Zhengzhou. Dr Wang holds a Master of Science and PhD from Imperial College, both in Rock Mechanics and Structural Geology and was an Associate Professor at the Chinese Academy of Science, Beijing, where he worked on tectonic and basin analysis. Dr Wang’s role is to deliver and commercialise the existing Production Sharing Contracts (PSCs) in Indonesia and to expand the unconventional and conventional portfolio across the ASEAN region. Dr Wang will be based in Jakarta to fulfill his new role as CEO. NEW SENIOR MANAGEMENT During the quarter, the Board of NGY also welcomed Huat King Huang as Chief Commercial Officer and Dr Sheng Li Zhang as Chief Exploration Manager. Mr Huang has 27 years of work experience in the oil and gas exploration and production sector with major international oil companies. He has over 15 years of contract and procurement experience and supply chain management, 11 years as team leader and is very competent in strategic sourcing for rigs, drilling equipment and services contracts. Mr Huang has a Master of Business Administration, Malaysia; Bachelor of Mechanical Engineering Degree (Hons.), New Zealand. Dr Zhang has 27 years of oil and gas and CBM field experience mainly dedicated to geology, reservoir engineering and analysis. He worked as lead Senior Geologist with KBM Oil Co. Ltd in the Citic Kazakhstan oilfield, Senior Geologist for Sinochem E&P Co. Ltd and Chief Geologist of CRS Oil company, Senior CBM Geologist for BP Arco China and Manager and Deputy director of CBM projects with Sinopec. Mr Zhang has a Doctor of Science from the China University of Geoscience and a Bachelor of Petroleum Geology from Chengdu University of Science and Technology. INDONESIA South Sumatra As part of the recapitalisation of NuEnergy the Company intends to solely focus on its three Indonesian Production Sharing Contracts (PSCs). NuEnergy’s core PSCs in South Sumatra will be the primary focus with the Company aiming to drill further pilot wells at its Muara Enim PSC and commence drilling at the Muara Enim II PSC, including a focus on the western area. Operations are set to recommence at the Muara Enim Pilot well#2 site with the tendering process to be completed during the current quarter. The entry of a new strategic investor, a For personal use only new CEO and management team will significantly assist NuEnergy with its drilling program. Corporate Office T: (+612) 9199 5522 Suite 2001, Level 20 Australia Square F: (+612) 9247 8966 264 George Street, SYDNEY 2000 E: [email protected] AUSTRALIA https://twitter.com/NuEnergyLtd www.nuenergygas.com ABN 50 009 126 238 Rengat PSC The secondary focus in Indonesia will be completing a farm out transaction for the Rengat PSC focusing on drilling wells that intersect the identified 15 metre coal seam revealed after extensive geological and geophysical work completed in 2013. NuEnergy has a 100% interest in Rengat PSC (located in the Central Sumatra coal basin in the vicinity of a major gas pipeline from Jakarta to the Chevron Duri Steam Flood project and related infrastructure).The signed Investment Agreement includes a provision for a farm- out of the Rengat PSC. Location Map – NuEnergy’s Indonesian PSCs and surrounding infrastructure ABOUT NUENERGY GAS LIMITED NuEnergy Gas Limited (ASX:NGY) is an emerging ASX listed gas and ancillary power generation development company with an immediate focus on establishing unconventional gas exploration & production in Indonesia. The company’s overall strategy is to rapidly prove up CBM and shale gas resources and bring these resources to production through small scale power generation and connection to the local gas grid. NuEnergy has secured strategically located CBM and shale gas concessions in areas that are short of power supply, where there is a significantly undersupplied gas market and/or where there is abundant gas and power infrastructure to take gas or power to market. NuEnergy has three operated PSCs in Indonesia. Yours sincerely For personal use only Rozanna Lee Company Secretary +61 2 9199 5556 Corporate Office T: (+612) 9199 5522 Suite 2001, Level 20 Australia Square F: (+612) 9247 8966 264 George Street, SYDNEY 2000 E: [email protected] AUSTRALIA https://twitter.com/NuEnergyLtd www.nuenergygas.com .