DIGITALX LIMITED — Capital/Financing Update 2011

Sep 7, 2011

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ACN 127 735 442
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September 8, 2011

High Impact Lyons Point Prospect to Spud

Highlights

• Lyons Point Exploration Prospect to spud next week (KOG 10% WI)

• High Impact Exploration Target : 3 MMBC and 60 BCF

• High Probability of Success- Independent Geological Assessment +50% POS

The Directors of Kilgore Oil and Gas Ltd (ASX:KOG) are pleased to advise the operator has confirmed the Lyons Point exploration prospect is due to spud early next week, with the transportation of the rig and drilling equipment to site currently underway.

The Lyons Point prospect in Louisiana is a high impact, onshore exploration horizon targeting 3 million barrels of condensate (MMBC) and 60 billion cubic feet of gas (Bcf). A successful Lyons Point exploration well and project development would be a material value creation event for the Company, through its 10% WI in the targeted resources.

Lyons Prospect- Acadia Parish, Louisiana

Non Operator (10% WI)

The Lyons Point is a large, high impact exploration prospect located on trend to Marg Tex reservoir production from adjacent fields. The well is being drilled by an experienced, local operator Clayton Williams Inc., who are equity participants in the well and prospect.

The Lyons Point Prospect has a closure of circa 400 acres with a most likely resource potential is 3 MMBC (Million Barrels Condensate) and 60 BCF with upside potential of 4 MMBC and 80 BCF. The well will be drilled to a total depth of 16,300 feet, is expected to take 45 days to drill.

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The Lyons Point Prospect is a seismically defined, up thrown fault bounded structural closure. The objective section is provided by the prolific Oligocene Marginulina Texana (Marg Tex) 1, 2, and 3 Sands, which are projected to be together 700 feet thick. The Marg Tex sands are productive in several fields in the immediate surrounding area.

The critical southerly fault (brown on the diagram above) is the same fault that is proven to seal at the nearby Leleux Field, which has cumulative production of 5 MMBC and 300 BCF from the Marg Tex interval.

L e v e l 2 1 , A l l e n d a l e S q u a r e , 7 7 S t G e o r g e s T c e P e r t h W A 6 0 0 0 P h : + 6 1 8 9 3 8 9 2 0 0 0 F a x : + 6 1 8 9 3 8 9 2 0 9 9 w w w . k i l g o r e o i l a n d g a s . c o m . a u

Production rates are estimated to be significant given adjacent analogue wells are producing at rates of 750 BC/D (Barrels Condensate per Day) and 15,000 MMCF/D (Million Cubic Feet Gas per Day). It is likely only four wells will be required to drain the structure.

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The Company’s 10% WI share of the dry hole well and entry cost is US$923,000 which has been paid in full. The well is being drilled by Precision Drilling under a turnkey arrangement, which fixes the drilling costs. In a success case, the Company’s share of completion and facilities costs is estimated to be a further US$300,000.

The participation terms are favourable with the Company paying 13.34% to earn a 10% working interest. The net revenue interest is ~7.5%.

This prospect was chosen over numerous others due to the thorough work done by the operator and the mitigation of the critical risk elements by the presence of nearby production and the availability of good quality 3D.

The Board engaged an independent expert to review the prospect and concurs with expert’s opinion that this prospect has an excellent chance of success, in the region of 50-66%.

Participants in the Lyons Prospect are as below:

	Before Casing Point %	After Casing Point %
		Initial & Subsequent
	Initial Well	Wells
Kilgore Oil & Gas Ltd (KOG)	13.33	10.00
Tango Petroleum Ltd (TNP)	23.00	17.25
Verus Investments Ltd (VIL)	20.00	15.00
Grand Gulf Energy Ltd (GGE)	6.67	5.00
Other	37.00	52.75
	100.00	100.00

For further information on this project or other company activities please contact Brett Mitchell or Charles Morgan on +61 8 9389 2000.

For and on behalf of the Board

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