XSTATE RESOURCES LIMITED — Capital/Financing Update 2010

Nov 3, 2010

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ABN 96 009 217 154

4 November 2010 ASX Limited Electronic lodgement

ADX Energy Limited Announcement re Dougga Gas Discovery

Please find attached a colour version of the release made today by ADX Energy Limited.

For and on behalf of the Board.

41 Stirling Highway, Nedlands WA 6009 Tel + 61 8 9423 3200 Fax +61 8 9389 8327 www.xstate.com.au

4 November 2010

DOUGGA GAS DISCOVERY

Resources Upgrade from 3D Seismic Remapping Results

ADX Energy Ltd (ASX:ADX) is pleased to announce a significant increase in the resource potential at its Dougga Gas Condensate discovery offshore Tunisia, based on the results of ADX remapping using its leading edge dual sensor 3D seismic data acquired earlier in 2010. ADX holds a 60% interest and is operator of Dougga and the surrounding Kerkouane permit.

Highlights

• Increase of in‐place gas and condensate volume estimates across all confidence categories – 42% for P(90), 26% for P(50) and 11% for the P(10) estimate

• Inferred revised mean recoverable Contingent Resource of 234 bcf Sales Gas and 50 mmbbls of condensate and LPGs (89 million barrels of oil equivalent)

• 3D seismic mapping indicates 300 meters of updip potential from Dougga 1 discovery well which is interpreted to have intersected a 200+ metre column of gas and condensate.

These results are an important first step in the ongoing technical and commercial assessment of the Dougga discovery that will incorporate an independent resource assessment, an independent review of development options and associated costs and an economic assessment. The objective of the studies is to establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).

establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).	establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).	establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).	establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).	establish the technical and commercial feasibility of the Dougga discovery after incorporating the results of an appraisal well planned for 2011. A detailed development review and resource assessment study has been initiated with AGR ‐ Tracs International Consultancy Ltd (“Tracs”).
Table 1: Dougga Probalistic in‐place rawgas volumes and inferred Contingent Resource estimate
Confidence Case	P(90)	P(50)	P(10)	Mean
Tacs 2009 “In Place Volume” (Bcf)	320	559	983	621
ADX Nov 2010 Estimate “In Place Volume”(Bcf)	455	702	1089	742
Percentage Change	42%	26%	11%	19%
Tracs 2009 Contingent Resources
Sales Gas (bcf)	102	177	308	196
Condensate + LPG (mmbbls)	22	38	65	42
Oil Equivalent(mmboe)	39	68	116	75
ADX Nov 2010 Inferred Contingent Resources(from 3D seismic mapping)
Sales (bcf)	145	222	341	234
Condensate + LPG (mmbbls)	31	47	72	50
Oil Equivalent(mmboe)	55	84	129	89
Note:The ADX inferred resource is based on theproportional increase in GRV and inplace rawgas volume

Summary of the 3D seismic mapping results

A key input parameter for resource calculations of the discovery is the Gross Rock Volume “GRV” – being the volume of hydrocarbon bearing reservoir in the structure. GRV is a direct output from the mapping of the 3D seismic. The new GRV has been combined with all the other parameters used in the Tracs 2009 Competent Person’s report on Dougga for calculating in place raw gas volumes.

The new mapping of the Dougga discovery is particularly encouraging because of the potential 42% increase in the “high confidence” P(90) contingent resources case. This upgrade is largely due to a significant improvement in structural and stratigraphic definition utilising the 3D data set. Table 1 above shows changes to the in place raw gas potential for the P(90), P(50), P(10) and mean confidence resource cases resulting from the revised mapping together with the inferred recoverable sales gas and condensate volumes based on proportional increase in line with GRV, using the 2009 Tracs resource assessment as the reference.

Increased confidence in resource potential and reservoir quality

In addition to the substantial potential increase to the “high confidence” P90 contingent resource case as a result of the 3D seismic mapping, the seismic has also revealed the potential for a thicker high quality Abiod reservoir further updip from the Dougga 1 well intersection. As a result a location approximately 300 meters updip from Dougga 1 will provide an excellent candidate for a future Dougga well.

The 3D seismic interpretation also indicates that Dougga is likely to contain a highly fractured Abiod reservoir analogous to that encountered at Lambouka. The interpreted fracturing and additional Abiod section based on ADX 3D seismic mapping enhances the potential for good reservoir productivity which in turn is important for the commerciality of Dougga. Demonstrating commercial gas and condensate flow rates via well test will be a key objective of the next well on the Dougga structure.

Additional Dougga prefeasibility study results will be provided as they become available.

The following Joint Venture is participating in the Kerkouane permit,

ADX	60% Operator
Gulfsands Petroleum Plc	30%
XState Resources Ltd*	10%

*XState has an option with ADX to increase XStates interest in Dougga to 20% under agreed farmin terms. If exercised ADX interest would decrease to 50%

For further details please contact :

Wolfgang Zimmer	Ian Tchacos
Managing Director	Chairman
+43 (0) 1641 0189	+61(08)9226 2822
www.adxenergy.com.au

Asset Background ‐ Dougga Gas Condensate Discovery

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Location Map
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Italy
Lambouka
Kerkouane
c)
Panteller i a
Dougga-NW
Tun i s i a
Dougga
Location map of ADX operated Kerkouane and Pantelleria licences. Red rectangle shows
Dual Sensor 3D seismic outline (approximately 620 sq km full fold, full aperture, 770 sq
km total).
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Dougga was discovered in 1981 by Shell at a time when gas was of little value and in a water depth that was near the technical limit for oil and gas development. The discovery well intersected and tested gas in the late Cretaceous Abiod and Allam formations. Drill stem test results revealed that Dougga contains liquids rich gas but also contains considerable levels of CO2 (approximately 30%).

Dougga is located in 328 meters of water approximately 45 kms East of Cap Bon in the prospective Gulf of Hammamet. The discovery is well positioned in terms of access to domestic and export infrastructure, proximal to landfall for onshore gas processing and demand for gas at internationally attractive pricing. The liquids rich nature of Dougga gas enhances the commercial potential of any gas development.

In late 2009 ADX commissioned TRACS International Consultancy Limited (TRACS) to undertake an independent resource evaluation of the Dougga gas discovery and its potential for commercial development. The study indicated Dougga is a potentially significant resource with a mean recoverable Contingent Resource of approximately 74 MMboe with upside potential of up to 116 MMboe. Furthermore based on a conceptual development plan and cost estimate, TRACS

economic analysis indicated a potentially commercial project at the mean resource level.

The prospects for a gas development at Dougga have been significantly enhanced recently by the nearby Lambouka gas discovery. Together Dougga and Lambouka represent a compelling appraisal and potential development opportunity with a potential mean Recoverable Contingent Resource exceeding 500 Bcf and 70 mmbbls of condensate.

ADX on behalf of its partners is undertaking a pre‐feasibility review of Dougga incorporating the results from the recently acquired Kerkouane ‐ Pantelleria 640 km[2] 3D survey which covers Dougga, revised cost estimates and alternative development options. It is intended that a well is drilled on the Dougga structure during 2011 with a view to establishing the commerciality of this potentially significant resource.

Seismic Cross Section

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Seismic cross section from 3D volume through Dougga‐1 well. Note additional seismic events beneath Top Abiod event. This indicates additional reservoir.