XSTATE RESOURCES LIMITED — Capital/Financing Update 2011

Aug 28, 2011

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ABN 96 009 217 154
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29 August 2011 ASX Limited

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Electronic lodgement
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300[+] MILLION BARREL POTENTIAL SIDI DHAHER WELL SPUDDED

Xstate Resources Limited (ASX: XST) advises that the Sidi Dhaher well spudded at 07:00am GMT on Saturday 27 August 2011. Xstate is earning a 10% interest in the well.

The current operation is drilling the 16” hole. The Sidi Dhaher well has a planned total depth of 2,168 meters and is expected to take about 33 days to drill. Additional time will be required in the event of formation testing.

During the course of drilling operations, drilling updates will be provided to the ASX on a weekly basis and as required upon the occurrence of any material event.

“Exploration of the 300+ million barrel (recoverable) Prospective Resource Sidi Dhaher prospect

is an important event for Xstate and it is exciting for shareholders that the actual drilling operations have now begun.” according to Gary Jeffery Managing Director of Xstate Resources

Sidi Dhaher Project Summary:

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Figure 1: Sidi Dhaher Prospect Geological Section showing six targets for oil and gas

208 Bagot Road, Subiaco WA 6008 Tel + 61 8 9381 4215 Fax +61 8 9381 9386

www.xstate.com.au

ABN 96 009 217 154

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The key attributes of the Sidi Dhaher prospect are:

• Potential for over 300 Million barrels of recoverable prospective oil resource in just the two primary reservoir zones[1] .

• The well is anticipated to intersect 6 prospective reservoir zones; all of which produce oil and gas from fields within 50 kilometres of Sidi Dhaher.

• The estimated cost to drill the well is approximately $6 million and the well is planned to take around 30 days to drill.

• 1 in 3 chance of Geologic Success[1] .

• The prospectivity of Sidi Dhaher is also supported by the presence of coincident hydrocarbon indicator anomalies, namely:

• Seismic Flat Spots, on all 2D seismic lines crossing the prospect at the shallowest

• reservoir level; these are interpreted to be potential Direct Hydrocarbon Indicators (“DHI”). Seismic flat spots are often the seismic expression of the interface between hydrocarbons and underlying water zones in good reservoir rocks; and

• Surface Petroleum Geochemical “Microseepage” Anomalies across the prospect

• area. Such anomalies are often present above oil and gas accumulations.

• 1 Isis Petroleum Consultants Report May 2010

For further information visit www.xstate.com.au or contact:

Xstate Resources Limited

Gary Jeffery (Managing Director)

• T: +61 8 9381 4215 .

208 Bagot Road, Subiaco WA 6008 Tel + 61 8 9381 4215 Fax +61 8 9381 9386 www.xstate.com.au