XSTATE RESOURCES LIMITED — Capital/Financing Update 2017

Oct 19, 2017

ABN 96 009 217 154

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20 October 2017

ASX Limited

Electronic lodgement

Successful Placement for Sacramento Basin Operations

• Xstate is pleased to advise it has successfully raised $752,378 (before costs)

• Proceeds will be used in part to fund the production test at Dempsey 1‐15 (Xstate 10% working interest) and ongoing leasing of additional acreage on trend with the Dempsey 1‐15 well. Xstate holds working interests in these additional prospects of 24%

• Dempsey 1‐15 production testing with a workover rig is expected to commence towards the end of October 2017

• The additional funding will enable the Company to cover expected expenditures on the Alvares (Xstate 21% working interest) well re entry project subject to a work program being approved by the joint venture

• Planning is underway to determine how best to evaluate the 1,500 metres of gas shows encountered in the Alvares ‐1 well

Xstate Resources Limited (ASX: XST) (“Xstate” or “the Company”) has successfully completed a placement to sophisticated investors raising $752,378 (before costs). Xstate will issue 62,698,179 fully paid shares at $0.012 cents per share. The placing price represents a 17% discount to the Volume Weighted Average Price over the 5 trading days prior to completion of the placing (1.44 cents per share). The placement was made pursuant to Section 708 of the Corporations Act and Rule 7.1 (18,908 shares) and Rule 7.1A ( 62,679,271 shares) of the ASX Listing Rules.

The funds raised will be in part used for the Company's share of production testing, completion and connection of the Dempsey 1‐15 well and ongoing leasing of additional acreage on Dempsey prospect lookalikes. The funds raised will also accelerate an Alvares re‐entry assessment and additional leasing in the Alvares project area. Furthermore, funds will be utilised to maintain existing leases, the tie in connection of additional wells for production and general working capital requirements.

The Board of Xstate is very encouraged by the strong support received in the Company’s capital raising which is an endorsement of the Company’s current portfolio and future growth plans. The funds will underpin an exciting exploration, appraisal and production development program with the aim being to position Xstate for growth for the remainder of 2017 and into 2018. The imminent production testing of the Dempsey well, the progression of appraisal activity on the Alvares project, as well as the Company’s pursuit of new oil production opportunities, provide ongoing near to medium term activity and the potential for value development.

We welcome our new shareholders, and we thank our existing shareholders for their ongoing patience and support of the company.

Level 1, 31 Cliff Street, Fremantle WA 6160 | Tel + 61 8 9435 3200 | Fax +61 8 6444 7408 | www.xstate.com.au

20 October 2017

2

Disclosure under ASX Listing Rules 7.1A.4(b) and 3.10.5A

The issue will be made pursuant to Section 708 of the Corporations Act 2001 (Cth) ( Corporations Act ).

In accordance with ASX Listing Rules 7.1A.4(b) and 3.10.5A, the Company makes the following disclosures in respect of the Shares issued pursuant to Listing Rule 7.1 and 7.1A. The dilutive effect of the Shares on existing shareholders, as a result of the issue of Shares under the placement, is as follows:

follows:
		Dilution
Shares on issue prior to Placement	720,792,718
Shares issued under Listing Rule 7.1	18,908	Not Meaningful
Shares on Issue after Rule 7.1 Issue	720,811,626
Shares Issued under Listing Rule 7.1A	62,679,271	8.00%
Total Shares on Issue after Placement	783,490,897

For and on behalf of the Board of Xstate Resources Limited

For further details please contact:

Cosimo Damiano

Managing Director Xstate Resources Limited Tel Office: +61 8 9435 3200 Email: cosimodamiano@xstate.com.au

About Xstate Resources Limited

Xstate Resources (ASX Code: XST) is an ASX listed company focused on the oil and gas sector. The Company has existing gas exploration assets located in the Sacramento Basin, California and associated gas production. Xstate is presently pursuing new opportunities in the oil and gas sector onshore North America.

Level 1, 31 Cliff Street, Fremantle WA 6160 | Tel + 61 8 9435 3200 | Fax +61 8 6444 7408 | www.xstate.com.au