XSTATE RESOURCES LIMITED — Investor Presentation 2014

Sep 8, 2014

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ABN 96 009 217 154

9 September 2014

ASX Limited

Electronic lodgement ASX Code: XST

GOOD OIL CONFERENCE PRESENTATION

Xstate is pleased to attach a copy of a presentation to be delivered today by Gary Jeffery, Managing Director of Australian Oil Company Limited (“AOC”) at the Good Oil Conference in Fremantle, Western Australia.

Xstate partners with AOC in an AMI in California as described in page 3 of the presentation.

On behalf of the Board of Directors

For information contact:

Chris Hodge‐ 92260866 Director Xstate Resources Limited

Suite 1, 45 Ord Street, West Perth, WA 6005 Tel + 61 8 9226 0866

www.xstate.com.au

Fremantle, September 2014

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AUSTRALIAN OIL COMPANY

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ASX: AOC

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AUSTRALIAN OIL COMPANY

Positioned for Success:

1. Unparalleled Gas Market

2. Ground Floor position in onshore, conventional reservoir sub-basin under the established Sacramento Basin

3. Asset Depth: Multi-Tcf Drillable Prospects, with analogue prospects leased for follow-up drilling

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A
O
C
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Source: AOC - ASX Release – 2[nd] December 2013

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AUSTRALIAN OIL COMPANY

Funding Exploration

Tightly held stock; management focused on leveraged exploration

• Shares on issue: 92.1 million

• Options: ~20 million unlisted options at 25 cents expiring end 2015 and 2016

• Annual G&A at an industry low of <A$300k per year; offset by A$100k per year revenue

• Market Cap: A$14 million

• AMI with AOC 70%; Xstate (ASX:XST) 30%

• Management Team of experienced industry

• veterans with a proven record of exploration

success & gas monetization

• High Project Equities in

• ~ 28,000 leased acres

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California Gas Markets: Shortfall of 6.5 BCF/d; LNG export options

AUSTRALIAN OIL COMPANY

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BC LNG Plants
Proposed
NW pipeline
3.9
TransCanada
MMMcf/d
GTN pipeline
Oregon LNG 2.7 MMMcf/d
Proposed
Jordan Cove LNG
Proposed
Paiute
Pipeline
1.0 MMcf/d
Energia Costa Azul LNG
Import Kern River
1.8 MMcf/d
Transwestern
pipeline
2.4 MMMcf/d
GOM LNG Plants
Proposed
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Total Californian Gas Demand Approx. 7.0 billion cubic feet a day. Peak over 11.0 billion cubic feet a day Californian production is about 410 million cubic feet per day. (< 5%) Local gas price: Henry Hub + ~$0.60

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Source : Naturalgasintel.com
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AUSTRALIAN OIL COMPANY

Ground Floor Prospecting for Hidden Value

“Second generation exploration of the

established Sacramento Basin; targeting big, conventional gas to feed strong domestic and LNG demand”.

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Gas: Sacramento
Assets
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Oil: Porters Ranch
Mankins Ranch
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AUSTRALIAN OIL COMPANY

Dempsey Prospect- 1+ TCF gas exploration well

Schematic Cross Section illustrating 7 Reservoir Targets

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AUSTRALIAN OIL COMPANY

Dempsey Prospect- 1+ TCF gas exploration well

Structure Map

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Resource Estimate :

• Total (100%) unrisked recoverable prospective resource* on a best estimate deterministic basis: > 1 Tcf ( > 167 million boe)

• Each target ranges from 1 Bcf to 350 Bcf ( 0.35Tcf)

• Probability of success estimates from 40% to 10% (weighted average ~20%)

• Individual reservoirs from 80 acres to 3900 acres

• Based on 3D and 2D seismic

• Leases:

• Net revenue interest ~80%

• AOC Working Interest 55% with option for +5%

• AOC net interest in revenue before Opex ~48%

* Refer AOC ASX release 4 Sept 2014

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AUSTRALIAN OIL COMPANY

Alvares 1 Gas Discovery- Well Summary

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•
•
•
Wet sands
outside of closure
Thick Seal
Interpreted Gas
Column
17# Mud masks shows
with core and gas
sample
www.australianoilcompany.com
1500+ metres gas shows
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• Alvares 1 gas discovery drilled in 1982

• • 1,500 metres of gas shows

• Pipeline quality gas to surface

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Alvares Appraisal-2+ Tcf gas

AUSTRALIAN OIL COMPANY

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Dempsey
Alvares
Tulainyo
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The Alvares Project is located close to large natural gas pipelines, and is on trend 30 miles from the geologically similar multi-Tcf Tulainyo Project (based on the James well drilled in 1947), mapped by Cirque Resources, and involving OXY, California's largest oil and gas company.

http://www.cirqueresources.com/

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AUSTRALIAN OIL COMPANY

Alvares Appraisal- 2+ Tcf gas

Alvares Appraisal Project- appraisal of a conventional sandstone reservoir gas discovery:

• Total (100%) unrisked recoverable prospective resource* on a best estimate deterministic basis:

• ~2.4 Tcf ( ~400 million boe)

• The Alvares 1 gas discovery was drilled within mapped closure over 30 years ago; intersected >1500 metres of high gas shows on mudlogs from 2500 metres depth; and flowed pipeline quality gas to surface

• The prospect is interpreted to have a high probability (>60%) of flowing commercial quantities of gas, with a 10% -15% chance of 1+ Tcf gas

Approximately 10,000 acres leased

AOC Working Interest is 40%:

• with option, on terms to be defined to increase to 60%.

• Net revenue interests are ~80%.

• Resulting in AOC having ~50% net revenue interest after option is exercised.

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Alvares 1
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*Resource estimate basis in Appendix to this presentation

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AUSTRALIAN OIL COMPANY

Cautionary Note

This document contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a many variables which could cause actual results or trends to differ materially. The technical information provided has been reviewed by Mr Gary Jeffery, Managing Director of Australian Oil Company Limited. He is a qualified geophysicist with over 40 years technical, commercial and management experience in exploration for, appraisal and development, and transportation of oil and gas. Mr Jeffery consents to the inclusion of the information in the form and context in which it appears.

In accordance with ASX Listing Rules, any new hydrocarbon resource information in this document has been reviewed by Australian Oil Company’s Technical Director, Mr Keith Martens, who has over 35 years of experience in the sector, with 15 years of experience in working in North America. Mr Martens is a qualified resources evaluator and consents to that information being included in the form and context in which it appears.

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Before investing it is recommended that you conduct your own due diligence and consult financial and technical advisors.

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AUSTRALIAN OIL COMPANY

Additional Explanatory Information

1. Contact Information

2. AOC Exploration & Appraisal – Next Steps

3. Alvares Project Resource Basis

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AUSTRALIAN OIL COMPANY

Management and Contact Information

Directors:

Company Secretary:

Andrew Childs - Chairman Gary Jeffery - Managing Director Keith Martens -Technical Director David McArthur

For further information contact:

Gary Jeffery - Managing Director Australian Oil Company Ltd Ph: +61 8 9226 0866 Email: gary.jeffery@aoc-email.com

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AUSTRALIAN OIL COMPANY

2. AOC Exploration & Appraisal – Next Steps

Continue parallel execution of plans to capture significant value:

1. Permitting to drill Dempsey 1+ Tcf Conventional Gas Prospect

2. Define and acquire additional working interests

3. Permitting to drill 10+ million barrel Porter Ranch oil exploration well

4. Close funding alternatives

5. Refine Alvares 2+Tcf Gas Project plans, including drilling detail

6. Continue leasing of acreage over most attractive Analogue Prospects to crystallise ‘early mover’ advantage.

7. Drill Dempsey and Porters Ranch- late 2014 to early 2015

AOC can control timing- annual lease payments,

but there is no drilling work program or spend obligations

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AUSTRALIAN OIL COMPANY

3. Alvares Project Resource Basis

Alvares Appraisal Project:

• Total (100%) unrisked recoverable prospective resource on a best estimate deterministic basis:

~2.4 Tcf ( ~400 million boe* - using an industry standard energy based conversion factor of 6 mcf per boe).

The resource estimate is based on:

• Anticlinal structure covering >26 Sq Km (>6400 acres)

• Broad 2D seismic control;

• The key well drilled within mapped closure over 30 years ago

• The key well was drilled for oil

• The well intersected >1500 metres of high gas shows on mudlogs from 2500 metres depth

• The well tested small quantity of pipeline quality gas from pre-flow to open hole DST, that then failed mechanically

• The prospect is interpreted to have a high probability (>60%) of flowing commercial quantities of gas, with a 10% -15% chance of 1+ Tcf gas

• The Alvares Project is located close to large natural gas pipelines and a ready market

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