XSTATE RESOURCES LIMITED

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Sacramento Basin Update

Upcoming Drilling Ac5vity

California focused with a porEolio of several projects including Gas Produc5on, Gas Produc5on Enhancement, and High Impact Explora5on and Appraisal

ASX: XST

Investor Presenta5on - July 2017

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Company Overview

California focused natural gas producer with high impact gas explora@on and appraisal
Near term ac@vity to drive share price
Dempsey-1 explora@on well (July 2017)
Alvares appraisal well (late 2017)
Produc@on enhancements to increase cash flow (ongoing)

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Corporate Summary: ASX:XST as at July 7, 2017	Corporate Summary: ASX:XST as at July 7, 2017
Current Shares on Issue	626.9 million
Op@ons @$0.05 (expire Dec 2020)	42.0 million
Market Cap (@$0.007/share)	A$4.4 million
12 Month High/Low ($/share)	$0.027 / $0.003
No of Shareholders	1,528
Top 20 Shareholders	48.0%
Directors/Management	+5.0%

Xstate Share Price & Volume – 12 Months

Se_lement of Legal dispute
Ongoing search to acquire low cost, low risk, profitable produc@on
Low cost company with focus on Projects rather than Overheads

Source: Bell Po_er Securi@es

July 2017

Sacramento Basin Update

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Investment Thesis
Near Term Catalysts for Growth
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Two “drill-ready” prospects: Dempsey -1 well and Alvares appraisal ac@vity

Value catalysts

1. Explora5on Well: imminent explora5on drilling of Dempsey-1 targe5ng >1 Tcf[1] (100%)

Drilling late July 2017; Xstate’s share of drilling cost US$440,000 (Drill & Complete)
Xstate 10% WI equivalent to >100 Bcf[1] net

2. Appraisal Ac5vity: on Alvares gas discovery targe5ng >2 Tcf[1] (100%)

Xstate 21% WI equivalent to >400 Bcf[1] net
Re-entry of exis@ng well planned 2H 2017; Xstate share of drilling cost US$80,000

3. Corporate

Se_lement of legal dispute

4. New Ventures

1 Unrisked Recoverable Best Case Prospec@ve Resources

July 2017

Sacramento Basin Update

Sacramento Basin

Strategy - Targe5ng World Class Natural Gas Fields

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Outline of
Dempsey Gas Project Sacramento Basin
Alvares Gas Project
Area of Sacramento
Basin Gas Fields
Over 11 Tcf produced
Rancho-Capay Gas Field
Malton Gas Field
Rice Creek East Gas Field
Los Medanos Gas Field
Dutch Slough Gas Field Sacramento
Denverton Gas Field
Rio Vista 3.5 Tcf
San Francisco
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Targe@ng low risk and/or mul@ - Tcf prospects onshore Sacramento Basin, California
Technical edge: use of 3D seismic, extensive database, local knowledge, long experience in the basin to iden@fy prospects
Technical edge: focus on lightly explored or undrilled deeper forma@ons, typically beneath producing gas fields. A proven strategy.
Build a prospect porqolio with materiality, diversity and follow-up poten@al
prospects and prospec@ve trends.
stages of leasing
acreage posi@on or to access undeveloped gas reserves

July 2017

Sacramento Basin Update

Assets

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Assets/Projects	XST WI	Resource (Tcf1)	Resource (Tcf1)
		Gross	Net			Outline of
						Sacramento Basin
Alvares Appraisal2	21%	2.4	0.5	Dempsey Gas Project		(and Northern
Alvares Trend3	24%	3 large prospects		Alvares Gas Project and Trend Dempsey AMI		California AMI)
Dempsey Prospect	10%	1.0	0.1			Area of Sacramento
Dempsey AMI	30%	Ac@ve leasing on prospects	3 large	Rancho-Capay Gas Field		Basin Gas Fields Over 11 Tcf produced
Rancho Capay	10%	n/a	n/a	Malton Gas Field Rice Creek East Gas Field
Malton Gas Field	30%	n/a	n/a
Rice Creek East Gas Field Los Medanos Gas Field	10% 10%	n/a n/a	n/a n/a	Los Medanos Gas Field Dutch Slough Gas Field Denverton Gas Field		Sacramento
Dutch Slough Gas Field	30%	n/a	n/a			Rio Vista 3.5 Tcf
Denverton Gas Field	30%	n/a	n/a
Northern California AMI	30%	Ac@ve Prospect
		Genera@on			San Francisco
Notes
1Unrisked Recoverable Best Case Prospec@ve Resources
2Assumes sale of 4% WI to Bombora		Natural Energy Pty Ltd
3Assumes sale of 6% WI to Bombora		Natural Energy Pty Ltd

July 2017

Sacramento Basin Update

Produc5on Assets

Material produc5on increases

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Recent acquisi@ons and development/work overs have materially increased produc@on
Rancho Capay and Los Medanos Gas Fields
165 mcf/d[3] ; March 2017

Assets/Projects	XST WI
Malton Gas Field	30%
Rancho Capay	10%
Rice Creek East Gas Field	10%
Los Medanos Gas Field	10%
Dutch Slough Gas Field	30%
Denverton Gas Field	30%

Recently acquired
Malton, Dutch Slough, Denverton and Rice Creek East Gas Fields
640 mcf/d[3] ; March 2017
with immediate produc@on upside
1 As at March 31, 2017

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Quarterly Gross Produc5on
1.00
0.80
0.60
0.40
0.20
-
Quarterly
mmcf/d
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
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July 2017 Sacramento Basin Update

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Dempsey Project
–
Mul5-Tcf gas explora5on prospect XST 10% Interest
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Simple prominent high relief structure mapped on 3D seismic
100% determinis@c unrisked recoverable Best Case Prospec@ve Resources ~1 Tcf* gross
Reduced risk - 7 stacked independent conven@onal sand reservoirs
Mul@ple independent targets, range from 1+ Bcf to 350+ Bcf
Strategically located nearby owned infrastructure

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Further details were included in the operators, Sacgasco Limited (ASX:SGC) Company’s ASX release dated 4 September 2014.

Prospec@ve resources: The es@mated quan@@es of petroleum that may poten@ally be recovered by the applica@on of a future development project(s) relate to undiscovered accumula@ons. These es@mates have both an associated risk of discovery and a risk of development. Further explora@on appraisal and evalua@on is required to determine the existence of a significant quan@ty of poten@ally movable hydrocarbons

July 2017

Sacramento Basin Update

Alvares Project

– Mul5 Tcf gas appraisal prospect XST 21%[1] Interest

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Targe@ng unrisked recoverable Best Case Prospec@ve Resources of 2.4Tcf** (100%)
Alvares -1 was drilled in 1982 on a large an@cline & encountered over 1,500m of gas shows and flowed gas to surface

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500m of high gas
shows with no
evalua@on logs
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The forward plan at Alvares will be to appraise this gas discovery by either a re-entry to flow-test poten@ally produc@ve sands, or to drill a new well
Alvares is on trend to the analog Tulainyo discovery which is now confirmed to have encountered “mul@ple stacked gasbearing reservoirs” over a 50 square mile structure

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Mud weight
choked shows
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Right: Composite well log from Alvares – 1 showing the lithology (yellow is sandstone, brown is shale) and the strong gas shows

Below: Published seismic line from Texaco (hence poor quality) showing the large Alvares structure

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** Further details were included in the operators, Sacgasco Limited (ASX:SGC) Company’s ASX release dated 4 September 2014.

1 Assumes sale of 4% to Bombora Natural Energy Pty Ltd

July 2017

Sacramento Basin Update

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Contact Details
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Cosimo Damiano

– Australia

Managing Director Tel: +61 8 9435 3200 Email: [email protected]

Fremantle W.A. 6160 Tel: +61 8 9425 3200 | Fax: +61 8 9389 8327

Chris Hodge

Australia - Postal Address

Non Execu@ve Director Tel: +61 8 9435 3200 Email: [email protected]

PO Box 985, Fremantle W.A. 6959

290 Maple Court, Suite 158 Ventura CA 93003

Internet: www.xstate.com.au

July 2017

Sacramento Basin Update

Appendix

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01. Sacramento Basin

July 2017

Sacramento Basin Update

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Sacramento Basin
Underexplored Onshore Conven5onal Gas Basin
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Dempsey Conventional Gas Project
(Appraisal / Exploration stage)
Alvares Conventional Gas Project
(Appraisal stage)
Rancho-Capay Gas
Field
(Producing)
Los Medanos Gas Major Gas Pipelines
Field
(Producing)
v
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unrecognized value poten@al.
Untapped (>1 million acres) region of proven 11 Tcf Sacramento Basin, California.
California has compelling gas market dynamics.
California is short gas – 90% of annual 2.5 Tcf gas usage is ‘imported’.
Locally produced gas commands a 15% premium to Henry Hub.
Sacramento Basin has produced over 11 Tcf gas; 3.5 Tcf gas produced from Rio Vista field alone.
Many traps have been overlooked and the basin is under-explored.
Proven petroleum systems: two wells tested valid gas traps, both flowed gas to surface.
Both wells found over 1,500 meters of gas shows.

July 2017

Sacramento Basin Update

Sacramento Valley Schema5c Prospects and Geology of Sacramento Basin

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Klamath Mountains Dempsey Trend AMI –
containing Dempsey
Prospect and 3 new
leased prospects
N
Alvares
Appraisal
Prospect
Dempsey
Tulainyo Gas
Discovery Crystalline
Basement
Exis5ng produc5on
Prospec5ve basin-wide mainly from
Horizons the Late Cretaceous
Crystalline Basement
Ter5ary
San Andreas Fault
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July 2017

Sacramento Basin Update

Sacramento Basin Gas Plays A tale of Two Trends

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Alvares and
Tulainyo Trend Dempsey and New
Gas recovered on
Prospects Trend
test with >1,500m
gas shows
Ter5ary
Forbes Gas
Produc@on Late Cretaceous
Basement
A variety of lightly explored
High relief an@clines
structural and stra@graphic plays
and sub-thrust plays Basement
beneath exis@ng produc@on
Jurassic to Early
Cretaceous
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July 2017

Sacramento Basin Update

Appendix

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– 02. Xstate Resources Limited Board and Management

July 2017

Sacramento Basin Update

Xstate’s Compe55ve Advantage World Class Technical and Commercial Exper5se

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Established a unique group of individuals at a Board and Management level with the key a_ributes to deliver success.
Board and Management has a proven track record establishing, growing and ul@mately mone@zing junior oil and gas companies.

ü Highly experienced technical team Technical ü Qualified exper@se in sub-surface appraisal and surface development Knowledge ü Large company exper@se with small company agility ü Strong deal structuring skills Commercial ü Robust Business Development skills Experience ü Wide Contractual Agreement knowledge ü Prudent financial/cash management Financial ü Strong Banking (debt and equity) rela@onships Exper5se ü Extensive Finance & Risk Management ü Long standing contacts in the Californian Oil & Gas sector Californian ü All senior management have worked in California Exper5se ü Extensive seismic data base covering project areas

July 2017

Sacramento Basin Update

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Xstate’s Board and Management
Complementary skills and a proven track record
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– Cosimo Damiano Managing Director: financial modeling of oil & gas companies for global Investment Banks and Energy Commodity Trading companies in a and principal investment role. This experience has provided Mr. Damiano with a strong commercial understanding and analy@cal analysis of financing oil and gas assets across various geographic and fiscal regimes. He has extensive experience in North America, represen@ng the Mercuria Group as a Director of Upstream Investments and represented Mercuria’s Board interests in the company’s oil and gas investments throughout North America located in Canada, California, North Dakota and Argen@na.

Ian Tchacos Non Execu5ve Director: is a petroleum engineer with over 25 years interna@onal experience in corporate development and strategy, mergers and acquisi@ons, explora@on, development and produc@on, opera@ons, marke@ng and finance. He has a proven management track record in a range of interna@onal company environments. In his last appointment as Managing Director of Nexus Energy he was responsible for the company's development from an onshore micro cap explorer to an ASX top 200 onshore produc@on and operator. Mr. Tchacos is currently Execu@ve Chairman of ADX Energy Limited and Non Execu@ve Chairman of Riedel Resources Limited and 3D Oil Limited.

Chris Hodge – Non Execu5ve Director: is a structural geologist and petroleum geophysicist by training. Over a career spanning 35 years he has occupied senior posi@ons at Ampolex (explora@on and country manager), Adelphi Energy (MD), Eureka Energy (Advisor) and Roc Oil (Director). Each of these companies was successful during Mr. Hodge’s tenure and each was ul@mately taken over. In addi@on he has consulted to both Mitsui and Mitsubishi where he assisted in the building of explora@on porqolios and making significant wildcat oil discoveries.

– David McArthur Non Execu5ve Director & Company Secretary: is a Chartered Accountant, having spent four years with a major interna@onal accoun@ng firm, and has over 30 years' experience in the accoun@ng profession. Mr McArthur has been ac@vely involved in the financial and corporate management of a number of public listed companies over the past 27 years. He has substan@al experience in capital raisings, company reorganiza@ons and restructuring, mergers and takeovers, and asset acquisi@ons by public companies. Mr. McArthur is an execu@ve director of Lodestar Minerals Limited and Renewable Heat and Power Limited, a Non-Execu@ve Director of Shark Mi@ga@on Systems Limited and is Company Secretary for a number of public listed companies.

July 2017

Sacramento Basin Update

Appendix

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03. Legal Update

July 2017

Sacramento Basin Update

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Corporate Update
Li5ga5on against four investors
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On April 19 , 2017, Xstate commenced legal proceedings against the four investors in Singapore and Indonesia for breach of contract
Le_ers of Termina@on and Le_ers of Demand (May 15, 2017) where subsequently served on all four investors seeking substan@al compensa@on for the loss and damages Xstate has suffered directly as a result of their breach
Late June 2017 , Xstate advised that a Writ of Summons had been served on three of the four investors and the three investors who have been served have un@l early August to enter appearances with the Supreme Court of Western Australia
agreement will be heard in Western Australia in rela@on to this ma_er
Xstate is endeavoring to reach a resolu@on with the investors in respect of Xstate's claim for damages rela@ng to the investors' breach of contract
company

July 2017

Sacramento Basin Update

Appendix

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July 2017

Sacramento Basin Update

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Qualifica5ons
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Cau5onary Statement

Further details were included in the operator’s, Sacgasco Limited (ASX:SGC) Company’s ASX release dated 4 September 2014.

Prospec5ve resources

The es@mated quan@@es of petroleum that may poten@ally be recovered by the applica@on of a future development project(s) relate to undiscovered accumula@ons. These es@mates have both an associated risk of discovery and a risk of development. Further explora@on appraisal and evalua@on is required to determine the existence of a significant quan@ty of poten@ally movable hydrocarbons.

Competent Persons Report

This presenta@on contains forward looking statements that are subject to risk factors associated with the oil and gas industry. It is believed that the expecta@ons 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 informa@on provided has been reviewed by Mr. Chris Hodge, Non Execu@ve Director of Xstate Resources Limited. He is a qualified geologist with over 30 years technical, commercial and management experience in explora@on for, appraisal and development of oil and gas. Mr. Hodge consents to the inclusion of the informa@on in the form and context in which it appears.

Glossary

mcf/d is defined as thousand cubic feet per day

mmboe is defined as million barrels oil equivalent WI is defined as working interest

July 2017

Sacramento Basin Update

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Disclaimer
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Extent of Informa5on

This document has been prepared by Xstate Resources Limited (“Xstate” or “Company”). This Presenta@on, including the informa@on contained in this disclaimer, does not cons@tute an offer, invita@on or recommenda@on to subscribe for or purchase any security and neither the Presenta@on, disclaimer nor anything contained in such forms the basis of any contract or commitment. This Presenta@on does not take into account your individual investment objec@ve, financial situa@on or par@cular needs. You must not act on the basis of any ma_er contained in this Presenta@on but must make your own assessment of the Company.

No representa@on, express or implied, is made as to the fairness, accuracy, completeness or correctness of the informa@on contained in this Presenta@on, including the accuracy, likelihood of the achievement or reasonableness of any forecast, prospects, returns or statements in rela@on to future ma_ers contained in the Presenta@on (“Forward-looking statements”). Any such forward-looking statements that are contained in this Presenta@on or can be implied by the same are by their nature subject to significant uncertain@es and con@ngencies associated with the oil and gas industry and are based on a number of es@mates and assump@ons that are subject to change (and in many cases are outside the control of Xstate Resources and its directors) which may cause the actual results or performance of Xstate to be materially different from any future results or performance expressed or implied by such forward-looking statements.

To the maximum extent permi_ed by law, none of Xstate’s, or related corpora@ons, directors, employees, agents nor any other person accepts any liability, including without limita@on arising from fault or negligence, for any loss arising from use of this Presenta@on or its content or otherwise arising in connec@on with it.

Exclusion of Financial Product Advice

the jurisdic@ons where the Presenta@on might be available. Nothing herein cons@tutes investment, legal, tax or other advice. This Presenta@on is not a recommenda@on to acquire shares and has been prepared without taking into account the investment objec@ves,

Independent Advice

appropriate advice, including, legal and taxa@on advice appropriate to your jurisdic@on. Xstate is not licensed to provide financial advice in respect of its shares.

July 2017

Sacramento Basin Update

AI assistant

XSTATE RESOURCES LIMITED Investor Presentation 2017

66107_rns_2017-07-09_2736c8c2-5d53-4c1c-87ab-f6820f72d694.pdf

Sacramento Basin Update

Upcoming Drilling Ac5vity

ASX: XST