announcement out

13 JULY 2011 ASX Announcement
NEW STANDARD AND CONOCOPHILLIPS EXECUTE HEADS OF AGREEMENT TO FARM INTO GOLDWYER PROJECT
(ASX: NSE)
New Standard Energy Ltd (New Standard) announces that it has entered into a non-binding Heads of Agreement (Heads of Agreement) and exclusive negotiating period with ConocoPhillips Australia SH4 Pty Ltd (ConocoPhillips), an affiliate of global energy company ConocoPhillips [NYSE:COP].
The Heads of Agreement sets the framework for ConocoPhillips to farm-in and jointly explore, New Standard?s flagship Goldwyer Project in the Canning Basin, Western Australia. It also contains an agreed set of core commercial principles which will form the basis for negotiating and completing binding and definitive agreements.
These core commercial principles envisage ConocoPhillips funding up to US$109.5MM over four phases of unconventional hydrocarbon exploration work, including the drilling, coring and evaluation of multiple wells. In return for funding the phased work program ConocoPhillips will have the right to earn up to a 75% working interest in the Goldwyer Project which would reduce New Standard?s working interest from 100% to 25%.
ConocoPhillips must complete all four phases of work to earn and retain the 75% working interest. In the event that ConocoPhillips elects not to complete all four proposed phases of work a 100% operated working interest in the Goldwyer Project will revert to New Standard.
ConocoPhillips will also make an upfront payment of A$1MM to New Standard in consideration of prior costs.
The phased nature of the exploration program provides for initial drilling, coring and evaluation of multiple wells to be undertaken following which ConocoPhillips will be required to decide if it wishes to proceed with further exploration, appraisal and pilot development work in subsequent phases. This structure provides ConocoPhillips with the option to withdraw at the completion of each phase of work on the basis that any working interest (or associated rights) is returned to New Standard.
The timing of the proposed work programs will be consistent with permit and work commitment revisions to be sought and agreed with the government. New Standard envisages that Phase 1 work would be carried out in 2012 assuming binding agreements are successfully executed.
The Heads of Agreement contemplates that New Standard will remain as operator, although ConocoPhillips would have the right to assume operatorship of the Goldwyer Project at its election. An integral part of the proposed farm-in arrangement is the proposed provision of technical support by ConocoPhillips to New Standard to enhance the operating arrangement. New Standard believes that ConocoPhillips? participation will inject invaluable and world class technical knowledge and resources to ensure the Goldwyer Project is explored and appraised in conjunction with a world leader in global shale plays.
Both parties have committed to an exclusive period to negotiate the proposed transaction with a target of executing binding agreements as soon as possible, but no later than 30 September 2011. The binding agreements will also be subject to any outstanding government approvals.