merlinleigh project overview

MERLINLEIGH PROJECT OVERVIEW

The Merlinleigh project lies within the Merlinleigh sub-basin of the greater Carnarvon basin and comprises the majority of the mature geological settings within the proven working petroleum system. The project has significant potential for unconventional hydrocarbons as evidenced by the encouraging presence of thick, organic rich source rocks with excellent TOC measurements, elevated hydrocarbon readings on historical logs and evidence of gas bleeding from various associated cores.

MERLINLEIGH PROJECT HIGHLIGHTS

Significant conventional and unconventional resources potential.

- Conventional: Condon and Crostella up to 1TCF GIP total, 530 bcf and 470 bcf respectively.

- Unconventional: 23 TCF potential GIP in mature shales across 770km2 zone

- 5,500km2 (1.4 million gross acres) in onshore Carnarvon Basin

- 100% equity in project

- Native Title Agreement signed with Gnulli people and exploration permits granted (EP481 and EP482)

- NSE is committed to drilling the Condon #1 well as planned, whether or not a farm-out partner is successfully secured.

- Accessible and low cost support infrastructure

- Early commercialisation potential

- Strategically well positioned.

- Ideal location for domestic gas market.

- Domestic gas prices currently ~ $8+/GJ

- Situated between Pilbara and Mid West growth regions

- Immediately adjacent to Dampier to Bunbury pipeline infrastructure

NSE’s tenements are surrounded by TAP’s tenements which were acquired last year.

As you can see from the 3D depth-to-depth basement map below, NSE holds tenements which covers the whole basin centre. This is similar to Buru’s Basin Centered Gas Accumulation (BSGA) Laurel play (Walhalla and Yullero) in Fitzroy Trough in Canning basin.

The below map is from Empire Oil and Gas P/L’s (tenement EP-439) oil and gas maturity map for Gneudna formation for Carnarvon Basin. Clearly shows that NSE’s two tenements are in the gas window. (This is given just as a sample. NSE primary target formation are different and better than Gneudna formation as far as I know atm)

CONDON #1 WELL IS SCHEDULED FOR DRILLING IN LATE 2013, TARGETING THE EXPLORATION OF BOTH CONVENTIONAL AND UNCONVENTIONAL RESOURCES

New Standard has chosen the Condon #1 drilling location for the first exploration well given it is
adjacent to known gas in the Kennedy Range #1 well and is prospective for sizeable quantities of both tight gas and conventional gas. The Condon prospect has the most technically advanced data suite and does not require additional seismic work to deliver the necessary control and confidence prior to drilling. NSE plans to revisit its seismic plans after drilling the Condon #1 well to confirm locations for future Merlinleigh well locations.

Several faulted anticlines have been identified that have the potential to hold up to 1 TCF of gas in place within conventional structural traps. These structures are anticlines along trend from the Kennedy Range #1 well which was drilled in 1966-67 and contains several gas columns in tight Permian reservoir sands.

CONDON #1 DRILLING IS VERY SOON !

The Condon #1 well drilling will commence in late 2013, to be followed by up to three wells at NSE’s Goldwyer Project in the Canning Basin after the wet season in mid-2014.

NSE signed a Drilling Services Agreement (DSA) for Enerdrill’s Rig #3 for a firm two well program with the option for an additional two wells at NSE’s election. The first well Condon #1 will be drilled at Merlinleigh Project, then the rig will be mobilised to Canning Basin for drilling another well for Goldwyer Project, most probably at Gibb Maitland Location. NSE has the option to drill another two wells at Canning Basin with Enerdill’s Rig #3 at the second half of 2014. Most probably one of them would be the third well for Goldwyer Project which would be the last well of Phase-1. The last and fourth well could be for Laurel Project or another well at Goldywer or back at Merlinleigh sub-basin again.

CURRENT ONGOING ADDITONAL GEOLOGICAL AND GEOPHYSICAL WORK TO FURTHER ADVANCE THE GOLDWYER AND LAUREL PROJECTS

By the meantime, additional geological and geophysical work which was not contemplated in the original farm-out program, is scheduled to be completed before the end of the year to further advance the Goldwyer Project. It includes integrating the data from the Nicolay #1 and Gibb Maitland #1 wells with a vast set of other data from the area, seismic reprocessing and interpretation, geological mapping and further well sample analyses.

In addition, substantial seismic interpretation and geochemistry work is currently underway to determine the best drill targets for potential drilling on the Laurel Project in 2014.

THE PRESENCE OF WORKING PETROLEUM SYSTEM IN MERLINLEIGH BASIN HAS BEEN ALREADY CONFIRMED BY KENNEDY RANGE #1 WELL

The work completed to date has confirmed the presence of a working petroleum system in the
Merlinleigh Basin which is supported by evidence from KR #1 drilled as a basin centre test by WAPET in 1966-67, to a depth of 2227m. KR#1 included a coring program and further analysis of the well completion data, logs and cores taken from this well confirms the presence of thick, organic rich shales with TOC ranges of between 2-4% (Ave.~3%) over significant thicknesses of up to 300m.

The KR#1 actually should be considered as the first exploration well drilled on this part of the sub-basin. The next well Condon #1 well which will be drilled by NSE later this year is going to be an appraisal well for testing the unconventional potential of the basin while testing a conventional faulted anticline target at the Condon location.

CONVENTIONAL POTENTIAL

- Conventional provides fastest path to market which has regional gas prices of around $8/GJ.

- Independent scoping study indicating increased conventional hydrocarbon prospectivity with greater potential value.

- Scoping study demonstrates conventional development would be attractive and provide a significant enabler for future unconventional appraisal and development.

- Scoping study have encouraged New Standard to more aggressively pursue the conventional prospectivity across this proven hydrocarbon generating sub basin.

-Model being followed in other basins in Australia (i.e. Buru in Laurel formation)

- Encouraging reservoir sands for conventional targets

- 12% porosity with hydrocarbon charge

Several faulted anticlines have been identified that have the potential to hold up to 1 TCF of gas in place within conventional structural traps. These structures are anticlines along trend from the Kennedy Range #1 well which was drilled in 1966 and contains several gas columns in tight Permian reservoir sands.

The conventional prospectivity is attractive with the Kennedy Range #1 well (KR #1) exhibiting
good gas shows over significant intervals within reservoir sands with average porosities of 12%.

UNCONVENTIONAL POTENTIAL

The future wells will also be designed to target the sizeable unconventional Basin Centred Gas and Shale Gas resource plays within the acreage. Well design will focus on testing each conventional target as well as acquiring data for the unconventional resource through a coring and logging program across the shales and tight sand packages.
Early estimates suggest around 33 TCF potential gas in place across the 1,100km2 primary zone of interest.
Scoping study completed recently focusing on a more refined area of approximately 770km2 (lying completely outside the National Park zones) that has the potential to host 23 TCF of potential gas in place.


GEOLOGY AND HYDROCARBON PROPERTIES

The Merlinleigh acreage was previously held and explored by Esso Australia (exploration subsidiary of ExxonMobil) in the 1980’s and the drilling and exploration work conducted in the region illustrates it is highly prospective for large gas resources.

The similarity between the shales of the Byro and Wooramel groups in the Merlinleigh and those encountered by other explorers in the Perth basin where shale gas drilling and fracture stimulation has been successful is particularly encouraging for New Standard.

The geological information available to date indicates the Wooramel Group shales in the northern parts of the Merlinleigh sub-basin have the following properties that are attractive for shale gas exploration and potential development:

-Proven hydrocarbon generating basin and presence of good quality source rocks

-NSE acreage is situated in a mature gas window within parts of the basin with good gas generating signatures.

-KR#1 was drilled by Wapet in 1966-67, to a depth of 2227m. Historical logs and core data from the KR #1 well formed a valuable part of the Merlinleigh dataset.

-Good gas shows in the KR #1 well with gas bleeding from multiple cores.

-Kennedy Range #1 well analysis demonstrates encouraging evidence of working petroleum system.

-Shale formation present across acreage at attractive depths

-Hydrocarbons present over 800m+ section from 1,200m to 2,000m

-Average TOC of 6% - 7% and up to 16% in Wooramel group

-Primary shale target up to 300m thick

-Encouraging reservoir sands for conventional targets

-~12% porosity with hydrocarbon charge


KENNEDY RANGE #1 WELL DATA AND ANALYSIS HIGLIGHTS THE THICK AND ORGANIC RICH SHALE INTERVALS.

The graphic below illustrates the log from KR #1 and highlights the thick and organic rich shale intervals, the onset of wet gas generation occurring from approximately 1,180m depth and the presence of significant gas readings over an 800m section down to approximately 2,000m. The section from approximately 1,700m to 2,000m also demonstrates good gas shows in sandstone intervals interbedded within the Permian shales. The figure also highlights that over the depth interval from approximately 1,450m to 2,000m at least five sections had gas bleeding from cores taken whilst drilling.

MORE TO COME..!