New Standard Energy to Drill in Australia After Securing Rig

New Standard Energy Ltd. (New Standard) announced it will resume drilling operations towards the end of 2013 after it signed a Drilling Services Agreement (DSA) for a firm two well program with the option for an additional two wells at New Standard’s election. This arrangement will provide New Standard with flexibility as operator of all its joint ventures and projects to allocate drilling slots as exploration programs are firmed up over the coming 6-12 months.

Subject to final approvals, drilling will commence at the company’s Merlinleigh Project in the onshore Carnarvon Basin in late 2013, to be followed by up to three wells in the Canning Basin after the wet season in mid-2014.

New Standard chose to commence the DSA at Merlinleigh rather than in the Canning Basin, with a primary consideration for the Company being the prohibitive cost to mobilize and demobilize the rig for one well in the Canning Basin prior to the 2013-14 wet season. New Standard and its joint venture partners have agreed to defer drilling the Goldwyer until next year to allow sufficient time for the parties to assess and agree plans for completing Phase 1 and provide an opportunity for costs to potentially be shared across multiple wells.

New Standard Managing Director Phil Thick said the company was pleased to be headed into drilling activity again after an exhaustive search for a suitable rig and drilling contractor to conduct operations efficiently and safely.

“Securing a suitable drilling contractor in such a highly competitive market is a great achievement for New Standard and reflects the continued dedication and hard work of our team. This is a great result and we are excited to be able to recommence our drilling operations later this year,” he said.

New Standard is confident it has selected the most competitive and competent contractor for its proposed 2013-14 drilling program following a highly detailed due diligence process and proactive two-way engagement with Enerdrill. The decision to contract Enerdrill’s Rig #3 was also supported by joint venture partner ConocoPhillips.

In addition to attractive commercial terms the fit-for-purpose rig, frontier drilling experience and the close geographic proximity as a Western Australia-based company were three important factors when selecting Enerdrill. In addition, due diligence and rig inspections undertaken by New Standard management have confirmed that the rig and drilling contractor are capable of meeting the strict safety and drilling requirements expected by the joint venture parties. New Standard has also reserved the right to undertake further audits and inspections prior to drilling.

Enerdrill’s Rig #3 has been extensively refurbished and with a vertical depth rating of 17,060 feet (5,200 meters), has the capacity to drill all of New Standard’s potential wells being considered for 2013-14.

Merlinleigh Project

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. As a result of timing associated with contractor and approvals schedules and the subsequent execution of this drilling contract, the seismic program previously scheduled for the Merlinleigh Project has been deferred. The company plans to revisit its seismic plans after drilling the Condon #1 well to confirm locations for future Merlinleigh well locations.

New Standard is now finalizing all necessary documentation and Government approvals for the drilling of a traditional vertical well at Condon #1. This will be a pure exploration well used to gather a database of information and no hydraulic fracture stimulations are being planned for this initial exploration well.

New Standard currently owns 100 percent interest in the Merlinleigh Project and the heritage and environmental approvals process are both well advanced leaving the Company well placed to drill in late 2013.

“Alongside the strong technical prospectivity and proximity to gas pipeline infrastructure, cost effectiveness was a key consideration at the core of our decision to drill our first exploration well at Merlinleigh, given the current southern location of the rig,” said Thick.

“Whilst Merlinleigh will be the first project to be drilled in this campaign, we have three key projects in Western Australia and are equally excited about their individual prospectivity. Our strong current cash position allows us to plan a 2013-14 drilling program potentially involving all three projects.”

New Standard has appointed Miro Advisors to assist with a farm-out process for the Merlinleigh Project to be completed prior to drilling. Importantly the company is committed to drilling the Condon #1 well as planned, whether or not a farm-out partner is successfully secured.

Goldwyer Project and Laurel Project

Activity is due to recommence in the Canning Basin on New Standard’s other two projects in mid 2014 to minimize the impact of seasonal weather on drilling and mobilization operations and costs.

Once the Enerdrill Rig #3 is released from operations at Condon #1 it is likely to be utilized by another operator before it is mobilized to the Canning Basin in mid 2014.

As part of the plans to revisit drilling the Goldwyer Project in 2014, New Standard and its joint venture partners have committed an additional $1.3 million (AUD 1.4 million) over and above the existing Phase 1 financial commitments. This additional commitment will be paid by joint venture parties in proportion to their participating interests (i.e. New Standard 25 percent), and will go towards additional geological and geophysical work on the Goldwyer Project that was not contemplated in the original farm-out program.

This additional work is scheduled to be completed before the end of the year and will utilize the extra time afforded by the Merlinleigh drilling program 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 analysis.

This technical work will assist the joint venture to determine and agree a plan for completion of Phase 1. New Standard believes this additional work will provide the best opportunity of achieving positive results to assist with moving forward to Phase 2 of the farm-in agreement.

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.

Further information and updates for both of these projects will follow in due course.



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