AMERICAN PATRIOT OIL & GAS LIMITED - Corporate Spotlight

ASX Announcement 29 November 2018 

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SEPTEMBER QUARTER ACTIVITIES REPORT

ASX Announcement 31 October 2018

Melbourne, October 31, 2018, American Patriot Oil and Gas Ltd (“AOW”) ”) is pleased to present its quarterly activities report for the period ending 30 September 2018.

Key highlights of these actions are:

Quarterly production of 38boepd (net AOW) 

Net production income of $234,000 

Opening of Houston Office 

Peak Energy & Magnolia / Burnett update 

Rough House Project Update

We set out additional details below.

Quarterly Production

While AOW previously announced settlement of various acquisitions to the market, the September quarters results were the result of the Goose Creek, Anasazi and CWS assets which currently produce 38boepd. As a result the income for this quarter was a respectable $234,000.

As previously advised, AOW settled on the Peak Energy and Magnolia Burnett assets in October, accordingly we expect that the December quarter report will show a significant increase in the production and revenue in the upcoming period.

Houston Office 

AOW has opened an office in Houston, TX which is considered to be central to most of the company’s assets in Texas. Houston has a number of benefits operationally, including being the centre of the oil and gas industry in the US. The office is part of a WeWork facility and gives us considerable flexibility for growth in the future to scale operations. We currently have a full time accounts and administrator operating from the space.

Peak Energy / Magnolia & Burnett acquisition 

Operationally the Peak Energy and the Magnolia / Burnett assets have now settled and are operational.

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10 FOLD PRODUCTION INCREASE TO 300 BOEPD

ASX Announcement 15 October 2018

Melbourne, October 15, 2018, American Patriot Oil and Gas Ltd (“AOW”) ”) is pleased to update the market on the transformative transactions closing this week. The various transactions have materially improved the long term prospects of the company, setting AOW up to become a leading US based Oil & Gas producer.

Key highlights of these actions are: 

Completed Peak Energy and Magnolia & Burnett Acquisitions 

Additional funding provided by Vertua Limited (NSX: VERA) to enable early completion on above assets 

Transactions result in additional 270 net boepd, with an additional 1.9 million barrels of 1P oil and gas reserves, taking total production to 300bopd (from 30boepd currently) 

At current oil prices this delivers operating revenue of USD$5m revenue (AUD $7.1m) and a projected EBITDA of USD$3m (AUD$4.3m) in 2019 

Update on Foothills settlement & associated funding 

Fully underwritten rights issue complete

We set out more detail on each event as follows.

Peak Energy and Magnolia/Burnett Petroleum Assets 

AOW has closed on the Peak Energy, Magnolia/Burnett Petroleum acquisitions. The key statistics of each asset are set out below:

Both Peak Energy and the Magnolia and Burnett Petroleum assets are conventional oil and gas assets with infrastructure in place and significant behind pipe and infill drilling opportunities to grow the production significantly with low capital expenditure. The program includes work-overs and recompletions which will commence immediately after close of the transaction. Further details of Peak and Magnolia / Burnett are provided in Annexure 1 & 2.

Rights Issue 

The Company is also please to confirm that it has completed the issue and allotment of 100% of the shortfall of the Company’s fully underwritten pro-rata non-renounceable 1 for 3.57 Rights Issue as announced on 12 October 2018. As a result of the Rights Issue, the Company has raised approximately $3 million AUD (before costs). 

The issue was underwritten by Capital Investment Partners (CIP) an existing major shareholder in AOW. The rights issue, when combined with the AUD$4m Placement undertaken on 24 July 2018 has resulted in a total of AUD$7m in equity being raised.

Additional Funding by Vertua Limited 

In an effort to accelerate the settlement of the Peak Energy, Magnolia & Burnett assets the Company has entered into a funding arrangement with a wholly owned subsidiary of Vertua Limited (NSX: VERA), a major shareholder of AOW. The facility provides the Company with the ability to settle these transactions without waiting on the Foothills settlement as was originally planned. 

This funding arrangement will enable AOW to settle on these assets, as well as a general working capital facility to fund deposits, workover/re-completion, security bonds and other corporate costs. The facility is for a period of 4 years. Monthly principle and interest amortisation is required.

Current Production Profile for AOW 

As a result of the settlement of these 3 assets, AOW is now a fully operational oil and gas producer, with a production rate of approximately 300 boepd, and 1.9 mmbbl of 1P reserves bringing total company reserves to 2.5mmbbl 1P proven reserves.

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• Partnered with Great Western (Operator) and Anadarko Minerals.
• 61,489 acres gross, 12,600 net acres to American Patriot (25% average working interest)
• The surrounding Lustre Oil Field was discovered by Exxon Corporation in 1982, and produced over 7.5 million barrels of oil from the Ratcliffe and Mission Canyon zones.
• Free carried on 2 horizontal exploration wells (no cost caps), plus back-in right on another 2 well option.
• A 3D seismic survey has been conducted on the neighbouring Lustre and Midfork oil fields.
• Excellent oil shows were encountered in a previous well.
• Planning is currently underway for a second horizontal well, which we are free carried on.
• Lower permeability rocks around and up-dip of the old field sweet spot suggests that horizontal drilling can be utilized to target significant resource and value potential.
• Expected IP is 250 to 500 barrels of oil per day (BOPD).

• Rough House is a conventional oil play focussed on stacked pays with multiple carbonate reservoir targets.
• A farm out was struck in February 2016 with Running Foxes Petroleum, a leading Colorado oil company who discovered the Arikaree Creek oil field – a 1,400 BOPD field.
• The Running Foxes farm out deal was a 5 well deal, which will involve economic low cost conventional drilling.
• There are two commitment wells of which American Patriot is free carried, plus a 3 well option.
• The first two wells will be development wells will be next to the Arikaree Creek Field.
• Running Foxes has significant on ground operational and development expertise in Colorado, owning its own drill rig fleet and workover units.
• The acreage is in close proximity to recent oil producing discoveries which have quick paybacks and nearby active leasing:
  • Nighthawk Energy: 300-400 BOPD from 4 wells, currently approximately 1,500 BOPD total production from the Arikaree Creek Oil field.
  • Wiepking Fullerton: 184,00 net acres, 3 wells were drilled recording between 694 and 1,600 BOPD
• Includes a vertical drilling opportunity to around 11,000 feet, with large upside potential.
• There is potential for future JV opportunities with Running Foxes in an Area of Mutual Interest which has been established.

Project Highlights:

• Large position on a well control defined structural nose
• Located on the flanks of an oil rich basin close to producers/infrastructure
• Vertical drilling opportunity with upside and potential to turn to horizontal oil play
• Low cost of entry and could represent significant upside in the event of success (as a result of being a first mover in the basin).
• Exploration plan is acquire seismic, farm down for free carry on well. American Patriot is presently seeking to identify appropriate partners, who are willing to enter into a farm down arrangement for the project. American Patriot is targeting technically sound operators with experience in the basin.
• The basin is well served by infrastructure with ready access to drill rigs and service companies. Vertical well costs in this project are estimated to be approximately $1,200,000 (fractured and stimulated).These projects are in the early exploration phase and no commercial discoveries have been drilled on or adjacent to the proposed project areas.