ASX: NWE

December 2015 Quarterly Report

29 January 2016

Summary

Contact

Norwest Energy NL Level 2, 6 Thelma Street West Perth WA 6005

PO Box 1264 West Perth WA 6872

Tel: +61 8 9227 3240

Fax: +61 8 9227 3211

Web: www.norwestenergy.com.au

Media enquiries: [email protected]

Shareholder enquiries: [email protected]

Norwest continues to retain a large footprint in the northern Perth Basin, with a net acreage position of 3,100km2, containing seven permits with conventional and unconventional oil and gas prospects. Norwest's exploration portfolio is considered to contain a number of highly

prospective targets, and the company's focus remains to be the realisation and development of these assets.

At the end of the quarter, a fund-raising initiative successfully raised $1.3 million to assist in meeting work program commitments on the northern Perth Basin assets. In parallel, the company implemented a number of cost reduction initiatives in order to reduce spend and conserve cash.

There is currently a heightened focus between northern Perth Basin companies and service providers to work together to ensure an ongoing exploration program continues in the Basin. Norwest continues to play a proactive role to ensure that in a difficult market environment our exploration objectives can still be met.

Norwest currently has three near-term drill targets identified, all set to be drilled within the next 12-18 months, subject to securing funding and regulatory approvals. The status of each of our permits is as follows:

• EP368: The main focus of this permit continues to be the drilling of the Lockyer-Deep-1 well, with operator Empire Oil and Gas (ASX: EOG) identifying a prospect on trend with AWE's massive Waitsia gas discovery, situated nearby. The Lockyer Deep well will target the Kingia formation, the same formation that was tested from AWE's Waitsia-1 well, flowing at an impressive 50.4 mmscf/d.

  
  

• EP413: Processing of the Arrowsmith 3D seismic acquisition is now complete, with results indicating a substantial improvement in sub-surface structural definition. Interpretation is ongoing, with a Joint Venture meeting scheduled with the EP413 JV partners for early February to finalise the work program for the year. DMP has approved a change to the EP413 work program - further details can be found in the EP413 section of this report.

  
  

• TP/15: Whilst there is significant interest in the Xanadu prospect, the current state of the market is making it difficult to secure a farm-in partner. Norwest is currently looking at alternative ways to fund the drilling of the Xanadu well; a potential company-maker, with an unrisked prospective resource of 160 million barrels of oil.

  
  

• P2265: This permit is located in the Wessex Basin, UK. Reprocessing of historic 3D seismic data over the permit area is now complete, with interpretation continuing into this quarter.

Low oil prices continue to present the global oil and gas industry with many challenges. Norwest has a clearly defined strategy which allows us to continue to develop value in our exploration targets, whist utilising a disciplined approach to the financial management of the company to ensure we can continue to grow and develop the value of the company.

The aim is to future-proof Norwest to ensure it is in the best position possible to capitalise on the investment already made in the Basin. This will be achieved by ensuring funding is in place, having drill-ready prospects, and using best in class corporate governance and HSE practices.

Figure 1. NWE tenements

Australian Exploration Program

EP368 and EP426

Operator Empire Oil and Gas (ASX:EGO) reports that the interpretation of the Black Swan Airborne geophysical survey is now complete, in addition to completion of the reprocessing of more than 400km of historical 2D seismic data.

An additional structure, North Erregulla Deep, located adjacent to Lockyer Deep has now been matured to prospect status at the Kingia / High Cliff Sandstone level.

North Erregulla Deep is located on trend with Lockyer Deep, and extends from EP368 into EP426.

Figure 2. Location of EP368 & EP426 highlighting proximity to the AWE discoveries

Figure 3 North Erregulla Deep Prospect

The Lockyer-North Erregulla trend was proved oil-bearing at the Dongara sandstone level by the historic North Erregulla-1 and Lockyer-1 wells, however the deeper stratigraphic levels of the Kingia and High Cliff Sandstone were not reached in these wells and so remain untested. These are the targets that yielded a recent major gas discovery at Waitsia in adjacent acreage to the west, operated by AWE Limited. AWE previously announced that the combined flow test results of the Waitsia-1 well from the High Cliff Sandstone and Kingia Formation totalled over 50 mmscf/d.

The extent of the Waitsia play into EP368 remains to be confirmed but the results of the recent AWE Irwin-1 well suggests that the Kingia reservoir fairway increases in thickness to the east and thus potentially into EP368.

Lockyer Deep is a medium risk well, targeting between 25 and 134 BCF, with a best case estimate of 58 BCF1.. North Erreugulla Deep has estimated prospective resources of between 15 and 122 BCF, with a best case estimate of 55BCF2, and represents an immediate follow up prospect should Lockyer Deep-1 be successful.

The Operator, Empire Oil and Gas, reports that the Lockyer Deep well is expected to be drilled in the second half of 2016, subject to funding. During the quarter, Lockyer Deep well was approved as the commitment well by the EP368 Joint Venture.

Lockyer Deep Prospective Resources - Kingia / High Cliff Sandstones

Secondary targets: Hovea Member; Dongara Sandstone; Carynginia Formation

Figure 4 Lockyer Deep Prospect

1. Refer Empire Oil and Gas NL (ASX: EGO) Investor Presentation released to ASX on 2nd September 2015

2. Refer Empire Oil and Gas NL (ASX: EGO) Q4 2015 Quarterly Report released to ASX on 27th January 2016