ASX: NWE

June 2016 Quarterly Report

29 July 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]

It has been a busy quarter for Norwest, with a number of changes implemented at the corporate level, a Strategic Alliance with Transerv Energy announced, and a capital raising of $830,000 successfully completed to enable Norwest to progress it's portfolio of projects.

On 11 July 2016 Norwest announced details of the capital raising, along with details of the alliance with Transerv Energy. This partnership has been formed to enable significant cost savings at a corporate level, but also to act as a trigger for completing the farm- out of the three near-term drill targets in the Norwest portfolio; namely Xanadu-1 in TP/15, Lockyer Deep-1 in EP368 and Arrowsmith-3 in EP413.

These wells are all planned for drilling in the next 12-18 months, subject to securing funding and regulatory approvals. The status of each of these drill-ready permits are as follows:

• TP/15: Norwest currently has 15 companies reviewing the TP/15 data room under confidentiality agreements. In addition to the Strategic Alliance with Transerv, Norwest has continued to progress discussions with all prospective parties interested in participating in the Xanadu drilling program. As a result, it is expected that the farm-out of TP/15 will soon be complete, with Norwest planning to retain operatorship and a relevant percentage interest in the permit.

• EP368: The 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. During the previous quarter significant upside potential in the high case resource was reported with Lockyer Deep-1 targeting between 25 BCF (low) and 256 BCF (high) of gas, with some oil potential as upside.

• EP413: The Arrowsmith project has 316 BCF gas assigned as a contingent gross recoverable resource, and 2.6 TCF of prospective gross recoverable resources. Following completion of the Arrowsmith 3D data processing, interpretation is continuing, with further work required regarding the planning of

the next well, due to additional conventional prospectivity discovered at the southern end of the permit, with similarities to the Woodada Gas Field located further to the south.

As mentioned in a Business News online article on Monday 25 July, Norwest Energy's primary objective is to expose shareholders to the drill bit and get these wells drilled. This drilling activity will provide shareholders with three opportunities for success in the short term, the first of which will be the Xanadu well, targeting 160 million barrels of unrisked recoverable oil.

As well as reducing corporate overheads by sharing office space, expenses and expertise with Transerv, Norwest plans to work closely with other operators to align exploration activity and reduce costs. The current environment provides a window of opportunity to drill wells in a cost-effective manner, as service providers are providing highly competitive terms not seen for many years in the industry.

Figure 1 highlights Norwest's position in the Perth Basin.

Figure 1. NWE tenements

Australian Exploration Program

TP/15

(Norwest 100%)

Figure 2. TP/15 permit location highlighting Xanadu prospect

TP/15 contains a number of conventional oil prospects, the largest being primary prospect Xanadu, having an un-risked prospective recoverable resource of 160mmbbls.

Norwest has commenced planning for the drilling of conventional oil well Xanadu-1, with the drilling application documentation currently being finalised in preparation for formal submission to the Department of Mines and Petroleum.

As part of the Strategic Alliance, Transerv has provided farm-in terms that are currently being discussed with other prospective parties. Norwest is encouraged by the high degree of interest shown in the permit and anticipates the proposed TP/15 Joint Venture being finalised in the near future.

Xanadu-1 is planned to be drilled as a deviated well from an onshore location. The target location is approximately 800m below surface, and 1250m from shore. The water depth in this nearshore region is 5-10 metres, with the onshore location situated within the boundary of Norwest's EP413 permit, on Crown Land, and with the Xanadu prospect contained within Western Australian state territorial waters.

Table 1.

*The estimated quantities of petroleum that may potentially be recovered by the application of a future development project(s) relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration appraisal and evaluation is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Red Hill South-1 Rehabilitation

Since the drilling of Red Hill South-1 in February 2011, Norwest has been managing the rehabilitation of the well location in accordance with the Environmental Management Plan developed to adhere to requirements in the Petroleum Act.

In a pleasing outcome, following over four years of rehabilitation work and monitoring surveys, Norwest has recently applied to the Department of Mines and Petroleum to be released from the rehabilitation commitment, as all milestones have been met.

Figure 3. Northern end of rehabilitation site Figure 4. Monitoring quadrant 3a

EP368 and EP426

(Norwest 20%, 22.22%)

Empire Oil & Gas (Empire) is the Operator of EP368 & EP426.

During the Quarter, Empire renewed EP426, and as part of the regulatory process relinquished the less prospective northern graticular blocks as indicated in Figure 5.

The Lockyer Deep well will be drilled from EP368 to test the gas potential of the Kingia and High Cliff Sandstone formations; the same play that resulted in the Waitsia gas discovery located to the west and adjacent to EP368.

Figure 5. Location of EP368 & EP426 highlighting proximity to the AWE discoveries.

Lockyer Deep is a medium risk well, targeting between 25 and 134 BCF, with a best case estimate of 58 BCF1..

The North Erregulla Deep prospect has estimated prospective resources of between 15 and 122 BCF, with a best case estimate of 55 BCF2, and represents an immediate follow up prospect should Lockyer Deep-1 be successful. At the high case, these two prospects combine, resulting in a high case prospective resource of 256 BCF3.