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ASX:NWE

Highlights Australian Exploration Program

EP413: Arrowsmith-2 evaluation program continued, with a maximum co-mingled flow rate of 3.5MMscf/d achieved in September 2013, with an average flow rate of 312,299 scf/d over a 38 day continuous period.

EP413: DeGolyer and MacNaughton provide resource booking including Best Estimate (2C) Contingent Gross Resource of 316 BCF (Billion Cubic Feet) of gas and Best Estimate (P50) Prospective Gross Recoverable 2.6 TCF (trillion cubic feet) of gas.

EP413: Planning continued for 110km2 3D seismic acquisition program within EP413.

SPA: Native Title negotiations advance with an on-country meeting scheduled for November 2013 with traditional owners the Yued People.

TP/15: Several companies currently evaluating the farm-in opportunity. United Kingdom Exploration Program

A joint study group has been formed with other UK operators to promote unconventional value of Wessex Basin to attract farm-in opportunities.

P1928: Successful 2D seismic survey now complete to improve structural knowledge on near-shore Steelhead and Beluga prospects.

Contact

Norwest Energy NL 288 Stirling Street Perth WA 6000 PO Box 8260 PBC WA 6849 Tel: +61 8 9227 3240 Fax: +61 8 9227 3211 Web: www.norwestenergy.com.au Media Enquiries: [email protected]

Email: [email protected]

Figure 1. Perth Basin Acreage

September 2013 Quarterly Report 31st October 2013

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of 15 NWE Quarterly Activity Report 31 October 2013

Executive Summary

The September Quarter was extremely busy and challenging.

The Arrowsmith-2 completion and flowback program was the main activity in the Perth Basin.

Following several months of planning and preparation, positive results were achieved and on 20th September, Norwest reported flow back of the Arrowsmith-2 vertical well with an initial maximum constrained gas flow rate of 3,523,000 scf/d. This was followed by an average flow rate of 312,299 scf/d over a continuous flow back period of 38 days, which is in line with expectations for a vertical fracture stimulated, unconventional well.

On 25th October the well was shut in to rectify minor down-hole technical issues (further details provided in a later section), and will remain shut in for approximately 30 days to conduct a pressure build-up test, followed by the necessary workover (expected duration two weeks). Flowback analysis will then resume as soon as possible and is expected to continue for the remainder of calendar year 2013.

During the Quarter DeGolyer and MacNaughton (D&M) added a Best Estimate (2C) Contingent Gross Resource of 316 BCF (Billion Cubic Feet) of gas to the previously reported Best Estimate (P50) Prospective Gross Recoverable 2.6 TCF (trillion cubic feet) of gas.

Norwest considers the evaluation results to date from both Arrowsmith-2 flow back/testing and the D&M resource estimates to be viewed as positive, especially as Arrowsmith-2 was designed as a Proof of Concept well. Current results continue to support the commercial potential of the EP413/Arrowsmith Field.

Planning continued for a 110km2 3D seismic acquisition program within EP413 to assess the extent of the resource surrounding the existing Arrowsmith-2 well location. The 3D seismic program will be used to assist in planning the location for future wells in the Arrowsmith Field. Due to the complex regulatory regime currently existing in Western Australia around environmental approvals (State and Federal regulations), the anticipated commencement date for the acquisition program is now mid-2014. Norwest Energy has engaged Strategen Environmental Consultants to assist with the approvals to ensure the regulatory process is managed as expediently as possible.

During the Quarter, planning for a 2D seismic survey continued for the offshore/nearshore TP15 permit. Discussions also continued with potential farminees.

In EP368 and EP426, project operator Empire Oil and Gas NL has advised Norwest that access arrangements are currently being finalised with local land owners to enable the planned North Erregulla 3D seismic survey to be acquired in Q1/2014.

Progress has been made with the Traditional Owners of the land covering the SPA-013 to negotiate an agreement providing land access to enable exploration. The next meeting with the Yued People will be held during November 2013.

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Significant progress was made in the UK with the offshore 75km2 2D seismic survey successfully completed during October 2013. The data will now be processed and interpreted together with the recently re-processed historic 2D and 3D seismic data.

Norwest and its JV partner AIMS listed Wessex Exploration are in the process of seeking a farminee for P1928, and the interpreted seismic data will form the basis of presentations to potential partners.

P1928 is adjacent to the 500 million bbl Wytch Farm oil field and contains a number of highly ranked prospects.

Activities continued with the Isle of Wight PEDL239 licence that has potential for conventional and unconventional hydrocarbons and this permit will also form the basis of the farm-out offering. Norwest has 65% interest in P1928 and 75% in PEDL239.

On the corporate front the September 2013 Security Purchase Plan (SPP) was successful in raising $2,863,800 from the issue of 95,460,000 shares. In conjunction with closing the SPP 33,333,333 shares were placed to raise an additional $1,000,000 resulting in total funds of $3,863,800 being received. The Board thanks those that supported the fundraising in what continues to be a very difficult market.

Whilst the September Quarter was busy and challenging, the tempo is not expected to abate in the coming Quarter and into the future as we continue to develop the asset base of the Company to maximise value recognition.

Peter Munachen

Chief Executive Officer

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Australian Exploration Program

EP413 – Northern Perth Basin unconventional exploration (Norwest 27.945%, Operator)

EP413 is located approximately 250km north of Perth, predominantly to the western side of the Brand Highway between Eneabba and Dongara (Refer Figure 4).

Q3 Review

The focus for the Quarter continued to be the ongoing evaluation of the Arrowsmith-2 shale gas well, finalising resource bookings for the block, and planning for the 3D seismic acquisition program.

Four formations are being evaluated in the Arrowsmith program – the Kockatea Shale (now isolated from wellbore), the Carynginia Formation, the Irwin River Coal Measures (IRCM) and the High Cliff Sandstone (HCSS).

Following several months of planning and procurement, operations at Arrowsmith-2 re-commenced in August and on 20th September Norwest reported flow back of the Arrowsmith-2 vertical well with a co-mingled maximum constrained gas flow rate of 3.523 mmscf/d measured through a 29/64” choke setting. Co-mingled flow back was from the lower three fracture stimulated formations via the recently installed 2-3/8” tubing string completion (set at 2645m MDRT) and averaged 312,299 scf/d over a continuous flow back period of 38 days, which is in line with expectations for a vertical fracture stimulated, unconventional well.

Generally, when assessing a vertical unconventional multi-zone well operators will opt to test using a co-mingled flowback technique, requiring a production logging tool (PLT) run at various times during flowback to establish zone contribution. Initially Norwest elected to test formations independently – this strategy was effectively implemented for testing the Kockatea Shale and Carynginia Formation. However due to operational issues with the well completion program in mid-September, it became necessary to implement a co-mingled flowback strategy for the remainder of the evaluation program.

Following installation of the 2-3/8” tubing string completion and while attempting to run the PLT, an obstruction was encountered within the 2-3/8” tubing completion at the depth of the gas lift mandrel. Subsequent diagnostic work conducted utilising slick line tools and a down hole video indicates a mechanical failure has occurred within the gas lift mandrel causing the obstruction and preventing execution of the PLT. To rectify this problem the 2-3/8” tubing string will need to be pulled and re-run to remove the gas lift mandrel from the well. A 30 day shut-in period will precede the workover to gather additional pressure build-up data prior to re-entering the well. It is uncertain at this time whether the failed mandrel has affected the gas flow rate achieved, however it is expected that this should become evident once the mandrel is removed.

The Joint Venture determined that as no further useful information could be obtained by continuing flow back at present, the well was shut in on 25th October 2013 to re-build pressure for approximately 30 days and to prepare for the necessary workover, expected to take approximately two weeks. Running a PLT is required to gather data from each of the specific target zones.

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Statistics up to 25th October when the well was shut-in are as follows:

- Average gas flow rate from 18th September to 25th October 2013 was 312,299 scf/d. - Total fluid returned to date ~8,329 bbls. - Water gas ratio has steadily decreased from greater than 770 bbls / mmscf to less than 600

bbls/mmscf.

Figure 2. Current completion diagram

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Figure 3. Arrowsmith-2 Co-mingled Gas Flare, 18th September 2013

Frac Stage

Formation Type Depth Hydrocarbons Encountered

Gas Flow Rates (scf/d)

Discovery Ranking (D&M)

1 HCSS Tight

Sandstone 3279-3301m Gas 777,000 Yes

2 IRCM Sandstone /

Shale 3000-3050m Gas

Yet to be evaluated

Yes

3 Lower

Carynginia Shale 2890-2940m

Gas and Condensate

500,000+

(Combined rate Stages 3

& 4)

Yes

4 Middle

Carynginia Shale 2824-2875m

Gas and Condensate

500,000+

(Combined rate Stages 3

& 4)

Yes

5 Kockatea

Shale Shale 2639-2681m Gas and Oil 414,000 Yes

Co-mingled Flow Rate

Frac Stages 1-4

Maximum rate of 3,523,000 scf/d

Average rate of 312,299 scf/d for 38 day continuous flow back period

Table 1. Arrowsmith-2 Flowback Data

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Next Steps for Arrowsmith-2:

• Complete pressure build up test (approximate duration of 30 days) followed by workover to replace gas lift mandrel and rerun tubing (approximate duration of 14 days);

• Recommence flowback to enable multiple PLT’s to be run – used to determine zone contributions in the co-mingled flowback; and

• Combine results from the entire program to commence planning next steps.

3D Seismic Acquisition Program

On behalf of the Joint Venture, Norwest is preparing to undertake a 3D seismic survey to assess the extent of the resource surrounding the existing Arrowsmith-2 well location. The survey area is approximately 12,700 Ha (110km2) (Refer Figure 4). Two botanical surveys are required as part of the regulatory environmental approval process; as a first step, the necessary Level 1 survey was completed in Q4/2012. Then during September and October field botanists commenced the larger Level 2 survey by conducting the first spring site reconnaissance survey, with a follow-up required in November/December 2013.

Due to the complex regulatory regime currently existing in Western Australia (both State and Federal regulations) around Environmental Approvals, the commencement date for the acquisition program is currently expected to be mid-2014.

Norwest Energy has engaged Strategen Environmental Consultants to assist with the approvals process for the 3D Seismic Program to ensure the regulatory process is managed as expediently as possible.

The 3D Seismic Program will be used to assist the EP413 Joint Venture in planning the location for future wells in the Arrowsmith Field.

Prospective Resource Report

During the Quarter, Norwest received a contingent resource booking to complement the previous prospective resource report from DeGolyer & MacNaughton, an independent US based consultancy specialising in unconventional resource and reserves reporting.

The findings of the report are summarised in Table 2 below.

The resource evaluation covers a gross acreage of 160km2 (~40,000 acres) focused on the deep unconventional gas trend East of the Beagle Ridge fault structure. 90km2 (~22,000 acres) is assessed as being prospective for oil and gas and a further 36km2 (~9,000 acres) is attributed to contingent resources. The contingent resource acreage surrounds the recent Arrowsmith-2 unconventional discovery and historical wells (Refer Figure 4).

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Table 2 EP413 Prospective and Contingent Resources

EP413 Gross Gas Contingent Resources (BCF)

1C 2C 3C

Undetermined 77 316 1481 1. Source = Kockatea + Carynginia + Irwin River Coal Measures + High Cliff Sandstone (combined)

EP413 Gross Oil Contingent Resources (MBBL)

1C 2C 3C

Undetermined 316 1,437 7,183 1. Source = Kockatea Shale 2. Application of any risk factor to contingent resources quantities does not equate contingent resources with reserves. 3. There is no certainty that it will be commercially viable to produce any portion of the contingent resources evaluated herein. 4. Contingent resources have an economic status of ‘undetermined’.

EP413 Prospective Resources - Gross Recoverable Volumes

Product Low Estimate Best Estimate High Estimate Mean Estimate

Oil1 (MMbbl) 2.9 9.0 27.1 13.2

Gas2 (Bcf) 1,637 2,636 4,085 2,816

Condensate3 (MMbbl) 1.0 2.1 4.5 2.5

Total BOE (MMbbl) 277 450 712 485

1. Source = Kockatea 2. Source = Kockatea + Carynginia + Irwin River Coal Measures + High Cliff Sandstone (combined) 3. Source = Kockatea + Carynginia (combined) 4. There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no

certainty that it will be commercially viable to produce any portion of the prospective resources evaluated.

Forward Program

The program going forward is to finalise testing the well over the remainder of calendar year 2013, completing the 3D seismic program acquisition and processing in 2014, and commence the planning of the location and target zones of future potential horizontal wells within the Arrowsmith Field.

As additional information is acquired, Norwest is better placed to determine resource definition and project economics in order to plan and progress future development options.

Community Relations

Norwest has been liaising with local community groups and the general public to ensure transparency on project related matters. Norwest also sponsors local community events where possible, and is a member of various committees and industry groups involved in communicating with relevant stakeholders.

EP413 Joint Venture

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Norwest Energy 27.945% (Operator) AWE Limited 44.252% (via subsidiaries) Bharat PetroResources Ltd 27.803%

Figure 4. EP413 Location Map showing Arrowsmith-2 location and proposed 3D program area

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STP-SPA-0013 Special Prospecting Authority

(Norwest 100%)

Norwest has received notification from the Department of Mines & Petroleum that the application to convert the SPA to an exploration permit has been accepted and will be awarded, subject to a successful outcome from Native Title negotiations.

On 7th August 2013, Norwest attended a meeting with claimant the Yued People to present the proposed exploration program, and to seek their agreement and approval of these plans. A follow-up meeting is now planned for November 2013 in order to commence negotiations in earnest. Norwest is operating in good faith and expects a positive outcome from these negotiations in Q4/2013.

Once agreement has been reached, the SPA will be converted to an exploration permit, and work will commence on the proposed Six-Year Program.

Previous work completed on the SPA indicates three separate hydrocarbon systems to be prospective in the area – a deep shale gas system, a shallow shale gas system and conventional traps requiring additional seismic work to confirm validity.

All work has been suspended on this permit until negotiations are complete and the permit is awarded.

Figure 5. SPA Location Map

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TP/15

(Norwest 100%)

Exploration Permit TP/15 is favourably located offshore northern Perth Basin in close proximity to the Cliff Head, Jingemia and Eremia oil fields and the Dongara gas field (Refer Figure 6).

The permit occupies the 3 nautical mile wide state territorial waters offshore Western Australia adjacent to the township of Port Denison and covers an area of 645.8km2. The permit was renewed in May 2012 for a five year term.

Norwest has planned a 2D seismic survey to be acquired as part of the TP/15 Year Two work program. This survey is designed to:

• Improve structural confidence in mature prospects;

• Firm up the structural integrity of newly identified leads;

• Acquire data in areas located to the north and south of the permit where there is no seismic though good potential for valid traps; and

• Improve regional mapping.

Norwest is in discussion with several companies considering farming into TP/15 and they are currently evaluating the technical data.

Table 3. TP15 Prospects

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Figure 6. TP/15 Prospect Location Map

EP368 and EP426

(Norwest 20%)

Project operator Empire Oil and Gas NL has advised Norwest that access arrangements are currently being finalised with local land owners to enable the planned North Erregulla 3D seismic survey to be acquired in Q1/2014. The main purpose of this survey is to detail the extent of oil accumulation up-dip from North Erregulla 1, which encountered a 3 metre oil column in the Wagina (Permian Age) reservoir when drilled in 1967.

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L14 Jingemia Oil Field

(Norwest 6.278%)

The Jingemia project has now come to the end of its commercial life. As such, operator Origin has placed the project under care and maintenance, leading to eventual abandonment and rehabilitation.

Timor Sea

AC/P22 - Puffin (Norwest 1.25%, ORRI)

No activity to report for the Quarter.

United Kingdom Exploration Program

P 1928 – Offshore Wessex Basin

(Norwest 65%, Operator)

During the Quarter, Norwest continued preparations for the planned 2D seismic acquisition survey to define the near shore Steelhead and Beluga leads and tie this data to the historical offshore 2D/3D surveys. The acquisition program was carried out during October 2013.

The survey recorded 75 km of high quality data. It is encouraging that initial examination of the data supports the existence of both the Beluga and Steelhead prospects, however this will need to be confirmed with fully processed data.

The reprocessing of all existing 2D and 3D data in the permit has been completed, and there is a significant improvement in data quality. Norwest has additionally acquired a seismic package linking wells to the south, which will further enhance our geological understanding of the region by providing an improved correlation with these wells.

Re-interpretation of all prospects and the regional geology has now commenced. At the conclusion of the re-interpretation, Norwest will re-assign prospect potential resources and risks which will provide the basis of possible drilling targets. Norwest remains optimistic these are attractive prospects and will attract potential farm-in candidates.

Norwest now has an excellent technical dataset on which to continue its evaluation and to enable it to confidently promote the potential value to farm-in candidates.

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P1928 Potential

STOOIP P50 MMbbl P50 unrisked recoverable MMbbl

Stickleback 50 20

Triggerfish 10 4

Remora 4 1.6

Stingray 27 11

Beluga 60 24

Total 151 60.6

PEDL239 – conventional and unconventional – Isle of Wight

(Norwest 75%, Operator)

In conjunction with JV partner Wessex, Norwest is participating in a regional study group with neighbouring operators InfraStrata and Northern Petroleum. The objectives of the study group are to define and promote the potential of the Jurassic shales in the zone downthrown from the main Purbeck – Isle of Wight fault zone with the aim to attract farminees.

Norwest has provided geochemical analysis for offshore and Isle of Wight wells to assist with the technical justification for unconventional exploration in the region. In addition Norwest has provided seismic data to correlate technical data from offshore wells to the study area.

Norwest considers that based upon geochemical analysis of historical offshore and Isle of Wight wells and seismic data, the Isle of Wight has potential for unconventional exploration. The JV is also assessing the potential for a conventional target located in the southern portion of the permit.

PEDL238

(Norwest 50% Operator)

No activity during the Quarter.

Table 4. P1928 Prospects

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Figure 7. NWE - UK Acreage, Prospects and 2D Seismic Location

Competent Person

The technical content of this announcement is based on information compiled by or under the direction of Mr Andrew Sutherland of Dataco Australasia Pty Ltd. Mr Sutherland holds a Bachelor Degree in Science and a Masters Degree in Business. He is a member of the Society of Petroleum Engineers and has 30 years’ experience in petroleum exploration. Mr Sutherland has consented in writing to the inclusion of the information stated in the form and context in which it appears.

Norwest Energy 288 Stirling Street Perth WA 6000 PO Box 8260 Perth Business Centre WA 6849 Tel: +61 8 9227 3240 Fax: +61 8 9227 3211 Email: [email protected] Web: www.norwestenergy.com.au

Shareholder Enquiries: [email protected]

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