Proved Developed Producing Reserves (PDP)The PDP reserve of the North Stockyard Oilfield have been assessed by Ryder Scott as at June 30 2012, at a gross EUR of 1.8 MMSTB valued at $7.5 million net to Samson using the NYMEX forward curve as at June 30 th. Representing $86 per barrel for the second half of 2012, $88 for 2013, $87 for 2014 and 2015, $86 for 2016, and thereafter. Probable Reserves Samson has completed an internal estimate that suggests the MB/TF in the Northern Tier will recover a gross EUR of 7.1 MMSTB (net 3.4 MMSTB) valued at $42.4 million net to Samson. Given the administrative status of these wells, these reserves are currently classed as Probable. At such time as the NDIC approves the requested spacing order the designation of these reserves is expected to move from Probable to Proved Undeveloped. Samson has also completed an estimate of the Probable Reserves of the deeper Three Fork Benches (TF) and has estimated that these Probable Reserves, at a gross EUR of 24.5 MMSTB (net 6.1 MMSTB), valued at a $49.8 million net to Samson. These estimates are set out in the following table:
|Gross EUR MMSTB||Net EUR MMSTB||Net NPV #|
|MB/TF Northern Tier||7.1||3.4||$42.4|
|TF Both Tiers||24.5||6.1||$49.8|
Development PlanSamson is planning to mobilize the Frontier Rig 24 to the North Stockyard Field early in 2013 to drill an initial 6 development wells. These wells will be drilled from two pads utilizing the skiddable platform available on Frontier 24. As previously advised, Samson contracted for the use of this new build rig for an 18 month period at a contract cost of $14.2 million, although the drilling rig contract, as amended, caps the liability for cancellation during the term at $5 million. The development wells are designed as 5,000 horizontals in either the Middle Bakken or the First Bench of the Three Forks. The wells will be “batched” drilled which are expected to result in considerable cost savings. Samson has the majority equity in a recently completed Salt Water Disposal well in the Northern Tier, as well as a water disposal pipeline system, that will be utilized to dispose of the water produced from the development wells in an economic manner. Existing gas gathering infrastructure is also already in place. Samson therefore expects that a relatively high net return will be extracted from the development of the Northern Tier. Samson’s ability to complete the development plan is contingent on its completion of a planned debt financing or another capital raising program. South Prairie 3-D Project, Williston Basin, North Dakota (SSN 25% WI) Acquisition of the South Prairie 3-D seismic survey has been completed as planned and the initial processed seismic data was received on schedule in early December. That seismic data is currently in the process of being mapped and evaluated. Samson has a 25% working interest in 23,879 net acres within the South Prairie 3-D survey. Potential reservoirs include the Mississippian Mission Canyon Formation and the Devonian Nisku Formation. After the 3-D data has been evaluated, the first well is planned for the 1 st quarter of 2013. As previously disclosed, the leads identified on the existing 2-D seismic data appear to be similar to the oil field immediately adjacent to the north of the project area. Wells in this other field have demonstrated recoveries of between 260,000 and 450,000 barrels of oil for wells drilled at the crest of the structure. Additional Mission Canyon fields along trend have demonstrated that some wells can recover as much as 900,000 barrels of oil per well when located on the crest of the structure. The 3-D seismic is expected to deliver excellent structural control, such that the wells can similarly be located at the crest of any structures. Given that the wells are presently expected to be drilled for approximately $1.1 million, Samson believes that the return on its investment will be attractive.
Samson’s Ordinary Shares are traded on the Australian Securities Exchange under the symbol "SSN." Samson's American Depository Shares (ADSs) are traded on the New York Stock Exchange MKT under the symbol "SSN." Each ADS represents 20 fully paid Ordinary Shares of Samson. Samson has a total of 1,996 million ordinary shares issued and outstanding (including 231 million options exercisable prior to December 31 2012, at AUD 1.5 cents). As at December 28 th, total issued ordinary shares was 1,908 million (equivalent to 95.4 million ADSs) and 88 million outstanding 1.5 cent options. Accordingly, based on the NYSE MKT closing price of US$0.645 per ADS on December 28 th, 2012 the Company has a current market capitalization of approximately US$62 million. (Excluding the value of the outstanding options) Correspondingly, based on the ASX closing price of A$0.031 on December 28th, 2012, the Company has a current market capitalization of A$59 million (Excluding the value of the outstanding options).
|For and on behalf of the board of|
|SAMSON OIL & GAS LIMITED|
A description of the risks and uncertainties that are generally attendant to Samson and its industry, as well as other factors that could affect Samson’s financial results, are included in the Company's report to the U.S. Securities and Exchange Commission on Form 10-K, which is available at www.sec.gov/edgar/searchedgar/webusers.htm.The reserves quoted in this release were estimated based on the definitions and disclosures guidelines contained in the Society of Petroleum Engineers, World Petroleum Council, American Association of Petroleum Geologists and Society of Petroleum Evaluation Engineers Petroleum Resources Management Systems. The PDP Reserves estimated by Ryder Scott were the responsibility of Richard J. Marshall a Colorado Registered Professional Engineer. The Probable Reserves estimated by Samson Oil and Gas Limited were the responsibility of Terence M. Barr their CEO, a Petroleum Geologist with 37 years of industry experience.