Monday 29 October 2018

HIGHLIGHTS:

- Talon farms in to a 10% interest in Licence P2396 containing the 45mmboe (gross 2C Contingent Resource) Curlew‐A discovery

- The farmin is Talon’s first step in a broader UK North Sea strategy with several additional high‐quality opportunities under consideration

- Successful placement to sophisticated investors to raise $720,000

Talon Petroleum Limited announced that it has entered into an agreement with Corallian Energy Limited to earn a 10% interest in Licence P2396, subject to Oil & Authority (OGA) approval of the assignment.

The Licence is located in the prolific Central Graben area of the UK North Sea and contains the Curlew‐A discovery made by Shell in 1977. Curlew‐A contains an independently certified gross 2C Contingent Resource of 45mmboe. Appraisal drilling at Curlew‐A is currently scheduled for 3Q 2019.

Overview of Curlew‐A appraisal opportunity

Curlew‐A is a significant un‐appraised Tertiary aged oil discovery made by Shell in 1977, and is one of the few remaining undeveloped, sizable simple four‐way dip closed oil bearing structures located adjacent to the prolific Central Graben area of the UK North Sea. The Curlew‐A discovery well encountered net oil sands of 10.5m and recovered multiple 36° API oil samples.

The Licence was most recently held by Shell but was relinquished in 2016 prior to its planned appraisal of Curlew‐A during a period of lower oil price. The Licence was recently awarded to Corallian via the 30th Seaward Licensing Round and is currently in its initial 3‐year phase with minimal commitments.

Timing of appraisal drilling is planned for 3Q 2019 and subject to licensees moving into the secondary commitment phase of the Licence.

Competent Person’s Report – Schlumberger 2018 (“CPR”)

A CPR on Curlew‐A was completed by Schlumberger in October 2018 and provides independent certification of the 45mmboe (gross 2C) Contingent Resources in the Odin and Cromarty reservoirs to be targeted by appraisal drilling in 2019.

Successful appraisal of Curlew‐A has the potential to be transformational for Talon.

Additional prospective upside to be tested by appraisal drilling

In addition to looking to prove the significant 2C Contingent Resource for future development, Curlew‐A appraisal drilling will test a secondary objective in the Forties Sandstone, which was not encountered in the original discovery well but that may be developed in the southwestern flank of the structure and which was present in nearby wells.

Success in the Forties Sandstone objective could lead to significant additional volumes and Talon is working to collaborate with Corallian to quantify the potential of the Forties Sandstone through the interpretation of available data.

Overview of farmin agreement with Corallian

- Talon to be assigned a 10% interest in P2396 Licence subject to regulatory approvals

- Talon to participate in the drilling of the Curlew‐A appraisal well at 10% participating interest/15% paying interest (1.5x promote capped at £12 million)

- Current well cost estimate ‐ £10 million

- Talon net well cost £1.8 million/A$3.2mm (at cap)

- Talon net share of 3‐year initial phase costs – A$65k

UK North Sea Strategy

Participation in the Licence is the first step by Talon in what will be a concentrated UK North Sea new ventures effort by the Company. Talon sees the ability to build a sustainable E&P business in the UK North Sea through the drilling of low‐risk, low‐cost and high chance of success opportunities.

Talon is presently engaged in the review of several such opportunities and is hopeful of progressing to further asset capture in the near term.

Why the UK North Sea?

- Prolific oil and gas province with over 50 years of oil and gas production and some 43 billion barrels of oil and gas recovered from Britain’s offshore fields

- Strong market for product with 70% of the UK’s primary energy consumption being provided by oil and gas with transport and heating being dominant uses

- The Oil and Gas Authority in Britain estimates that significant remaining recoverable resource potential remains with between 10‐20 billion boe:

- 6‐9 billion boe in existing reserves

- 2‐5 billion boe in potential additional resources

- 2‐6 billion boe in yet to find potential

- Regular bid rounds for further acreage capture

- Abundant infrastructure allowing for development capex reductions

- Drilling activity on the increase post oil price recovery

Talon investment criteria

- Non‐operated equity positions of up to 20%

- Drilling:

- Appraisal of known discoveries; or

- low‐risk exploration

- Tie‐backs to nearby infrastructure

Placement to raise $720,000

In order to provide funding for Talon’s entry into the Licence and other potential North Sea acquisitions. the Company has agreed a placement to sophisticated investors of 240,000,000 shares at an issue price of $0.003 to raise an amount of $720,000.

Chieftain Securities Pty Ltd acted as Corporate Advisor and Lead Manager to the placement, which will be completed under Talon’s existing Listing Rule 7.1 capacity (under which an amount of 153,018,428 shares were issued) and 7.1A capacity (under which an amount of 86,981,572 shares were issued). An Appendix 3B and cleansing notice will be lodged on completion.

Full announcement