LCK - Initial PRMS ISG Gas Resources Certification

Leigh Creek Energy (LCK) announced having achievemed a 2C SPE-PRMS ISG gas resource of 2,963.9 PJ at its flagship Leigh Creek Energy Project (LCEP) reported in accordance with the Society of Petroleum Engineers - Petroleum Resources Management System (PRMS). PRMS is the internationally recognized standard for reporting oil and gas resources and reserves.

The gas resource was independently assessed by MHA Petroleum Consultants LLC (MHA) of Denver USA, who certified the following resources (MHA’s certification report is appended for information):

                    1C         2,747.7 PJ

                    2C         2,963.9 PJ

                    3C         3,303.1 PJ

All numbers quoted represent MHA’s opinion of gas energy recoverable at the LCEP.

Gas Resources

The achievement of a PRMS of this size is significant for a company with our current market capitalization ($69m at $0:30 per share), particularly in the context of the demand in the Eastern Australian Gas Market. The tables below show the market capitalisation of certain Australian Energy Stocks (at close of business on 7 January 2016) and the current 2C resource comparison with these stocks:

The magnitude of the resource at LCEP may not yet be recognised in the share price.

*1 Refer to ASX: BPT announcement on 23/10/15
*2 PJ refers to ISG Gas Resource Certification attached
*3 Refer to ASX: SXY announcement on 25/8/15 (Combined oil, gas and condensate resources)
*4 Refer to ASX: DLS announcement on 26/8/15 (Combined wet gas and unconventional gas resources)
*5 Refer to ASX: COE announcement on 9/10/15 (Combined oil and gas resources)
*6 Refer to ASX: CTP announcement on 23/9/15
*7 Refer to ASX: STX announcement on 21/9/15

Gas Marketing

As we previously informed the market, LCK commenced discussions with several potential gas buyers in 2015.

LCK continues to actively work towards selling gas in the ground with upfront payments from potential buyers. We are pleased to be able to report that we are currently in discussions with companies who wish to purchase gas.

Now that the SPE-PRMS resource is completed, we expect to rapidly progress negotiations with potential customers. Previously, it has been difficult to progress negotiations towards the final stage without an independently certified PRMS resource.

Path Forward

The LCEP is nearing completion of the first phase of the project with the recent Inferred JORC (2012 compliant) resource (refer ASX release 8/12/15), commencement of environmental baseline studies and now MHA’s ISG Gas Resource certification.

In the March quarter of 2016 LCK will commence phase two of the LCEP which will work towards demonstration and flaring gas in December quarter 2016.

Chairman’s Comments

“This PRMS gas resource announcement is an exciting, and important milestone in the development of the Leigh Creek Energy Project and underpins our original assumption that the LCEP contained significant quantities of recoverable gas from which we intend to produce commercial quantities of gas. We are pleased with the progress of gas sales discussions and intend to deliver binding gas supply contract in the June half 2016. Independent gas resource certification helps accelerate the LCEP development timetable as it provides added confidence to domestic and international buyers of gas, investors in LCK and future debt providers. I look forward to updating stakeholders with the outcomes of these negotiations with additional news.”