MOLOPO ENERGY LIMITED 
By MOLOPO ENERGY LIMITED
Quarterly ReportMarch 2012
Highlights
? Crude oil production was 215 barrels per day during the Quarter, an increase of 73% over the prior quarter due to production in the United States coming on-stream and increased production in Saskatchewan
? The first three Wolfcamp wells in the Fiesta project in Texas tested with encouraging initial oil rates, confirming that Molopo's acreage is in the oil window. Bottomhole pumps are being installed on all three wells and the wells are expected to be producing in May, allowing stabilised flow rates to be established in the next quarter
? The 09-22 well in the Estevan area in Saskatchewan, Canada showed encouraging hydrocarbon indications in the
Midale and Alida intervals
? Subsequent to the end of the Quarter, Molopo:
? acquired its partner's 22% interest in the Fiesta project in Texas; and
? expanded its capital investment program for CY12 to $98 million
? Cash on hand was $90 million at the end of the Quarter, an increase of $42 million during the Quarter, as a result of the cash received from the sale of its Legacy shares ($67 million) more than offsetting capital and operating expenditures
Figures are Molopo net (accruals basis) | CANADA | USA | OTHER | Total Q3 FY12 | Total Q2 FY12 | Change % |
Exploration & development highlights | 3 wells drilled & 3 completed & brought onto production; 1 ready for completion in new interval | 3 wells completed & on test to confirm oil rates | Minimal operational activity | |||
Exploration & development expenditure incurred (A$000's) | $6,497 | $10,679 | $460 | $17,636 | $20,793 | (15)% |
Sales Volume | 16,242 Bbls | 3,358 Bbls | - | 19,600 Boe | 11,346 Boe | 73% |
Sales Proceeds* (A$000's) | $1,500 | $299 | - | $1,799 | $1,073 | 68% |
*'Sales proceeds' is the gross amount from production before royalties and operating costs. As Molopo's operations are still considered to be in the exploration phase, generally accepted accounting principles requires net production revenue (i.e. sales proceeds less royalties & operating costs) to be capitalised.
About Molopo Energy Limited
Molopo Energy Limited is an ASX listed company actively engaged in exploration, development and production of crude oil and natural gas oil with a portfolio projects located in North America, Australia and South Africa.
North America
? Canada - Saskatchewan (oil), Quebec (shale gas)
? United States of America - Texas (oil and gas)
Australia
? Coal Bed Methane assets in Queensland
South Africa
? Evander & Virginia gas projects
ASX Code: MPO Share Price1: $0.67
Market Cap1: $165MM Net Cash and equivalents2: $90MM
1. Market figures as at 25 April 2012
2. Balance sheet amounts as at 31 March 2012
1
Molopo Energy Limited Quarterly Report - March 2012
PROJECT REVIEW UNITED STATES OF AMERICATEXAS TIGHT OIL - WOLFCAMP (100% initially, reducing to 80% after Partner back-in rights)
Molopo's Wolfcamp acreage is located in the Midland sub-basin
of the Permian basin in West Texas. The Company holds
approximately 26,000 gross acres in two project areas: the
24,600 acre "Fiesta" project located just south of Approach
Resources' position in the Midland sub-basin and the 1,400
acre "Barnhart" project located adjacent to EOG operated
lands. Molopo has a 100% working interest (WI) in both land
positions with this interest reducing to 80% on each project
at the point when Molopo reaches payout on a project
basis.
Molopo is targeting the Wolfcamp formation at a vertical
depth range of between 5,000 and 7,500 feet. Total gross
thickness of the interval is expected to be approximately
1,200 feet and it is believed to contain multiple prospective
horizons.
Fiesta Project
Three 5,000 foot horizontal test wells, drilled in the
Wolfcamp interval, were completed during the Quarter with
approximately 20 frac stages per well.
These test wells have confirmed the potential for oil
production from Molopo's acreage, with initial flow rates
during production testing of 300 boepd (Baggett 32), 230
boepd (Baggett 40) and 50 boepd (Parker 85). Subsequent to
the end of the Quarter, Parker 85 has been put on pump.
Baggett 32 and Baggett 40 are currently awaiting final
equipping and tie in. Stabilised flow rates will be
established on these wells during the next quarter.
A 3D seismic survey was initiated across Molopo's Fiesta
lands during the Quarter and locations have been selected for
drilling a further four horizontal wells in this project area
during the remainder of CY2012.
Subsequent to the end of the Quarter, Molopo successfully
negotiated the purchase of its partner's
22% interest Fiesta project, including their net interest in
the current three wells. The transaction
added 5,423 acres, or 8.5 sections, to Molopo's net
acreage position in the Fiesta project at a
competitive price. This represented a highly
strategic purchase, enabling the Company to
proceed with development of the asset in
accordance with its preferred timetable.
Barnhart Project
The Barnhart land position, located to the North of
Molopo's Fiesta project, was acquired in December
2011. Molopo holds 1,400 acres in this project which has
offsetting production with IP rates averaging 910 boepd (77%
liquids).
A 2D seismic survey across the acreage has been purchased.
Based on an analysis of that survey, the first two well
locations have been selected for drilling. These wells will
be long horizontals with an anticipated length of
approximately 1.5 miles targeting the Wolfcamp interval. Site
preparation commenced during the Quarter for the first
location which is due to spud in early May 2012.
SASKATCHEWAN - MIDALE, ALIDA, BAKKEN
~100% WI (excluding pooled lands)
Molopo holds 47,000 net acres in South Eastern Saskatchewan
with the geological targets being the Bakken and Alida/Midale
formations.
The Taylorton area is considered a development play for
Molopo and the Company has pooled its three quarter sections
of land in this area with adjacent Operators to optimise
efficiency. Drilling progressed with two new wells commencing
oil
2
Molopo Energy Limited Quarterly Report - March 2012
production from the Taylorton-Bakken interval during the
Quarter. The Roche-Percee 15-34 well (non- operated, 25% WI)
and the Taylorton 12-1 well (non- operated, 50% WI) were
successfully drilled and completed and initial production
rates for the first month of production were 218 bopd and 85
bopd, respectively.
Exploration activities progressed in the Company's
Torquay and Estevan areas during the Quarter.
The Oungre 9-21 well (100% WI) at Torquay was completed in
the Bakken interval and produced an average of 49 bopd in the
first 30 days. The potential for contingent locations will be
evaluated later in the year pending the longer term
performance of the well.
The Estevan 9-22 well (100% WI) encountered a disappointing
extent of Bakken sand, however excellent oil and gas shows
were recorded in the uphole Alida and Midale intervals.
Plans are proceeding to test the economic potential of the
Alida and Midale intervals in the 9-22 well. With successful
results, two new horizontal wells will proceed in the Midale
formation.
QUEBEC SHALE GAS (100% Working Interest)
Molopo holds approximately 1.4 million acres of exploration
acreage targeting the Utica shale in the province of Quebec,
Canada.
The moratorium on fracturing in Quebec continues as the
industry works with the government to help establish a
successful framework for the industry moving forward. In
light of the moratorium, Molopo has no capital investment
plans for the asset at this time. All lease spending
obligations have been suspended and lease tenures have been
extended for the duration of the moratorium.
Molopo's Bowen Basin Queensland asset sale negotiations are continuing with interested parties. Exploration activity in these projects is at a minimum while the asset sale progresses.
SOUTH AFRICA
Molopo has gas assets in the Virginia area in the
Free State province and the Evander area southeast of
Johannesburg. Negotiations for securing a
Production Right with the South African authorities
are continuing.
New staff appointments
During the Quarter, the Company announced a number of new staff appointments.
Chief Operating Officer: Shannon Ouellette
Shannon has over 19 years of experience and she and her team
bring to Molopo proven skills and a track record in
successful development and
operations, with a focus on cost optimisation of oil
and gas assets in North America.
Chief Financial Officer: Paul Belliveau
Paul's appointment marks the transition of the CFO role from Melbourne to Calgary. Paul comes from a background spanning both large and small oil companies and he has both Canadian and international experience.
VP Land and Business Development: David HornDavid joins from a 25 year career in land and business development which includes over $5 billion of M&A activity.
In line with the continued transition of key operations and personnel to the Company's Calgary office, a program of redundancies began in Australia during the Quarter.
Expanded capital investment program
Subsequent to the end of the Quarter Molopo announced it had
increased its CY12 capital expenditure budget to $98 million,
from $36 million. The expanded investment program reflects
the Company's increased confidence in the Wolfcamp play based
on the results from Molopo's three recently completed wells
in the Fiesta Project in West Texas.
As a result of the increased investment plan, the
Company also increased its forecast end calendar
3
Molopo Energy Limited Quarterly Report - March 2012
year production target from 730 boepd to 2,300 boepd (85% oil and NGLs).
Cash and Debt
At the end of the Quarter, Molopo had approximately $90
million cash and no debt, compared with $47.6 million at the
beginning of the Quarter.
The increase in cash during the Quarter was principally due
to the January 2012 divestment of Molopo's 6.18 million
shares in Legacy Oil + Gas Inc (TSX:LEG). These shares were
acquired as part of the consideration for the sale of the
Spearfish asset in Manitoba, Canada in March 2011. The price
achieved for the sale was C$71.7 million (A$67.4 million)
representing C$11.60 per share which was close to a 12 month
trading high in LEG's share price.
On-Market Buyback
On 23 April 2012, Molopo announced the cessation of the on-market buyback in light of the funds required to finance the Company's expanded capital investment program.
Legal Claim
The legal claim by a former joint venture partner is continuing in the ordinary course. No Court date has yet been set.
April Operations Update
Technical work undertaken in April 2012 was focused on the
development of the updated drilling plan for Molopo's Texas
and Saskatchewan assets. The Company contracted a rig in
Texas to support this expanded drilling program. This
contract ensures technical continuity with the drilling
program and continued execution of the drilling program into
CY13.
The 3D seismic program covering the Fiesta lands is
progressing and will continue into May 2012. Results from the
3D seismic are expected in the quarter ending September 2012.
MOLOPO ENERGY LIMITED
For further information contact:
Joanna Hughes IR +61 3 9618 8704
4
Appendix 5B Mining exploration entity quarterly report
Appendix 5B
Mining exploration entity quarterly reportIntroduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10
Name of entity
MOLOPO ENERGY LIMITED
Rule 5.3
ABN Quarter ended ("current quarter")
79 003 152 154 31 March 2012
Consolidated statement of cash flowsCash flows related to operating activities | Current quarter $A'000 | Year to date (9 months) $A'000 | |
1.1 | Receipts from product sales and related debtors | 1,548 | 2,827 |
1.2 | Payments for (a) exploration & evaluation (b) development (c) production (d) administration | (22,451) (24) (528) (5,097) | (34,731) (675) (1,589) (11,836) |
1.3 | Dividends received | ||
1.4 | Interest and other items of a similar nature received | 225 | 840 |
1.5 | Interest and other costs of finance paid | ||
1.6 | Income taxes paid | - | (20,738) |
1.7 | Other (Joint venture recoveries) | 33 | 155 |
Net Operating Cash Flows | (26,294) | (65,747) | |
Cash flows related to investing activities | |||
1.8 | Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets | - - - | (6,702) (511) - |
1.9 | Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets (d) financial instruments | (173) - 67,007 | 1,759 - 69,207 |
1.10 | Loans to other entities | - | - |
1.11 | Loans repaid by other entities | - | - |
1.12 | Other (share buyback) | - | (878) |
Net investing cash flows | 66,834 | 63,753 | |
1.13 | Total operating and investing cash flows (carried forward) | 40,540 | (1,994) |
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 5
Appendix 5B Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward) | 40,540 | (1,994) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) | - - - - - - | - - - - (878) |
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) | - | (878) |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 40,540 47,642 1,630 | (2,872) 91,344 1,340 |
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter | 89,812 | 89,812 |
Current quarter
$A'000
1.23 | Aggregate amount of payments to the parties included in item 1.2 | 337 |
1.24 | Aggregate amount of loans to the parties included in item 1.10 | - |
1.25 | Explanation necessary for an understanding of the transactions |
Per 1.23 Payments made to entities associated with a director pursuant to (i) payment of
consulting fees, and (ii) payment of salaries & director's fees.
Non-cash financing and investing activities2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 6
Appendix 5B Mining exploration entity quarterly report
Financing facilities availableAdd notes as necessary for an understanding of the position.
3.1 Loan facilities
3.2 Credit standby arrangements
Estimated cash outflows for next quarter4.1 Exploration and evaluation
4.2 Development
4.3 Production (net of sales proceeds)
4.4 Administration (net of interest received)
Reconciliation of cashReconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Changes in interests in mining tenements6.1 Interests in mining tenements relinquished, reduced or lapsed
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 7
Appendix 5B Mining exploration entity quarterly report
6.2 Interests in mining tenements acquired or increased
Issued and quoted securities at end of current quarterDescription includes rate of interest and any redemption or conversion rights together with prices and dates.
7.5 +Convertible debt securities (description)
7.6 Changes during quarter (a) Increases through issues
(b) Decreases through securities matured, converted
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 8
Appendix 5B Mining exploration entity quarterly report
7.7 Options (Unlisted mgmt incentive options) MPOAW MPOAB MPOAB MPOAD MPOAG MPOAH MPOAB MPOAB MPOAB MPOAB MPOAB 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter | Number on issue 250,000 100,000 150,000 100,000 35,000 175,000 150,000 55,000 175,000 95,000 160,000 300,000 | Number quoted - - - - - - - - - - - | Exercise price (A$) $1.29 $1.60 $1.46 $1.45 $1.21 $1.50 $1.63 $1.46 $1.23 $1.22 $1.17 $0.70 | Expiry date 25 June 2012 17 December 2012 17 December 2012 25 March 2013 1 April 2013 28 February 2013 21 December 2012 18 April 2013 31 May 2013 28 July 2013 6 December 2013 1 October 2016 |
7.7 Options (Unlisted mgmt incentive options) MPOAW MPOAB MPOAB MPOAD MPOAG MPOAH MPOAB MPOAB MPOAB MPOAB MPOAB 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter | 1,745,000 | - | ||
7.7 Options (Unlisted mgmt incentive options) MPOAW MPOAB MPOAB MPOAD MPOAG MPOAH MPOAB MPOAB MPOAB MPOAB MPOAB 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter | - | - | ||
7.7 Options (Unlisted mgmt incentive options) MPOAW MPOAB MPOAB MPOAD MPOAG MPOAH MPOAB MPOAB MPOAB MPOAB MPOAB 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter | - | - | ||
7.7 Options (Unlisted mgmt incentive options) MPOAW MPOAB MPOAB MPOAD MPOAG MPOAH MPOAB MPOAB MPOAB MPOAB MPOAB 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter | 200,000 250,000 135,000 115,000 250,002 150,000 | $0.85 $1.50 $1.45 $1.04 $0.80 $0.80 | 20 January 2012 28 February 2013 14 April 2013 4 April 2014 30 May 2016 30 May 2016 |
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 9
Appendix 5B Mining exploration entity quarterly report
7.11 Performance Share
Rights
7.14 Debentures
(totals only)
Unsecured notes
(totals only)
*Of which 11,738 may convert into between 0 and 100 fully paid ordinary Molopo shares, dependent upon extent of satisfaction of performance criteria.
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 10
Appendix 5B Mining exploration entity quarterly report
Compliance statement1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: Date: 30 April 2012 (Company Secretary)
Print name: Jessica Huberman
Notes1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
+ See chapter 19 for defined terms.
17/12/2010 Appendix 5B Page 11
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