New Standard Energy Impacted by Low Oil Price

New Standard Energy Limited provides an update on its active management of the Company’s activities in the current low oil price environment.

The Company’s growth plans and focus on the US have clearly been impacted by low oil prices and their effect on the oil industry’s commercial landscape. The Company continues to concentrate on reducing operational and corporate costs as well as managing its capital commitments and sourcing additional funding essential for it to continue to develop and maintain its assets and to ensure it is adequately funded to contend with the current business environment.

Operations
New Standard’s existing wells are currently producing an average of 250-300 barrels of oil equivalent per day (Boepd) which, combined with hedges averaging around US$78 per barrel, provides important revenue to the Company. Additional production is also expected from the Peeler Ranch-5H well post workover, while the two wells successfully drilled in the fourth quarter of 2014 have yet to be hydraulically fractured and completed.

In light of the continued pressure on global oil prices, New Standard continues to push back operational activity, including the hydraulic fracture and completion of these wells, as far as possible, while meeting its commitments to retain its acreage position. Drilling and completion costs continue to fall dramatically and further deferral of this capital expenditure will enable New Standard to take advantage of these lower costs in the future. The wells are currently planned for completion in the next quarter.

Capital Management
As outlined in New Standard’s most recent quarterly activities report (31 January 2015), the Company has been investigating various funding options and opportunities essential for the ongoing development and management of its assets and drilling program. In addition to substantial cuts in costs and overheads, the Company continues to actively pursue a range of initiatives for ongoing funding including (but not limited to) partnerships, joint ventures, farm-ins and asset sales or swaps.

Negotiations on a number of potential alternatives have been underway for some time, and are continuing, but have yet to reach a stage where they are sufficiently finalised or binding as to warrant specific disclosure. New Standard expects that these negotiations will reach conclusion within the next two weeks at which point an update can be provided to shareholders.

New Standard has also continued to engage with the provider of its Enhanced Debt Facility, Credit Suisse, on the various options currently being pursued. The Company’s lenders remain supportive and have indicated preliminary support for interim funding alternatives as the Company progresses discussions on such transactions and opportunities.

Corporate
In response to the falling oil price environment, New Standard reduced its workforce by 60 per cent last year. It has continued to aggressively manage administration costs in 2015 by cutting its workforce to a total of just four employees across Australia and the United States.

The Company’s directors have agreed to suspend all directors’ fees until market conditions improve and the Managing Director has agreed to reduce his salary by 50 per cent in line with these changes.

Mr Chris Sadler, who has moved to New York, has offered his resignation as a Director to focus on his other business activities and this has been accepted effective today. New Standard Energy Non Executive Chairman Arthur Dixon AM thanked Mr Sadler for his significant contribution to the Board over the past three years and wished him well in his future endeavors.

New Standard Energy Managing Director Phil Thick said: “After making more than half of our workforce redundant last year it is very disappointing but necessary to make such significant additional cuts this year. The speed and intensity of the collapse in global oil prices has affected companies large and small and across all jurisdictions. We have to continue to be responsive to these market forces.”

“The Board and management are continuing discussions and negotiations on all options to provide necessary funding that will place New Standard and our shareholders in the best possible position to contend with the current low oil price environment.”