ASX Announcement -- Skyland Petroleum -- Acquisition Update on East Siberian Oil and Gas Asset

Skyland Petroleum Group Limited ARBN 613 928 671 is pleased to announce that it has successfully completed its due diligence on the Mirninsky Licence.

The update provided is in relation to the potential acquisition of a producing oil and gas asset located in the East Siberian basin within the Sakha (Yakutia) Republic of the Russian Federation (herein referred to as the "Mirninsky Licence").

Previous announcements disclosed that the Company is contracted to purchase 100% of the Mirninsky Licence from a Russian entity known as 'YATEC' for USD100 million (the "Acquisition"); and that such purchase was contingent upon a number of factors which included receipt of satisfactory results from the Company's financial, technical and legal due diligence investigations. The Company has recently completed its due diligence into the project and has concluded that the results of the due diligence are encouraging.

Positive Due Diligence Results

In relation to technical due diligence, the Company is pleased to provide the independent audited SPE-PMRS estimate reserves and contingent resources figures for the Mirninsky Licence. The work was completed by Gustavson Associates LLC ("Gustavson") of Boulder, Colorado, USA in accordance with the Australian VALMIN Code and SPE PRMS methodology.

The reserves and contingent resource figures are in line with Skyland's expectations and management reaffirms its view of the Mirninsky Licence as transformational to the Company's value and ultimately to its shareholders investments in Skyland.

The Mirninsky License covers an area of 2,452 km2 and contains four named discovered oil and gas fields plus a number of unnamed discoveries. The four named discovered fields are as follows:

  1. Machobinskoye (currently on pilot production with oil sales within the region);
  2. Nelbinskoye;
  3. North Nelbinskoye; and
  4. Mirninskoye

The evaluation gives P50 reserves of 76.8 million barrels (MMbbl) of oil plus condensate and 453.7 billion cubic feet (Bcf) of gas (a total of 152.4 million barrels oil equivalent (MMBOE)) for the two largest named fields in the licence, Machobinskoye and Nelbinskoye.

Reserves were only determined for the two largest of the named fields, with the two smaller fields being classed as having contingent resources at this stage since further appraisal is required. Several other discoveries were also identified within the licence area and assigned contingent resources. These are in addition to the reserves.

The evaluation gives P50 contingent resources of 34.8 MMbbl of oil and 339.6 Bcf of gas for the two smaller named fields (North Nelbinskoye and Mirninskoye) plus a number of unnamed discoveries within the licence area which have been identified (a total of 91.4 MMBOE).

The sum of the P50 reserves plus P50 contingent resources is 111.6 MMbbl of oil and condensate and 793.3 Bcf of gas (a total of 243.8 MMBOE). Evaluation of the prospective resources relating to the exploration potential within the block is still ongoing and these resources will be in addition.

Source: Skyland Petroleum Limited
Date: Oct 24, 2016