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TANGIERS PETROLEUM LIMITED - Quarterly Report December 2012.

31 January 2013
 TANGIERS PETROLEUM LIMITED 


Quarterly Report for Period Ending 31 December 2012

The Board of Tangiers Petroleum Limited is pleased to provide the following

commentary on its activities during the quarter ended 31 December 2012. A copy of the full quarterly report, including the diagrams referred to in the text and the Appendix 5B (Quarterly Cash Flow Report), is available on the Company's website at www.tangierspetroleum.com
 December 2012 Quarter - Highlights 


This quarter was a significant and successful one for the Company, both in raising capital and negotiating farm out agreements resulting in the Company ending the calendar year with its future commitments fully funded and a strengthened balance sheet.

Operationally, the processing of the Assaka 3D seismic survey data (Tarfaya block, Morocco) was completed. This survey was located over the Trident, Assaka and TMA prospects which had previously been identified on 2D data. The new data has confirmed these prospects and will be utilised to identify the optimum well location.

Corporate activities were focused on raising capital and negotiating agreements whereby the Company would be carried through its exploration commitments and also improve its cash position.

The Company is also moving to strengthen its management team and we are pleased to advise of the appointment of Robert Dalton as Chief Financial Officer during the quarter.

The key operational activities for the quarter were:

- the completion of the processing of the 3D seismic data over the Trident,

Assaka and TMA prospects in the Tarfaya Block, Morocco; and

- the commencement of planning for a 3D survey in the Australian permits,

WA-442-P and NT/P81.

The key corporate activities for the quarter were:

- execution of a farmout agreement with Galp Energia for assignment of a 50%

interest in the Tarfaya Block, Morocco for a carry of up to US$33 million in

an exploration well and refund of back costs of US$7.5 million;

- execution of a Heads of Agreement with CWH Resources for assignment of a 70%

interest in exploration permits, WA-442-P and NT/P81 for a carry of A$35

million in the exploration program of 3D seismic acquisition and two wells;

and

- appointment of Robert Dalton as Chief Financial Officer.
 Financial 


The Appendix 5B (Quarterly Cash Flow Report), which is available on the Company's website, contains the Company's cash flow statement for the quarter. The significant elements for the period were:

- exploration expenditure of A$0.711 million (Sep 2012 A$0.673 million), the

majority of which are costs associated with the processing of the Assaka 3D

seismic data;

- the completion of a capital raising of A$7.2 million (before costs) by way

of a two tranche placement in the UK and Australia and a Share Purchase Plan;

- administration, and other operating costs of A$0.772 million (Sep 2012

A$0.644 million); and

- payment of the remaining amount due on the bank guarantee in Morocco to an

amount of US$3 million.

The Company recorded a net cash inflow of A$2.2 million for the quarter (Sep 2012: net cash inflow of A$1.48 million). At the end of the quarter, the Company had net cash reserves of $4.2 million excluding US$3 million bank guarantee in Morocco.

On satisfaction of the conditions precedent for the Galp farm-in agreement which relate to approvals from the Moroccan government, cash reserves will be augmented by US$7.5 million of back costs and return of the US$3 million bank guarantee.
 Tarfaya Offshore Block - Morocco (75% and Operator) 


The Tarfaya Block, offshore Morocco, comprises 8 contiguous permits covering an area of 11,281 km2 (approximately 2.8 million acres). The Tarfaya Block is situated approximately 600 km southwest of Morocco's capital, Rabat, inshore from the Canary Islands on Morocco's Atlantic Margin. The Block contains multiple prospects and leads within Jurassic sediments as well as emerging potential within the Tertiary, Cretaceous and Triassic Formations.

Processing of the 677 km2 Assaka 3D seismic survey (Fig.2) by CGG Veritas has been completed. The Assaka 3D survey covers three of the Tarfaya Block's primary prospects in the Jurassic: Trident, TMA, and Assaka, which have been independently assessed by NSAI and ISIS to have a combined P50 gross unrisked original oil-in-place of 3,789 million barrels (with 2,841 million barrels attributable to the Company's current 75% interest). The new 3D data is of much better quality than the earlier 2D data and reveals the horizons and structures within the Jurassic section to a much greater extent. Deeper horizons are much better imaged and continuous, greatly assisting the mapping and also verifying the structural configuration of the prospects that were mapped on the 2D data. In addition, the overlying Cretaceous and Tertiary horizons are much clearer on the 3D data set and faults are better defined.

The four primary Jurassic prospects certified thus far by ISIS and NSAI within the Tarfaya Block have now all been covered with 3D seismic data. The La Dam prospect located to the south of the Trident, TMA and Assaka prospects contains best estimate gross unrisked original oil-in-place of 546 million barrels (409 million barrels attributable to the Company). It is covered by a 580 km2 3D seismic survey acquired in 2006 and reprocessed in 2011. Total best estimate gross unrisked original oil-in-place for the four Jurassic prospects in the Tarfaya block is 4,335 million barrels (3,521 million barrels attributable to the Company).

The Company continues to focus exploration efforts towards maturing leads identified within the shallower Lower Cretaceous Sands, Upper Jurassic dolomite horizons, and rollover anticlines in Triassic grabens underlying the Jurassic section.

Tangiers has entered into a farm-out agreement with Galp Energia whereby Galp will earn a 50% interest in the Tarfaya Offshore area by spending US$40.5 million, which includes a full carry on the exploration well of US$33 million and reimbursement of US$7.5 million for past costs. This essentially covers Tangiers financial obligations for the Tarfaya Block for the First Extension period (to August 2014).

The Company will retain 25% equity in the Tarfaya Offshore area while Office National des Hydrocarbures et des Mines (ONHYM), the Moroccan state company, will maintain its 25% interest in the Tarfaya Offshore area. As part of the agreement, Galp will assume the operatorship and commence planning the first exploration well in the Tarfaya Offshore area on the Trident Prospect.

WA-442-P (Turtle) and NT/P81 (Barnett) (90% and Operator)

These two contiguous exploration permits encompass 3900 km2 and are located approximately 20 km offshore in the southern, shallow Federal waters off of the northern Western Australia and Northern Territory coasts, approximately 320 km southwest of Darwin (Figure 3). The permits are located in relatively shallow water with depths of less than 60 m and are covered with extensive 2D and modest 3D seismic data.

Situated southeast of the producing Blacktip gas field, these two permits offer multiple play types. There are structural, stratigraphic, and combination structural and stratigraphic oil plays in the Early Carboniferous Milligans Formation, a new deeper gas play concept within the Early Paleozoic intervals plus the Carboniferous to Permian undeveloped Turtle and Barnett oil fields including the Messner and East Barnett oil leads in the same interval.

ISIS Petroleum Consultants has prepared a Competent Person's Report (CPR) for 14 leads identified in the Early-Mid Carboniferous Milligans Fan oil play. ISIS estimates the combined mean unrisked oil-in-place to be 683 million barrels (615 million barrels attributable to the Company). The combined estimate for gross unrisked mean Prospective Resources for the 14 leads is 218 million barrels of oil (196 million barrels attributable to the Company). The Milligans interval has produced oil and gas on drill stem tests of two well penetrations, Turtle-2 and Barnett-2, within the WA-442-P and NT/P81 Permit Areas. This serves to confirm the presence of an active petroleum system at this horizon.

The deeper gas play consists of two very large structures, Nova and Super Nova. These structures are believed to be located within Devonian aged sediments below the mapped Top Bonaparte horizon and underlie the Turtle and Barnett oil fields. An independent evaluation and CPR prepared by ISIS on the Nova prospect provides a gross mean unrisked gas-in-place estimate of 6.93 trillion cubic feet of gas (6.24tcf attributable to the Company). The corresponding estimate of gross mean unrisked Prospective Resources is 3.46 trillion cubic feet of gas (3.11tcf attributable to the Company).

The shallower undeveloped Turtle and Barnett oil fields were discovered in 1984 and 1985, respectively. Multiple oil bearing reservoirs have been encountered within the Carboniferous to Permian Keyling, Treachery, Kuriyippi, Tanmurra and Milligans formations. Three wells tested oil with the Barnett-2 well having flowed up to 921 barrels of oil per day on jet pump from the Early Permian Lower Treachery Sandstone. The crude oil was of excellent quality at 38.6A API gravity. Engineering and reservoir studies have been undertaken to assess suitable development concepts.

Tangiers has signed a non-binding heads of agreement (HOA) with CWH Resources for them to farm in to exploration permits WA-442-P and NT/P81 in the Bonaparte Basin. As part of the agreement, CWH will cover the first AUD $35 million in exploration costs in order to earn 70% equity in the permits and become the operator of the permits. Tangiers will retain 27% equity in WA-442-P and NT/P81 while Ansbachall, an existing joint venture partner in the permits, will maintain a 3% stake. The level of funding being put forth by CWH is expected to fulfil the remaining Firm Work Program Commitments of seismic acquisition and drilling for the two permits.

The Joint Venture partners are planning to acquire a 3D seismic survey in the two permits and work has started on an environmental study in advance of the 3D seismic acquisition programme.

NT/P83 Exploration Permit, Offshore Darwin, Arafura Sea (100% and
 Operator) 


Tangiers acquired the NT/P83 Exploration Permit located some 120 km north of Darwin in the last bidding round for offshore acreage that closed on 12 April 2012. The permit was awarded in August 2012 and covers 15,540 km2 in water depths of less than 200 m. No wells have been drilled in the block although there have been shows of hydrocarbons in wells drilled to the east and west of the block. The large Evans Shoals and Abadi Gas Fields are located to the northwest of NT/P83. Evaluation by Tangiers Petroleum has shown that there are three main play types in the block. There are Palaeozoic subcrop and deep anticlinal closures, Jurassic reactivated tilted fault blocks and inversion structures and Cretaceous clastic stratigraphic plays in prograding shelf sands of the Puffin Formation and Darwin Radiolarite. The initial focus is on planning to acquire approximately 500 line km of 2D seismic data.

ATP-587-P Cooper/Eromanga Basins, Onshore Queensland (100% and Operator)

Tangiers has withdrawn from ATP-587-P and relinquished its interest in this onshore Cooper-Eromanga Basin exploration permit in Queensland. The block was a legacy asset which had received minimal exploration focus.

Hydrocarbons in Place Summary

Detailed below are the estimated oil and gas-in-place estimates for the Company's portfolio of project interests.
 Gross (100%) Tangiers Net Attributable
 Interest
 Project Low Best/ High Low Best/ High
Operator
 Mean Mean Oil-in-Place
Estimates (unrisked) (All figures in millions of barrels) Morocco
1,564 4,335 12,399 75% 1,173 3,521 9,299 Tangiers Milligans
Fan 118 683 1,489 90% 106 615 1,340 Tangiers
Leads, Australia Total 1,682 5,018 13,888 1,279
4,136 10,639 Prospective Resources


Gas-in-Place Estimates (unrisked) (all figures in trillions of cubic feet) Nova Prospect, 0.375 6.930 15.704 90% 0.338 6.24 14.134 Tangiers Australia
 Prospective Resources Summary 


Detailed below are the estimated Prospective Resources delineated across the Company's portfolio of project interests.
 Gross (100%) Tangiers Net Attributable
Risk
 Interest
Factor
 Project Low Best/ High Low Best/ High
Operator
 Mean Mean Prospective
Oil Resources (unrisked) (All figures in millions of barrels) Morocco
156 867 4,959 75% 117 650 3,720 unrisked Tangiers
Milligans Fan 35 218 505 90% 32 196 455
unrisked Tangiers Leads, Australia Total 191 1,085 5,464
149 846 4,175 Prospective Resources


Prospective Gas Resources (unrisked) (all figures in trillions of cubic feet) Nova Prospect, 0.17 3.46 7.83 90% 0.15 3.11 7.04 unrisked Tangiers Australia
 Qualified Person 


The information in this announcement was produced by Mrs Margaret Hildick-Pytte who is the Director of Exploration for Tangiers and Mr Brent Villemarette who is an Executive Director of Tangiers. Mrs Hildick-Pytte holds a BSc and MSc in Geology and is undertaking an MSc in Petroleum Engineering. She is a member of SPE, AAPG, the SPWLA and PESA; and is a Fellow of the London Geological Society. Mr Villemarette is a petroleum engineer with over 30 years of experience and is a member of the Society of Petroleum Engineers. Mrs Hildick-Pytte and Mr Villemarette have reviewed this announcement and consent to its release.

Terminology and standards adopted by the Society of Petroleum Engineers ("SPE") "Petroleum Resources Management System" have been applied in producing this document.

Under these standards:

"Undiscovered Oil Initially in Place" is that quantity of oil which is estimated, on a given date, to be contained in accumulations yet to be discovered. The estimated potentially recoverable portion of Undiscovered Oil Initially in Place is classified as Prospective Resources, as defined below; and

"Prospective Resources" are those quantities of oil or gas which are estimated, on a given date, to be potentially recoverable from undiscovered accumulations.
 KRYSTEL KIROU
Joint Company Secretary Tangiers Petroleum Limited
Level 2, 5 Ord Street West Perth WA 6005, Australia Ph: + 61 8 9485 0990
www.tangierspetroleum.com
Contacts
RFC Ambrian Limited (Nominated Adviser) Mr Stuart Laing + 61 8 9480 2506
Old Park Lane Capital PLC (Joint AIM Broker) Mr Michael Parnes Mr Luca
Tenuta + 44 20 7493 8188
Shore Capital Stockbrokers Ltd (Joint AIM Broker) Mr Jerry Keen Mr Bidhi
Bhoma + 44 20 7408 4090 


Mr Ed Portman (Media and Investor Relations - United Kingdom) Tavistock Communications + 44 20 7920 3150
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