2 March 2015 Red Emperor Resources NL Farmin Agreement Signed With Otto Energy and Appendix 3BThe Board of Red Emperor Resources NL ("Red Emperor" or the "Company") ispleased to announce that it has signed a Farmin Agreement (the "Agreement")with Otto Energy Philippines Inc. (a wholly owned subsidiary of Otto EnergyLtd, ASX: OEL) to farm in to the highly prospective offshore Philippines Block,SC55.Highlights * Red Emperor to earn a 15% working interest in offshore Philippines Block, SC55, by participating in the upcoming Hawkeye-1 exploration well that will test the significant hydrocarbon potential of the Southern Palawan Basin. * Hawkeye-1 is expected to be drilled early in Q3 2015 and is targeting a structure assessed to contain in excess of 100MMbbls of Gross Best Estimate Prospective Resources (~15MMbbls net to RMP). * Independent report from Jordon & Pay Exploration Consultants describes the prospect as a "robust, attractive exploration target with a good geological chance of success" (32%), with the operator indicating Gross Prospective Resource of up to 401MMbbls (High Case - 51MMbbls net to RMP). * The Hawkeye prospect is covered by extensive and high quality 3D seismic, which indicates the strong chance of a gas cap sitting above a sizeable oil leg (>100m). * Commercial success in the Hawkeye well would unlock a significant region for exploration, the heart of which is covered by Block SC55. * A further drill ready gas target (Cinco) also exists within Block SC55, assessed by the Operator to have Gross Best Estimate Prospective Resources of 1.6Tcf (208 Bcf net RMP) of recoverable gas. * Red Emperor to complete A$2.13m placement leaving the Company fully funded to participate in the Hawkeye-1 exploration well and other potential opportunities.Service Contract (SC) 55Service Contract 55 (SC55) is located in the southwest Palawan Basin, covers anarea of 9,880km2 and was awarded to Otto Energy Investments Ltd (formerlyNorAsian Energy Ltd) in 2005.It is a deep-water block in the middle of a proven regional oil and gas fairwaythat extends from the productive offshore Borneo region in the southwest to theoffshore Philippine production assets northwest of Palawan.Exploration and DevelopmentSC55 contains a number of distinct exploration play types including the Hawkeyeturbidite clastic prospect and the material Cinco carbonate gas/condensateprospect, as well as a number of follow-up leads. The permit provides amaterial opportunity and a series of possible drill targets in an explorationcampaign that will be undertaken during the remaining term of the servicecontract.The Hawkeye prospect was identified on 2D seismic originally acquired by Ottoin 2007 and further defined with the 600km2 3D seismic acquisition in late2009. Hawkeye contains a 'Best Estimate' STOIIP of ~480 MMbbls of oil and a'Best Estimate' Gross Prospective Resource of 112 MMbbls (RMP net 14.3 MMbbls)of oil according to the Operator, Otto Energy.The Cinco gas/carbonate prospect was identified as part of a 1,800km2 3Dseismic program undertaken by BHPB in 2010 that focused on a trend of carbonateprospects and leads, with Cinco being analogous to the Malampaya producing gas/condensate field in the Philippines. Cinco contains a 'Best Estimate' GIIP of2.4 Tcf with a 'Best Estimate' Gross Prospective Resource of 1.6 Tcf of gas and57 MMbbls of associated condensate (RMP net 208 Bcf) and 7.3 MMbbls). The NetProspective Resources exclude Government Share of profit oil.The arithmetically aggregated gas/condensate prospect and lead inventoryincluding Cinco, contains a 'Best Estimate' GIIP of ~17 Tcf with a 'BestEstimate' Gross Prospective Resource of over 11 Tcf of gas (RMP net 1.5 Tcf)and 403 MMbbls (RMP net 51 MMbbls) of condensate.Hawkeye ProspectThe Hawkeye prospect is interpreted to be a large, relatively undeformedMiocene aged toe thrust, analogous to offset discoveries in Malaysia. TheMiocene turbidite reservoir is likely to be tested by a well sitting inapproximately 1,690m of water. The prospect was first identified on 2D seismicdata, which was later followed up by a 3D seismic acquisition in early 2010.The 3D data has further matured the prospect to drillable status. Hawkeye is awell imaged, toe thrust structure of more than 500m vertical relief, 50km2 areawith attendant Direct Hydrocarbon Indicators. Multiple flat spots are evidentwith an associated oil column consistent with detailed rock property analysis.The Operator's estimate of the Hawkeye Prospective Resources is shown below:(MMbbls) STOIIP Gross Recoverable Net RMPLow Estimate 87 19 2.4Best Estimate 484 112 14.3High Estimate 1,539 401 51.1*Source: Otto EnergyThe Operator, Otto Energy, is anticipating a spud date in early Q3 2015 for theHawkeye-1 well. The exploration well has been designed to reach the top oftarget reservoir approximately 1,000m below the sea bed floor and intersect thegas oil contact to prove or otherwise the presence of the oil leg.Cinco ProspectThe Cinco prospect is interpreted to be a large Nido level reef/platformcarbonate build-up, which sits on a regional high block in water depth ofapproximately 1,400m. The 3D seismic acquired in early 2010 has identified asignificant number of similar structures. Success at Cinco would high-grademany of the adjacent large analogue structures in the block, which, incombination, would have the potential to unlock a large new gas province of LNGproportions.There are a number of similarities between the Cinco prospect and the largestgas and condensate discovery in the Philippines at Malampaya, which has beendeveloped as the country's largest gas to power project. Both have Nidocarbonate reservoir, sit on regional high blocks and have similar seismiccharacter and volumetric capacity.The Operator's estimate of the Cinco Prospective Resources is shown below:(Bscf) GIIP Gross Recoverable Net RMPLow Estimate 906 586 75Best Estimate 2,447 1,635 208High Estimate 6,327 4,319 551* Source: Otto EnergyManaging Director, Greg Bandy, commented, "The Board of Red Emperor aredelighted to have been able to complete on a transaction that has the potentialto completely redefine the company. After extensive review of many potentialprojects, the Red Emperor Board have not only taken advantage of a depressedoil market that has seen drill rig rates halve and farm-in promotes reducesignificantly, it has concluded the robustness of the Hawkeye prospect, andleverage to success in follow-up potential, a compelling investment opportunityfor Red Emperor and its shareholders".COMPETENT PERSON STATEMENTThe resource estimates in this report have been compiled by Otto Energy Ltd,the Operator of SC55, and reviewed by Mr James Jordan BSc (Hons), MSc and DrMark Pay BSc (Hons), MSc, PhD. Mr Jordan and Dr Pay have consented to theinclusion of such information in this report in the form and context in whichit appears. Mr Jordan and Dr Pay are directors of Jordan & Pay ExplorationConsultants Pty Ltd and have more than 20 years relevant resource estimationexperience in the petroleum industry. Resources have been estimated inaccordance with the SPE Petroleum Resources Management System (SPE PRMS) andconform to the ASX listing rules.Red Emperor is not aware of any new information or data that materially affectsthe assumptions and technical parameters underpinning the estimates ofresources. The estimated quantities of petroleum that may potentially berecovered by the application of future development projects relate toundiscovered accumulations.These estimates have both an associated risk of discovery and a risk ofdevelopment. Further exploration appraisal and evaluation is required todetermine the existence of a significant quantity of potentially moveablehydrocarbons.Key Terms of the Agreement 1. Working interestRed Emperor Resources (Farmee) has the right to earn a 15% working interest inService Contract SC55 (Farmin interest) in consideration for paying, in cash,15% of the Well Costs for the drilling and testing of the Hawkeye - 1exploration well. Red Emperor's well cost exposure is capped at US$5.625m,beyond which Red Emperor has the option to reduce equity from the 15% workinginterest level. 2. OwnershipAssuming no further acquisition or divestment, following the assignment of theFarmin Interest contemplated under the Agreement, the Participating Interestsshall be:Otto Energy Philippines Inc (Farmor): 45.00%(100% owned subsidiary of Otto Energy Limited)Otto Energy Investment Limited (OEIL): 33.18%(100% owned subsidiary of Otto Energy Limited)Red Emperor Resources NL: 15.00%Palawan 55 Exploration and Production Company: 6.82%(a subsidiary of Trans-Asia Oil and Energy Development Corporation)Total: 100%PNOC-EC have expressed an interest to farm-in for a 15% working interest inSC55. The farm-in is subject to approval by the Office of the President of thePhilippines, which is currently being sought. 3. Conditions PrecedentThe assignment of the Farmin Interest is subject to the satisfaction or waiverof the following conditions: a. OEIL and Palawan 55 not exercising their respective rights of pre-emption under the JOA, and otherwiseconsenting to the assignment of the Farmin Interest and executing all necessaryassignment documents. b. Receipt of approval from the Department of Energy of the Republic of the Philippines. c. Red Emperor obtaining any shareholder approvals required under AIM or ASX listing rules.If all of these conditions are not satisfied or waived within 60 days of 28February 2015, either Red Emperor or Farmor Party may terminate the Agreement. 4. Carry Following DiscoveryIf: a. an oil discovery is made by the Farmin Well; and b. the Operator reasonably considers the oil discovery merits appraisal; and c. a decision is taken in accordance with the JOA to drill either:(i) a follow up appraisal well based on the outcome of the Farmin Well; or;(ii) an exploration well ahead of an appraisal well,as a Joint Operation (or an exclusive operation or non-consent operation inwhich a party other than OEIL and Farmor participates as a consenting party)then Red Emperor shall pay the Farmor's Participating Interest share of thecosts of the follow up well up to an amount of USD$2,000,000.CorporateTo ensure that Red Emperor maintains a strong cash position throughout its 2015work program, the Company has agreed to place 66,558,555 shares at A$0.032 pershare (£0.016) (the "Placing Shares") to raise approximately A$2.13m (£1.06m)from sophisticated investors both in Australia and the UK. 708 Capital Limited,a Sydney based full service investment advisory firm, is lead manager to theissue and have been appointed as Red Emperor's Australian broker. Brandon HillCapital (formerly Fox Davies Limited) remains the Company's UK broker. Thefunds raised from the placement will be used for purposes associated with theCompany's share of upcoming drilling costs in the Philippines.Application will be made for the Placing Shares, which will rank pari passuwith the Company's existing issued ordinary shares, to be admitted to tradingon AIM, with dealings expected to commence on or around 11 March 2015. Refer toattached Appendix 3B.Max Capital Pty Ltd acted as corporate advisor to the Farmin transaction.Appendix 3BInformation or documents not available now must be given to ASX as soon asavailable. Information and documents given to ASX become ASX's property and maybe made public.Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13Name of entityRED EMPEROR RESOURCES NLABN99 124 734 961We (the entity) give ASX the following information.Part 1 - All issuesYou must complete the relevant sections (attach sheets if there is not enoughspace).1 +Class of +securities Ordinary fully paid shares issued or to be issued2 Number of +securities A. 66,558,555 issued or to be issued (if known) or maximum number B. 10,000,000 which may be issued C. 10,000,0003 Principal terms of the Ordinary fully paid shares +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)4 Do the +securities rank Yes equally in all respects from the +issue date with an existing +class of quoted +securities? If the additional +securities do not rank equally, please state: * the date from which they do * the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment * the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment5 Issue price or A. A$0.032 per share consideration B. as consideration for the introduction, facilitation and corporate advisory services related to the SC55 transaction and pursuant to the Corporate Advisory Agreement dated 26 February 2015 C. as consideration for stockbroking and advisory services and pursuant to the Corporate Services Mandate dated 27 February 20156 Purpose of the issue A. to fund exploration programmes, related to the SC55 transaction, (If issued as consideration working capital and expenses of the for the acquisition of placement assets, clearly identify those assets) B. as consideration for the introduction, facilitation and corporate advisory services related to the SC55 transaction and pursuant to the Corporate Advisory Agreement dated 26 February 2015. The shares will be subject to shareholder approval C. as consideration for stockbroking and advisory services and pursuant to the Corporate Services Mandate dated 27 February 2015. The shares will be subject to shareholder approval6a Is the entity an +eligible Yes entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b - 6h in relation to the +securities the subject of this Appendix 3B, and comply with section 6i6b The date the security 27 November 2014 holder resolution under rule 7.1A was passed6c Number of +securities 39,935,133 issued without security holder approval under rule 7.16d Number of +securities 26,623,422 issued with security holder approval under rule 7.1A6e Number of +securities N/A issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)6f Number of +securities N/A issued under an exception in rule 7.26g If +securities issued under * Yes rule 7.1A, was issue price at least 75% of 15 day VWAP * Issue price is $0.032 - 2 March as calculated under rule 2015 7.1A.3? Include the +issue date and both values. * VWAP $0.0395 Include the source of the VWAP calculation. * 75% of VWAP $0.0296 * Source: IRESS6h If +securities were issued N/A under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements6i Calculate the entity's 7.1 - Nil remaining issue capacity under rule 7.1 and rule 7.1A - Nil 7.1A - complete Annexure 1 and release to ASX Market Announcements7 +Issue dates A. 2 March 2015 Note: The issue date may B. To be advised (subject to be prescribed by ASX shareholder approval) (refer to the definition of issue date in rule C. To be advised (subject to 19.12). For example, the shareholder approval) issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. Number +Class8 Number and +class of all 352,792,776 Ordinary Shares +securities quoted on ASX (including the +securities in section 2 if applicable) Number +Class9 Number and +class of all 5,492,000 Unlisted Options +securities not quoted on exercisable at £ ASX (including the 112,966 0.265 +securities in section 2 if applicable) 1,170,000 on or before 28/03/ 15 Unlisted Options exercisable at £ 0.18 on or before 3/04/ 15 Unlisted Options exercisable at £ 0.32 on or before 16/05/ 1510 Dividend policy (in the N/A case of a trust, distribution policy) on the increased capital (interests)Part 2 - Pro rata issue11 Is security holder approval N/A required?12 Is the issue renounceable N/A or non-renounceable?13 Ratio in which the N/A +securities will be offered14 +Class of +securities to N/A which the offer relates15 +Record date to determine N/A entitlements16 Will holdings on different N/A registers (or subregisters) be aggregated for calculating entitlements?17 Policy for deciding N/A entitlements in relation to fractions18 Names of countries in which N/A the entity has security holders who will not be sent new offer documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7.19 Closing date for receipt of N/A acceptances or renunciations20 Names of any underwriters N/A21 Amount of any underwriting N/A fee or commission22 Names of any brokers to the N/A issue23 Fee or commission payable N/A to the broker to the issue24 Amount of any handling fee N/A payable to brokers who lodge acceptances or renunciations on behalf of security holders25 If the issue is contingent N/A on security holders' approval, the date of the meeting26 Date entitlement and N/A acceptance form and offer documents will be sent to persons entitled27 If the entity has issued N/A options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders28 Date rights trading will N/A begin (if applicable)29 Date rights trading will N/A end (if applicable)30 How do security holders N/A sell their entitlements in full through a broker?31 How do security holders N/A sell part of their entitlements through a broker and accept for the balance?32 How do security holders N/A dispose of their entitlements (except by sale through a broker)?33 +Issue date N/APart 3 - Quotation of securitiesYou need only complete this section if you are applying for quotation ofsecurities34 Type of +securities (tick one)(a) +Securities described in Part 1(b) All other +securities Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securitiesEntities that have ticked box 34(a)Additional securities forming a new class of securitiesTick to indicate you are providing theinformation or documents35 If the +securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders36 If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over37 A copy of any trust deed for the additional +securitiesEntities that have ticked box 34(b)38 Number of +securities for N/A which +quotation is sought39 +Class of +securities for N/A which quotation is sought40 Do the +securities rank N/A equally in all respects from the +issue date with an existing +class of quoted +securities? If the additional +securities do not rank equally, please state: * the date from which they do * the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment * the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment41 Reason for request for N/A quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another +security, clearly identify that other +security) Number +Class42 Number and +class of all N/A +securities quoted on ASX (including the +securities in clause 38)Quotation agreement1 +Quotation of our additional +securities is in ASX's absolute discretion. ASXmay quote the +securities on any conditions it decides.2 We warrant the following to ASX.• The issue of the +securities to be quoted complies with the law and is notfor an illegal purpose.• There is no reason why those +securities should not be granted +quotation.• An offer of the +securities for sale within 12 months after their issue willnot require disclosure under section 707(3) or section 1012C(6) of theCorporations Act.Note: An entity may need to obtain appropriate warranties from subscribers forthe securities in order to be able to give this warranty• Section 724 or section 1016E of the Corporations Act does not apply to anyapplications received by us in relation to any +securities to be quoted andthat no-one has any right to return any +securities to be quoted under sections737, 738 or 1016F of the Corporations Act at the time that we request that the+securities be quoted.• If we are a trust, we warrant that no person has the right to return the+securities to be quoted under section 1019B of the Corporations Act at thetime that we request that the +securities be quoted.3 We will indemnify ASX to the fullest extent permitted by law in respect ofany claim, action or expense arising from or connected with any breach of thewarranties in this agreement.4 We give ASX the information and documents required by this form. If anyinformation or document is not available now, we will give it to ASX before+quotation of the +securities begins. We acknowledge that ASX is relying on theinformation and documents. We warrant that they are (will be) true andcomplete.Sign here: Aaron Bertolatti Date: 2 March 2015(Company Secretary)Print name: ......................................................... == == == == ==Appendix 3B - Annexure 1Calculation of placement capacity under rule 7.1 and rule 7.1A for eligibleentitiesIntroduced 01/08/12 Amended 04/03/13Part 1 Rule 7.1 - Issues exceeding 15% of capitalStep 1: Calculate "A", the base figure from which the placement capacityis calculatedInsert number of fully paid 266,234,221+ordinary securities on issue 12months before the +issue date ordate of agreement to issueAdd the following: Nil• Number of fully paid +ordinary Nilsecurities issued in that 12 monthperiod under an exception in rule Nil7.2• Number of fully paid +ordinarysecurities issued in that 12 monthperiod with shareholder approval• Number of partly paid +ordinarysecurities that became fully paid inthat 12 month periodNote:• Include only ordinary securitieshere - other classes of equitysecurities cannot be added• Include here (if applicable) thesecurities the subject of theAppendix 3B to which this form isannexed• It may be useful to set out issuesof securities on different dates asseparate line itemsSubtract the number of fully paid Nil+ordinary securities cancelledduring that 12 month period"A" 266,234,221Step 2: Calculate 15% of "A""B" 0.15 [Note: this value cannot be changed]Multiply "A" by 0.15 39,935,133Step 3: Calculate "C", the amount of placement capacity under rule 7.1that has already been usedInsert number of +equity securities 39,935,133 - 2 March 2015issued or agreed to be issued inthat 12 month period not countingthose issued:• Under an exception in rule 7.2• Under rule 7.1A• With security holder approvalunder rule 7.1 or rule 7.4Note:• This applies to equity securities,unless specifically excluded - notjust ordinary securities• Include here (if applicable) thesecurities the subject of theAppendix 3B to which this form isannexed• It may be useful to set out issuesof securities on different dates asseparate line items"C" 39,935,133Step 4: Subtract "C" from ["A" x "B"] to calculate remaining placementcapacity under rule 7.1"A" x 0.15 39,935,133Note: number must be same as shownin Step 2Subtract "C" 39,935,133Note: number must be same as shownin Step 3Total ["A" x 0.15] - "C" - [Note: this is the remaining placement capacity under rule 7.1]Part 2 Rule 7.1A - Additional placement capacity for eligible entitiesStep 1: Calculate "A", the base figure from which the placement capacityis calculated"A" 266,234,221Note: number must be same as shownin Step 1 of Part 1Step 2: Calculate 10% of "A""D" 0.10 Note: this value cannot be changedMultiply "A" by 0.10 26,623,422Step 3: Calculate "E", the amount of placement capacity under rule 7.1Athat has already been usedInsert number of +equity securities 26,623,422 - 2 March 2015issued or agreed to be issued inthat 12 month period under rule 7.1ANotes:• This applies to equity securities- not just ordinary securities• Include here - if applicable - thesecurities the subject of theAppendix 3B to which this form isannexed• Do not include equity securitiesissued under rule 7.1 (they must bedealt with in Part 1), or for whichspecific security holder approvalhas been obtained• It may be useful to set out issuesof securities on different dates asseparate line items"E" 26,623,422Step 4: Subtract "E" from ["A" x "D"] to calculate remaining placementcapacity under rule 7.1A"A" x 0.10 26,623,422Note: number must be same as shownin Step 2Subtract "E" 26,623,422Note: number must be same as shownin Step 3Total ["A" x 0.10] - "E" - Note: this is the remaining placement capacity under rule 7.1AFor further information please visit www.redemperorresources.com or contact:Red EmperorGreg Bandy +61 8 9212 0102Grant Thornton UK LLPPhilip Secrett/Jen Clarke/Jamie Barklem +44 20 7383 5100Appendix 3BNew issue announcement+ See chapter 19 for defined terms.Appendix 3B Page 12 04/03/2013 Appendix 3B
New issue announcement