Quarterly Report

RNS Number : 1499L

Global Petroleum Ltd

27 July 2011

RNS AIM release

Global Petroleum Limited - June 2011 Quarterly Report

The Board of Global Petroleum Limited ("Global") is pleased to present its Quarterly Report for the period ending 30 June 2011.

Highlights

· In January 2011, Global entered into a conditional sale and purchase agreement ("Agreement") to acquire
Jupiter Petroleum Limited ("Jupiter") which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel. The Agreement is conditional on the satisfaction of a number of conditions precedent. The Company has continued to work towards satisfying these conditions precedent during the quarter:

Ø Consent for the transaction was provided by the Namibian Competition Commission.

Ø The General Meeting seeking shareholder approval for the acquisition will be held on 19 August 2011. The Notice of Meeting (see ASX announcement dated 14 July 2011) includes the independent expert report.

Ø The Company is continuing to undertake due diligence investigations and completion is expected to occur on or around 26 August 2011.

· At the Leighton Project, total production from the first Eagle Ford horizontal well ("Tyler Ranch EFS #1H") in which Global has an interest was 26,925 boe (20,441 bo and 38,904 mcfg) for the June quarter or 296 boepd. Global has a 7.939% working interest (5.95% NRI) in Tyler Ranch EFS #1H.

· Drilling commenced on the second Eagle Ford horizontal well ("Tyler Ranch EFS #2H") in mid June and has now reached its total depth of 15,767 feet after successfully drilling 4,500 feet of horizontal well in the Eagle Ford reservoir. Oil and gas shows recorded throughout the 4,500 feet are in line with the oil and gas shows in the nearby Tyler Ranch EFS #1H. Tyler Ranch EFS #2H has been cased and suspended for fraccing, testing and production which is scheduled for mid August.

· Total combined production from the eight producing Olmos vertical wells in which Global has an interest was 45,579 boe (18,354 bo and 163,352 mcfg) or 501 boepd. Global has a 15% working interest (11.25% NRI) in approximately 873 acres from the surface down to the stratigraphic equivalent of the Olmos formation.

· In April, the eighth Leighton Olmos well - Peeler #2, begun to flow oil and gas at the gross rate of 252 boepd from the Olmos Reservoir (comprising 192 bopd and 360 mcf of gas per day). Drilling of the ninth Leighton Olmos well - Peeler #3 commenced in June and reached its total vertical depth of 2,774 metres (9,100 feet) in July. The Olmos in Peeler #3 has similar reservoir characteristics to the Olmos in the previous Leighton wells.

Acquisition of Jupiter Petroleum Limited

In January 2011, the Company entered into a conditional sale and purchase agreement ("Agreement") to acquire Jupiter Petroleum Limited ("Jupiter") which holds prospective oil and gas exploration interests in offshore Namibia and in offshore Juan de Nova, a French dependency in the Mozambique Channel.

The acquisition of these interests will enable Global to participate in the prospective and active exploration province of offshore Namibia and position itself as an African focused oil and gas explorer.

Global will acquire 100% of Jupiter, a UK registered company which is owned 50% by Mr Peter Taylor and 50% by Mr Peter Blakey who are both also Directors of Global. The commercial terms of the acquisition, includes the issue of 25 million Global shares at settlement and the reimbursement of reasonable historical expenditure on the Namibian and Juan de Nova interests. The Agreement is conditional on the satisfaction of a number of conditions precedent, including due diligence investigations, a report from an independent expert that the transaction is fair and reasonable to Global Shareholders, and Shareholder approval at a general meeting.

Namibian Project

The Namibian Project consists of an 85% participating interest in Petroleum Exploration Licence Number 29 ("Licence") covering Offshore Blocks 1910B and 2010A in the Republic of Namibia. The Licence, issued on 3 December 2010, covers 11,730 square kilometers and is located in offshore Namibia in water depths ranging from 1,200 meters to 3,000 meters.

A reconnaissance grid of 1995 2D seismic data over both blocks is available and Jupiter is currently in the process of acquiring the relevant data to advance the project. Preliminary examination suggests the presence of large structural highs and the presence of a significant Early Cretaceous and possibly older section beneath the main highs. Although only a few wells have been drilled in the area, they have established the presence of oil and gas-prone source rocks, good potential reservoirs and migrated hydrocarbons in the region, making this an attractive frontier play.

It is believed that the regional basin or basins were formed in response to thermal subsidence following the rifting preceding the separation of Africa from South America.

The Jupiter blocks lie adjacent to acreage held by Arcadia Petroleum Limited, whose partner Tower Resources recently announced encouraging estimates (from a Competent Person's Report) for finding hydrocarbons in one or more of their prospects.

To the north east of the Jupiter blocks, a well drilled last year by Sintezneftgaz (Nakor Investments) reportedly found a substantial gas column whilst Chariot Oil and Gas has recently announced the identification of new structures and increases in its estimates of gross unrisked mean prospective resources in its licences in offshore Namibia. Chariot have shot 3-D seismic and also have a Competent Person's Report.

The Jupiter blocks represent one of the last remaining opportunities to participate in this prospective and active exploration province in this part of offshore Namibia.

The Licence is held jointly by Jupiter Petroleum (Namibia) Limited ("Jupiter Namibia" - a subsidiary of Jupiter), the National Petroleum Corporation of Namibia (Pty) Ltd ("NAMCOR" - wholly owned by the Government) and Bronze Investments Pty Ltd ("Bronze"). In addition to the Licence, Jupiter Namibia, NAMCOR and Bronze are parties to:

(a) a Petroleum Agreement dated 3 December 2010 between them and the Government of the Republic of
Namibia; and

(b) a Joint Operating Agreement ("JOA") dated 6 December 2010 between them, pursuant to which they have
agreed to hold their interests as a participating interest of 85% for Jupiter Namibia, and carried interests (carried through exploration) of 10% for NAMCOR and 5% for Bronze.

In accordance with the terms of the Petroleum Agreement and JOA, the following minimum work and expenditure programme must be undertaken and funded by Jupiter:

(a) Initial Exploration Period (First Four Years of Licence):

Undertake geological, geochemical, geophysical and related studies and review all existing gravity and magnetic data, and other available information, including the purchase of existing relevant and reasonable quality seismic data, and acquire, process and interpret a minimum of 1,000 kms of 2-D seismic data. Minimum exploration expenditure for the Initial Exploration Period: US$1 million.

(b) First Renewal Exploration Period (Two Years):

The drilling of one exploration well. Minimum exploration expenditure for the First Renewal Exploration Period: US$20 million.

Acquisition, processing and interpretation of additional seismic data (if necessary) and the drilling of one exploration well. Minimum exploration expenditure for the Second Renewal Exploration Period: US$20 million, or US$ 21 million if new seismic is required.

Juan de Nova Project

Jupiter has a 30% interest in the Juan de Nova Est Permit which was issued by the French Government in December 2008. The Permit covers approximately 9,010 square kilometers and is situated to the east of the small island of Juan de Nova in the Mozambique Channel, immediately to the west of Madagascar.

The permit lies within the exclusive economic zone surrounding Juan de Nova which is under French control. The remainder of the exclusive economic zone is covered by a permit operated by Roc Oil (Madagascar) Pty Ltd which is immediately to the west of Juan de Nova Est.

Water depths range from 200 metres to approximately 1,500 metres, with at least half of the permit lying in shallow water on the continental shelf of the island of Madagascar. The shallow water shelf area is probably underlain by late Paleozic to early Mesozoic rocks, mainly sandstones and shales with interbedded volcanics, whilst the deeper water areas are probably underlain by younger rocks of late Mesozoic and Tertiary age, whose lithology is unknown.

No systematic petroleum exploration has taken place around Juan de Nova and this area is considered to be a frontier province.

Wessex Exploration PLC is the operator and 70% equity holder in the Juan de Nova Est Permit. The current term of the exploration permit runs to 31 December 2013 with three phases of exploration and a production period of 25 years for any discovery made. The work obligations for the current term of the exploration permit include geologic studies, seismic acquisition and reprocessing and a commitment to drill one well with a contingency for a second well. The total financial commitment for this period is €27.92 million with Jupiter's share being €8.38 million.

Wessex has engaged an agent to assist in finding a partner who is willing to earn into the Juan de Nova Est Permit by funding exploration activities. Jupiter's interest in the Juan de Nova Est Permit would be part of any farmout arrangement.

Preliminary work undertaken on the permit to-date has included an assessment of available data and an extensive review of literature on the North Morondava Basin in which the permit lies.

Commercial Terms

In consideration for the acquisition of 100% of the issued capital of Jupiter, Global will issue Mr Peter Blakey and Mr Peter Taylor ("Vendors") 25 million fully paid ordinary shares on completion. The Vendors are also Directors of Global.

The Company has also loaned A$251,102 to Jupiter to assist meet bank guarantee requirements and other licence payments for the Namibian petroleum licence whilst Global performed an initial assessment of Jupiter and its assets and undertook preliminary due diligence. In addition and prior to completion, Global will also reimburse the Vendors for any actual costs incurred in connection with obtaining the licence and other reasonable costs in connection with the agreement, anticipated to be in the order of £250,000 (A$400,000). In accordance with the terms of a loan agreement between Global and Jupiter, these amounts will be fully repayable to Global in the event that the transaction does not complete.

Prior to completion of the acquisition of Jupiter by Global, Jupiter is required to continue to meet work program commitments for the Namibian Project. As foreshadowed in the Notice of Meeting (see ASX Announcement dated 14 July 2011), Global agreed to lend Jupiter an additional US$665,000 (A$619,000) in July to meet these work program commitments. The funds will be used to acquire two sets of historical seismic data covering sections of the Namibian Licence. Jupiter will interpret the data to provide inputs for a new 2D seismic survey in which it intends to participate in late 2011.

The sale and purchase agreement to acquire Jupiter is subject to the following conditions precedent:

1. Global completing due diligence investigations, including confirmation of title of the Licence and Juan de Nova Est Permit, and due diligence on the Petroleum Agreement, Jupiter and its subsidiaries. Due diligence is ongoing and the Company expects to have completed its due diligence investigations by 31 August 2011;

2. Obtaining any necessary consents from governmental authorities or third parties necessary to give effect to the transaction. The Company announced in June that it had received notification from the Namibian Competition Commission approving the acquisition of Jupiter. The Company expects to have been granted all required consents, approvals, waivers or authorisations (if any) by 31 August 2011;

3. The independent expert concluding that the transaction is fair and reasonable to the Company's shareholders. This condition precedent has been satisfied (see Notice of Meeting - ASX Announcement dated 14 July 2011);

4. The independent directors of Global making an announcement containing a statement that, having consulted with the Company's nominated adviser, the consider that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned. This condition precedent has been satisfied (see Notice of Meeting - ASX Announcement dated 14 July 2011); and

5. Global Shareholders passing all resolutions as are required under the ASX Listing Rules, the constitution and the Corporations Act to give effect to the transaction contemplated by the agreement. This condition precedent will be satisfied if Resolution 1 at a General Meeting to be held on 19 August 2011 is passed (see ASX Announcement dated 14 July 2011).

The Vendors have provided warranties in relation to title and Jupiter in general. There are normal commercial warranties provided by both parties.

Due Diligence Requirements and Settlement

Shareholders and potential investors should note that prior to executing the conditional sale and purchase agreement with Jupiter and its Vendors, Global conducted a high level review and assessment of the information provided in respect of the projects.

Global is currently completing undertaking more comprehensive due diligence investigations (including title and other risks) with respect to the acquisition of Jupiter, however, it should be noted that the usual risks associated with junior companies undertaking exploration activities in the oil and gas sector will remain at completion of this due diligence process.

A summary of the risk factors of the acquisition of Jupiter and the Namibian Project and the Juan de Nova Project are included in Schedule 2 of the Notice of Meeting (see ASX Announcement dated 14 July 2011).

Shareholder and investors should also be aware that the agreement to acquire Jupiter is conditional on the satisfaction of each of the condition precedent listed above. Accordingly there is a risk that some of the conditions may not be satisfied and the transaction contemplated by this announcement may be changed or not be completed before 31 August 2011 (extended from 30 June 2011). If necessary, the parties may agree to extend this date. Should the transaction not complete, the monies advanced to Jupiter shall be refunded at Global's request.

Leighton Project

Total production in the June quarter for the first Eagle Ford well at the Leighton Project, Tyler Ranch EFS #1H, was 26,925 boe (20,441 bo and 38,904 mcfg). This represents an average daily oil equivalent rate of 296 boepd (225 bopd and 428 mcfgpd).

Global has a 7.939% working interest in the well. Global's beneficial interest (NRI) in the production is 5.95% or some 1,602 boe for the quarter or 17.6 boepd.

Texon Petroleum Ltd (ASX: TXN) has advised that Tyler Ranch EFS #2H, the second Eagle Ford horizontal well in which Global has an interest, commenced drilling in June and has now reached its total depth of 15,767 feet after successfully drilling 4,500 feet of horizontal well in the Eagle Ford reservoir.

Oil and gas shows recorded throughout the 4,500 feet are in line with the oil and gas shows in the nearby first Eagle Ford well, Tyler Ranch EFS #1H.

Tyler Ranch EFS #2 has been cased and suspended for fraccing, testing and production. This work is scheduled for mid August with first oil and gas production forecast for early September.

Global has a 7.939% working interest in approximately 1,651 acres beneath the Olmos formation including the Eagle Ford Shale. Global's interest in the Leighton prospect also includes a 15% working interest in approximately 873 acres from the surface down to the stratigraphic equivalent of the Olmos formation.

Peeler #2, the eighth Leighton Olmos well, commenced production in April with an initial flow of oil and gas at the gross rate of 252 boepd from the Olmos Reservoir (comprising 192 bopd and 360 mcf of gas per day). Drilling of the ninth Leighton Olmos well - Peeler #3 commenced in June and reached its total vertical depth of 2,774 metres (9,100 feet) in July. The Olmos in Peeler #3 has similar reservoir characteristics to the Olmos in the previous Leighton wells.

The combined average daily production rate of the eight (8) Leighton Olmos wells (Peeler #1, Peeler Ranch #2, Tyler Ranch #1, Tyler Ranch #2, Tyler Ranch #3, Tyler Ranch #4, Tyler Ranch #5 and Tyler Ranch #6) for the June quarter was a gross 501 boepd (202 bopd and 1,795 mcfgpd) with Global's beneficial interest (11.25% NRI) being 56 boepd.

Business Development

The Board continues to review opportunities for other acquisitions, joint ventures, or investments in the resources sector, both domestic and overseas, which may enhance shareholder value. A number of new opportunities were assessed during the quarter and the Company will continue to evaluate these opportunities as they are presented.

Mark Savage

Chairman

Enquiries:

Global Petroleum Limited
Clint McGhie	Tel	+ 61 8 9322 6322
	Email	global.info@globalpetroleum.com.au

Northland Capital Partners Limited (Nominated Adviser and Broker)
William Vandyk Luke Cairns	Tel	+44 20 7796 8800