1.

1 Introduction
A & B Energy Pty Limited has agreed the terms of a share sale and purchase
agreement (Sale and Purchase Agreement) pursuant to which it has agreed to
acquire a portfolio of quality underdeveloped oil and gas field assets (the Assets)
in the prolific on-shore Eromanga Basin near Eromanga in Queensland, Australia
via the acquisition of the US company Oilwells, Inc. of Kentucky (OWK)
(subject to financing). Newports intention is to further develop
the Assets, increase the current production levels and capitalize on any potential
exploration upside (the Project).
A & B is seeking to rise up to K66, 000,000 to fund the acquisition of the Assets
and provide working capital for the development program of the Project as well as
for the review and evaluation of other strategic opportunities. A & B will seek to
proceed to an Initial Public Offering (IPO) on an appropriate stock exchange (eg
LuSE) to provide liquidity for investors in the Project or raise funds for the next
material acquisition at the appropriate time.
The purpose of this document is to provide potential investors with information
relevant to their investment decision for this acquisition and the next development
phase.
1.2 Assets to be acquired
The principal shareholder of INDENI has accepted A & Bs offer to acquire all the
shares in INDENI subject to A & B successfully raising sufficient capital to pay the
purchase price agreed between A & B and INDENI. INDENI owns the following
Assets:
a 60% interest in the PL 214 (Western Field) Producing asset; and
a 100% interest in exploration permit ATP 560P.
The PL 214 interest is governed by a joint venture operating agreement (the
JVOA) between the holders of interests in
PL 214, being INDENI and Bounty Oil (listed on LuSE: BUY).
The agreed purchase price for INDENI is US$5.0 million.
The Assets are located near Eromanga, Queensland in the Eromanga Basin, 30km
SE of Tintaburra, 50 km NE of Jackson Oil Facility, and have publicly stated
Proven and Probable (2P) oil reserves of 2.86 MMboe3 . In addition to these 2P
reserves, the fields are also expected to offer significant upside in the form of
possible reserves and exploration potential.

Key attractions of the Assets include:

An existing, but underdeveloped producing oil field with opportunity to exploit
additional reserves;
Commercially viable reserves;
A prolific oil producing region with potential opportunity to aggregate nearby
production; and
situated adjacent to existing infrastructure.
1.3 Investment Opportunity
A & B is seeking to raise up to K66 million by issuing ordinary shares in a newly
incorporated holding company, A & B Energy Pty Limited. Together with pre seed
investors, the management team of A & B has agreed to provide up to K4.4 million
of new capital. A & B will use the funds raised to acquire the Assets and provide
working capital for the further development phase of the Project as well as for the
review and evaluation of other strategic opportunities.
Following the raising of K66 million, existing A & B management and pre seed
investors will hold 29.4% of the undiluted ordinary shares in A & B.
The Directors reserve the right to accept over-subscriptions of up to an additional
K16.5 million, making a total raising of K82.5 million. These additional funds will
be applied to meet the Companys business strategies and objectives as set out in
this Information Memorandum.
1.4 Source and Application of Funds
The funds raised from Investors at this acquisition phase will be used to purchase
the Assets and provide working capital for the further development/drilling
program, as well as for the review and evaluation of other strategic opportunities.
An estimated breakdown of the source and application of funds being raised at this
acquisition is set out in Table 1.
FY2010

FY2011

FY2012

FY2013

1.5 Nature of Investment and Potential Returns

The proposed investment offers the potential for capital appreciation in the short to
medium term as well as liquidity through a possible IPO. There will be potentially
high returns over the long term if the investment is held through an increased
production phase of the Project as well as by introduction of significant new
projects to the portfolio.
A & B has prepared a financial model to provide cash flow projections for the
Project. A & Bs Base Case financial projections suggest potential returns to Initial
Investors as set out in Table 2.

The expected returns are based on a discounted cash flow (DCF) valuation
method and for the purpose of equity valuation and uplift, A & B estimate that an
IPO to occur in approximately 12-18 months. The base case only assumes cash
flows arising from existing and planned development, exploration and feasibility
work as well as the revenues and Estimated Monetary Value (EMV) that arises. It
does not include projections for further acquisition, growth opportunities or if the
inherent upside in the Assets is realised. Cash flow projections may change
significantly if further acquisitions are made. Refer to Section 6.2.
The above projections are based on key assumptions comprising the Base Case
scenario described in Section 4.1 of this Information Memorandum. These
projections are predictive in character, may be affected by a change in assumptions
or by known or unknown risks and uncertainties. Results ultimately achieved may
differ materially from those set out in Table 2 above and Section 4 of this
Information Memorandum. Note that any investment in A & B carries with it
certain risks, which may result in a loss of some or all of the capital invested. Refer
to Section 8 of this Information Memorandum (Risk Factors) for further details.
1.6 A & B Energy Pty Limited
A & B has been incorporated to acquire and further develop underdeveloped and
underexploited oil & gas assets with an initial target focus in Australia and South
East Asia, or other such opportunities which meet appropriate commercial
thresholds. In particular, A & B is seeking to acquire assets with the opportunity to
aggregate production in the nearby area, and capitalise on opportunities which
have not been realised by the incumbent owner.

Where necessary the company will operate, although taking non-operated strategic
interests may also suit the business model. This acquisition opportunity is the first
initiative that A & B has secured and is in accordance with A & Bs business
strategy. The A & B management team has been very successful in resource
venture operations and management, in engineering oil and gas projects and in
venture capital funding in the past. The A & B executive team will be headed by
Briven Simaundu, CEO (technical) and Amanda Mhango, Finance Director, CFO
(corporate/financial). Briven Simaundu will take responsibility for completing the
acquisition of the Assets, working with its existing management team and
preparing A & B for the next development phase for the Western Field. They will
also review additional key opportunities in Australia and overseas. A & B has
assembled an exceptionally experienced bluechip management team, boasting
key personnel with highly developed skills and core competencies to create a
unique and well balanced oil company well positioned to capitalise upon
significant opportunities in the industry.
1.7 Choma Drilling Services (CDS) and Mutango Well Construction Pty Ltd
(MWC)
CDS and MWC will provide technical operations and engineering support to A &
B. CDS is a drilling services company established in 2005. It owns and operates
two drilling rigs and well service equipment. CDS is actively engaged in contract
drilling services and provides drilling supervisors, drilling personnel & rig
managers for Zambian and international drilling operations. Mr Tuta Limande is
the Managing Director of CDS and will have a material interest in A & B.
MWC is an engineering services group. MWC specialises in onshore and offshore
well design and construction for clients throughout Africa. It provides a focused
concept in drilling management services through provision of engineering staff and
supervisory personnel to perform a range of tasks from drilling & completion
design, to procurement of equipment and services, through to onsite supervision of
drilling and completion operations. Mr Bruce Mulonda is the Managing Director of
MWC and will have a material interest in A & B. Briven Simaundu has a
shareholding in MWC.
A & B is currently finalising strategic alliance agreements with both MWC and
CDS, which will provide additional technological and service capabilities to A &
B.MWC and CDS are both privately owned and are not related parties to each
other.

1.8 Timetable of Key Events

A & B has agreed the purchase price for the acquisition of INDENI with the owner
of the shares in INDENI and has agreed the terms of a conditional Sale and
Purchase Agreement with INDENI. It is intended that A & B will complete the
acquisition of the shares in INDENI in August 2009, subject to certain conditions
precedent being satisfied, as set out in Section 8 of this Information Memorandum.
2.0 Investment Structure
A & B, a proprietary unlisted company, is the vehicle that will acquire INDENI,
which holds the Assets. In order to raise sufficient funds to complete the purchase
of INDENI and provide working capital for the planned further development and
exploration program, A & B is proposing to raise up to K66 million. This will be
recognised through the issue of new ordinary shares to Investors at an issue price
of K1.1 per share. It is noted that the key promoters and pre-seed investors of A &
B will commit up to K4.4 Million as pre-seed equity in A & B which is not
included as part of this raising. Refer to Section 6.4 of this Information
Memorandum for more details as to the proposed composition of the board of
A & B.The potential capital structure of A & B post-investment is set out below.

3.1 Indicative Investment Timetable

An indicative investment timetable has been set by A&B to outline the steps
required by A&B to complete the acquisition of INDENI, as set out below.
Completion of the acquisition of INDENI is intended between the parties to take
place in August 2009, provided that A&B raises sufficient capital to complete the
acquisition Refer to Section 8 of this Information Memorandum for a full list of
conditions precedent. The following dates feature in this indicative investment
timetable:
Release of Information Memorandum
Investment Offer Close
Allocation Date

August 2009
30 October 2009
7 days after receipt of application form

3.2 Project Timetable

Once the acquisition of INDENI has been completed, A&B intends to prepare for
immediate development drilling of the Western oil fields in which it will have a
60% interest. Additional production is expected in fourth quarter 2009.

4.0 Financial projections

4.1 Key Assumptions
A&B has prepared the Financial Model to generate cash flow projections for the
Project. Some of the underlying assumptions and sensitivities are noted below.
4.1.1 Base Case
The Base Case Financial Model has been prepared on the basis of a set of
assumptions and operating projections. Some of the assumptions are set out in the
following table.

Table 4. Main base case assumptions

Equity Discount Rate
Cost Inflation
Oil Escalation Factor
Tax Rate
Value of Franking Credits
Oil price (USD/bbl)
AUD/USD Exchange Rate
Initial Capital ($000)
Total Lifetime Production (000 barrels)
Newports Share of New Wells
Average Downtime

12.0%
3.0%
2.0%
30%
70%
70
0.80
12,800
2,002
60%
40%

Oil Price
Current WTI oil price in June 2009 is approximately US$70/bbl.
A graph of the 5-year historical WTI oil prices is set out below.

4.1.2 Sensitivities
Sensitivity scenarios were used for comparison with the Base Case. Variations in
assumptions between these three cases are listed in the table below.

4.2 Base Case Production Projections

Work Program
A&B considers that the minimum work program for the INDENI permits should
be as follows:
a) Drill a commitment exploration well in the 560P Permit Area to retain the
acreage. Any successful discovery would be appraised immediately and tied back
to the existing infrastructure. This well must be drilled by November 2009.
Notwithstanding the commitment to undertake an exploration programme
comprising seismic and a well by Nov 2009, Newport will seek an extension from
QDME to assess current permit data and contract the necessary services to
undertake the programme in 2010 during the next dry season. Newport expects that
as new operator of the ATP 560P permit it should receive the necessary extension
on the permit. In the unlikely event that an extension is not granted, an exploration
well would be drilled as part of the development drilling programme, subject to
available funds.
b) In PL 214, drill and complete two new development wells and re-enter and
complete the existing, suspended Uforia 1 well (which encountered hydrocarbons
in 1988 at the same level as Utopia 2). These new wells would be undertaken in
Q4, 2009 after locations are selected.
c) In PL 214, complete a workover at Utopia 3, which is currently off-line. This
work would be done during a break in the rig schedule.
d) Tieback and bring the new wells on line.
This program will: a) secure the ATP 560P permit areas for further exploration
efforts; and b) provide up to 4 more development wells (total of 7) to improve
production and define reserves more accurately. It is expected that this work would
result in increased production bringing total field production up to at least
270bbl/day. Since the exploration well is planned as a twinned well to an existing
discovery, the possibility exists that a further field development may occur which
would be tied back within 4 months to the Western field infrastructure (subject to
regulatory approvals).
Forecast Production Profile
The Western field currently has three producing wells with one well off-line
(Utopia 3) in need of a workover. Three additional producers are intended to be
added by early FY2010 (Uforia 1 to be re-entered & completed plus Utopia 7 and
8), Utopia 3 worked over and additional wells drilled from cash flow during late
FY2010. In addition three additional producers are planned for each of FY2011
and FY2012, resulting in a total of 16 production wells; the production profile of

which is shown in the figure below. Subject to the performance of the field and the
results of additional post-well mapping work (including possible infill seismic),
extra activity would be carried out during 2011 on the lobes to the east and south of
the main Western structure to increase production further.