CENTRAL PETROLEUM LIMITED — Capital/Financing Update 2007

Nov 22, 2007

ASX ANNOUNCEMENT RELEASED to the ASX DATE: 231107

TO: Manager, Company Announcements ASX Limited

CONTACT: John Heugh +61 8 9474 1444

Further clarification on proposed rolling convertible bond issue

On 20 November 2007 Central Petroleum announced that it would seek Shareholder approval to implement the terms of an agreement which provides for a funding facility of up to $80 million via a series of $1 million tranches. Further comment on the proposed facility is provided to clarify a number of issues raised by some Shareholders following the release.

The proposed facility is novel to the Australian market but has operated in a number of overseas jurisdictions for some time.

This announcement should be read in conjunction with the 20 November 2007 announcement.

• Any tranche of $1 million in Bonds has to be converted into Company Shares prior to the next tranche being drawn down thus limiting the total exposure to debt by the Company to $1 million at any time under this facility. The Company will retain liquid funds to ensure that any Bonds not converted to equity may be paid out.

• The Company is not obliged to utilize the whole $80 million facility which can be terminated unilaterally at any time by either the facility provider, DBZ, or the Company.

• The Bond Agreement is subject to Shareholder approval at a General Meeting.

• If the Company’s market share price trades below 15 cents the facility will be terminated.

• The formulae for calculating the Bond conversion price is the lower of:

• (a) 10% discount to market price of the five lowest trading days during the 25 business days prior to conversion of Bonds or

• (b) 125% of the average of the market prices for the 25 business days prior to the date the Bond is issued.

The formulae compares favourably to the terms usually negotiated for a listed junior exploration company via placements, which can be up to a 20% discount to market, plus a 5% commission to the stockbroker concerned.

• At no time will DBZ hold or be entitled to hold more than 15% of the Company’s issued shares.

• The successful continuation of the rolling Bond facility depends inter alia on the Company utilizing the funds in a meaningful fashion on exploration and or development and the continued placement by DBZ of shares at a margin to the purchase price. A sustained declining market price may reduce the potential for DBZ to achieve a margin and the facility may be terminated.

• Should the Directors of the Company at any time believe that the Bond facility is having a material adverse effect on the share price, the Company may terminate the facility forthwith.

• Approval will be sought from Shareholders to approve Bond issues over either 3 month or alternatively 15 month Approval Periods if a proposed policy change from the ASX concerning Listing Rule 7.3.2 and a consequent waiver is effected before the planned General Meeting on 21 December 2007.

• The Directors plan an entitlement process to allow existing Shareholders the opportunity to proportionally take up Shares equivalent in number to that issued to DBZ under the Bond conversions during any particular Approval Period on the same discount terms as the conversion to Shares of the most recent Bond conversion at the time of such entitlement issue or issues. The timing and detailed terms of such an offer or offers to Shareholders is yet to be determined.

• Rapid access to capital to conduct exploration and potential development is one of the perennial problems faced by junior explorers, particularly at a time when all costs associated with exploration and development are rapidly escalating in line with the continued escalation of the oil price. The proposed convertible bond facility provides the Company with timely access to funds.

• Other capital raising facilities outside of the proposed rolling convertible Bond facility such as Share Purchase Plans, placements and entitlement issues are not restricted by the Bond agreement.

Further clarification on potential purchase of a drilling rig

Reference in the explanatory notes to the General Meeting of the potential purchase of a drilling rig is occasioned by the shortage and high cost of appropriate drilling service contracts in Australia.

In common with most parts of the world, there is a growing shortage of drilling rigs and costs are escalating rapidly as the oil price climbs.

• It is currently not the intention of the Company to immediately purchase a drilling rig but, as the exploration programme progresses, the purchase of a drilling rig may be the best way to continue efficient cost effective exploration of the vast area operated by the Company.

• Whilst Management is not wishing to divert itself from its core business of exploration and development per se, the Directors believe that there would be more risk in being “rig driven” via a long term drilling contract, in having to drill wells possibly before adequate assessment, than there would be in finding profitable work for a Company owned rig at times when such a rig was not needed.

• Most of the drilling rigs in Australia are relatively old and certainly can not be considered as state of the art with the advantages of technical progression that the rig types favoured by Management enjoy.

• Management continues to evaluate the various options before it hand in hand with the progression of its Farmout Agreements.

• Clearly there is potential for the Company, if it purchases a rig, to have it crewed and operated on a profit sharing basis by an established drilling contractor in a joint venture or partnership arrangement.

Conclusion

The proposed rolling convertible bonds may bring considerable flexibility in how the Company progresses its exploration and development. The Company is an explorer with the largest prospective petroleum acreage in Australia at approximately 60 million acres, (255,000 km[2] ) in 27 permits or applications. There are currently over 200 prospects and leads to work up and drill and a serious exploration effort has already commenced.

Whilst the Company has an existing Farmin Partner and is negotiating with others to fund initial exploration, the availability of additional funds to assist in an aggressive exploration programme is considered by the Directors to be in the best interests of Shareholders.

Sincerely

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John Heugh, Managing Director, Central Petroleum Limited