HYDROCARBON DYNAMICS LIMITED — AGM Information 2012

May 22, 2012

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Annual General Meeting

23 May 2012

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Disclaimer, Forward Looking Statements and Competent Person Statement

This presentation has been prepared by Pryme Energy Limited (the “Company”). This presentation is being provided to investors for the sole purpose of providing preliminary background financial and other information to enable recipients to review the business activities of the Company. It is not intended as an offer, invitation, solicitation or recommendation with respect to the purchase or sale of any securities in the Company.

The information presented in this presentation may contain predictions, estimates and other forward-looking statements. Although the company believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward-looking statements include the timing and extent of changes in commodity prices for oil and gas, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about the estimates of reserves, competition, government regulation and the ability of the company to meet its stated business goals.

Prospective investors should make their own independent evaluation of an investment in the Company or seek advice from their financial adviser, accountant, lawyer, stockbroker or other professional adviser. Nothing in this presentation should be construed as financial product advice, whether personal or general, for the purposes of Section 766B of the Corporations Act, or otherwise. This presentation does not amount to, involve or imply a recommendation or a statement of opinion in respect of whether to buy, sell or hold a financial product.

Technical information contained in this presentation in relation to Turner Bayou was compiled by Pryme and reviewed by Mr Greg Short, BSc. Geology (Hons), a Director of Pryme who has more than 33 years’ experience in the practise of petroleum geology. Mr Short consents to the inclusion in this presentation of the information in the form and context in which it appears.

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Company Snapshot

Major Exploration Upside through Turner Bayou Stable oil and natural gas production

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Current Daily Production (Net to Pryme) Oil 73 Bbls/day Natural Gas 138 Mcf/day*

_________ Total /Day 96 BOE/day Total /Month 2,880 BOE/month

*Natural gas is converted at a ratio of 6.1:1 into barrels of oil equivalent.

A Pryme Platform for Growth

A combination of low risk oil and gas exploration and production with substantial upside from high impact exploration

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Large contiguous mineral lease position

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High impact multiple objective project with large upside potential

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Strong deal flow

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S o l i d f o u n d a t i o n o f a s s e t s

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Oil and Gas Reserves at 31 December 2011

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MBOE – Oil equivalent expressed in thousands of stock tank barrels (MBO), where one barrel is equivalent to 42 United States gallons

Value per share calculated by dividing current shares on issue into discounted cash flow for each project using an AUD/USD exchange rate of 1.00 from Petro Partners, Inc summary of reserves as at 31 December 2011

Value Proposition

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Proven reserves in Turner Bayou are based on the area of influence of the Deshotels 20H and 13H and reflects their sub-optimal completion and low levels of production. The reserve estimate does not reflect the potential of the project area which is much greater than this area of influence

1P and 2P NPV10 valued at A$0.32 per share

• 1P and 2P oil reserves only valued at A$6.61 per barrel

1P and 2P oil and natural gas reserves valued at A$5.57 per barrel of oil equivalent

Improved results from new Turner Bayou wells will significantly impact all reserve categories positively

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Turner Bayou

A Company Making Project

Shot 80 square mile (52,000 acre) 3D survey in 2007

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25,791 gross acres under lease (10,316 acres net to Pryme) in Austin Chalk play area, 2,160 acres Held by Production

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Pryme owns 40% working interest (30% NRI)

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Recoverable oil 500,000 Bbls – 1,000,000 Bbls per well (150,000 Bbls - 300,000Bbls per well net to Pryme)

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Based on 640 acre well spacing, we estimate that, fully developed, the prospective area has potential to support up to 30 horizontal wells

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• Initial production rates average over 1,000 barrels per day of oil in region

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Significant shows and/or production from all targeted intervals

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H i h r a t e o f r e t u r n i n t h e a r e a g

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Right Location

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Major phase oil with associated natural gas

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On trend with prolific Austin Chalk production through Western Louisiana and Eastern Texas

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Tuscaloosa Marine Shale development through Louisiana and Mississippi

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Oil sold attracts premium of approximately 10 - 15% on West Texas Intermediate (WTI) pricing due to demand in the local area

Source: EOG Quarterly Results Presentation

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Austin Chalk Regional Trend Map and Project Location

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Turner Bayou

Stratigraphic Column

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Thinner chalk is one element that dictates better production in Masters Creek Field to the west due to higher fracture density

Wilcox ~ 12,000 feet

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Austin Chalk ~ 15,000 feet Tuscaloosa Marine Shale ~ 16,000 feet

The TMS is the Louisiana equivalent of South Texas’ highly prospective Eagle Ford formation

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Higher fracture density the higher the productivity of the Austin Chalk

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Horizontal drilling increases potential of productive structures

Several vertical wells were drilled on our survey in the period from the late 1970’s to the mid 1990’s and include one of the best vertical wells in the trend which produced 572,000 Bbls of oil and 0.58 Bcf of natural gas from one fracture network

Interpretation indicates an erosional event occurred during the Upper Cretaceous age causing chalk to thin from 1,000 feet to 450 feet in some sections

• The thin chalk and its relation to the shelf edge dictates fracture density

Results of Deshotels 20H, 13H and Rabalais 35H well support geologic and geophysical interpretation

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Turner Bayou acreage over 3D seismic survey

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Deshotels 20H (40% WI)

Deshotels 13H (40% WI)

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• 12 major oil and gas bearing fracture zones, many smaller fractures intersected

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• 15 major oil and gas bearing fracture zones, many smaller fractures intersected

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• Gas shows and oil over shakers while drilling

• Currently producing 75 barrels of oil per day gross (23 barrels per day net to Pryme)

• Not indicative of expected production rates due to mechanical problems during completion and stimulation which were not encountered in second well

• Plan to install lift system on well to improve production

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• Burning up to a 70 foot flare and oil produced to surface

• 128 oil bearing fractures indicated by fracture identification log

• Currently producing 60 barrels of oil per day gross (18 barrels per day net to Pryme)

• Mechanical failures with the installation of Packers Plus production liner

• Well currently on pump

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Austin Chalk Potential

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• Extensive fracturing and oil and gas produced to surface during drilling were observed in both the Deshotels 20H and 13H wells

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• Third party engineering studies have concluded that sub-optimal completion techniques and major mechanical issues during completion resulting in lower than expected production rates – Completion techniques have been refined using large independent oil and gas companies’ proven methodology

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• Acreage in Austin Chalk “sweet spot” surrounded by Anadarko and Atinum with Swift to the west

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Tuscaloosa Marine Shale (TMS)

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A vertical completion was made in the TMS on our 3D survey in 1977 by Gulf which tested at initial rate of at over 100 barrels of oil per day and associated gas with no stimulation

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The Eagle Ford is an abnormally pressured source rock and is a target for shale gas and NGLs in South Texas. Deshotels well intersected the Louisiana Eagle Ford equivalent (the TMS) with minor reservoir rock with porosity up to 16% with very encouraging mud log shows. Compares favourably to some of the better locations in the Eagle Ford play in South Texas which exhibit porosities in the 6% to 12% range

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Turner Bayou
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Source: www.tuscaloosatrend.blogspot.com
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Pryme Energy ASX Share Price Trading History (12 months)

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Pryme Opportunity

Project	Description	1P Reserves	Value per share
LaSalle Parish	Middle Wilcox Trend Oil Project (Existing production)	113MBO	$0.042
Raven	Cotton Valley Gas & Condensate Project (Existing production)	250MBOE	$0.023
Four Rivers	Middle Wilcox Trend Oil (Existing production)	73MBO	$0.028
Turner Bayou	3D Seismic Survey generated Austin Chalk
(Austin Chalk proved	Oil play with Tuscaloosa Marine Shale	709MBOE	$0.159
wells only)	potential
Proved		1,145MBOE	$0.252

MBOE – Oil equivalent expressed in thousands of stock tank barrels (MBO), where one barrel is equivalent to 42 United States gallons Value per share calculated by dividing current shares on issue into undiscounted cash flow for each project using an AUD/USD exchange rate of 1.00 from Petro Partners, Inc summary of reserves as at 31 December 2011

Proven reserves in Turner Bayou are based on the area of influence of the Deshotels 20H and 13H and reflects their sub-optimal completion and low levels of production. The reserve estimate does not reflect the potential of the project area which is much greater than this are of influence

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Execute on Turner Bayou

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Producer with exploration and development upside through secured projects Proprietary 3D seismic to generate prospects in Turner Bayou Short lead time (months) of executing on Company maker

Strategy

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• Drill most densely fractured Austin Chalk well location in Turner Bayou in coming months 2012 with significant engineering and operational changes

• Fund next well in Turner Bayou through a farm-out at project level or corporately through a structure with the least amount of dilution for shareholders at current share price

• Focus on the development of play; drilling another well within 30-60 days of completion of next well Delineate and develop acreage driven by geoscience (30 locations fully developed using 640 acre spacing) Payback on successfully completed wells modeled between 3-6 months due to high initial production rates Expected to exponentially increase Pryme’s company wide oil production and reserves

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