HYDROCARBON DYNAMICS LIMITED — Capital/Financing Update 2010

Dec 8, 2010

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9 December 2010

Placement of Shortfall Shares and Appendix 3B

Pryme Oil and Gas Limited ( Pryme ) is pleased to announce that it has successfully placed the shortfall of 8,597,878 fully paid ordinary shares from the recent Rights Issue ( Shortfall Shares ). The placement of the Shortfall Shares takes Pryme’s issued capital to 225,057,754 fully paid ordinary shares.

In accordance with the terms of Rights Issue, the Shortfall Shares have been allotted and issued to Eligible Shareholders at $0.08 per share today, 9 December 2010. The Shortfall Shares are issued under Exception 3 of ASX Listing Rule 7.2 and the issue does not require shareholder approval.

The recent Placement and Rights Issue which was announced on 31 August 2010, together with the placement of the Shortfall Shares, have raised approximately $3.7million in new capital for Pryme. Pryme’s current cash holding is approximately $2.48m.

For further information please contact:

Justin Pettett Ryan Messer Managing Director Chief Operating Officer Pryme Oil and Gas Limited Pryme Oil and Gas Limited Telephone: +61 7 3371 1103 Telephone: +1 713 401 9806 Website: www.prymeoilandgas.com ASX Code: PYM OTCQX Code: POGLY

Pryme Oil and Gas Limited is an Australian oil and natural gas producer and explorer with interests in the Gulf States of the U.S. The company has oil and gas exploration projects focused on Louisiana, the fifth-largest oilproducing state in the U.S. These projects are funded in part by existing cash flow. Pryme’s board of directors and management team has over 100 years of energy industry experience and has uniquely focused local knowledge, underscored by the proven track records of its managers and directors. Directors of the company are George Lloyd (Non-Executive Chairman), Justin Pettett (Managing Director) and Ryan Messer (Executive Director) and Greg Short (Non-Executive Director).

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Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003.

Name of entity

Pryme Oil & Gas Limited

ABN

75 117 387 354

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1+Class of+securities issued or to beissued2Number of+securities issued or tobe issued (if known) or maximumnumber which may be issued3Principal terms of the+securities(eg, if options, exercise price andexpirydate;ifpartlypaid+securities, the amount outstandingand due dates for payment; if+convertiblesecurities,theconversion price and dates forconversion)	Ordinary Shares
	8,597,878
	Ordinary fully paid shares

• See chapter 19 for defined terms.

Appendix 3B Page 1

1/1/2003

• 4 Do the[+] securities rank equally in all The shares issued will rank equally with the respects from the date of allotment existing class of ordinary shares 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 payment

• 5 Issue price or consideration 8 cents per share 6 Purpose of the issue To supplement working capital and ensure that: (If issued as consideration for the • If a decision is taken to commence a second acquisition of assets, clearly identify Turner Bayou Chalk project well prior to

• those assets) significant revenue flows from a successful Deshotels 20-H No.1 well, Pryme will be able to participate at its current working interest level;

• • In the event of cost overruns on the Deshotels 20-H No.1 well, the Company can continue to fund its proportionate share; and

• • the Company can continue with its planned barge rig drilling program in Catahoula Lake from 1 February 2011.

• 7 Dates of entering[+] securities into uncertificated holdings or despatch of certificates

9 December 2010

• Number +Class

• 8 Number and[+] class of all[+] securities 225,057,754 Ordinary shares quoted on ASX ( including the securities in clause 2 if applicable)

• See chapter 19 for defined terms.

Appendix 3B Page 2

1/1/2003

Number +Class 9 Number and +class of all 500,000 $0.15 options +securities not quoted on ASX expiring on 20 ( including the securities in clause January 2012 2 if applicable) 1,106,855 Performance Rights/Restricted Stock Units 10 Dividend policy (in the case of a None trust, distribution policy) on the increased capital (interests)

Part 2 - Bonus issue or pro rata issue

Items 11 to 33 are not applicable

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

34 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 securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Items 35 to 42 are not applicable

• See chapter 19 for defined terms.

Appendix 3B Page 3

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Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may 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 not for 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 will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

  - Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted. 

  - We warrant that if confirmation is required under section 1017F of the Corporations Act in relation to the[+] securities to be quoted, it has been provided 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 the time that we request that the[+] securities be quoted. 

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

  • 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: ............................................................ Date: 9 December 2010 (Managing Director) Print name: Justin Pettett

• See chapter 19 for defined terms.

Appendix 3B Page 4

1/1/2003