HYDROCARBON DYNAMICS LIMITED — Capital/Financing Update 2011

Jan 26, 2011

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27 January 2011

Work Underway to Acidize Deshotels 20-H No.1

A completi o n rig has arrived o n site to r e mediate a nd enhan c e the pro d uction ca p acity of t h e D eshotels 2 0-H No.1 w ell in the Turner Bayo u Chalk pr o ject.

T he horizo n tal leg of t h e well int e rsected m u ltiple oil-b e aring fracture zones as indicated by mudl o g s hows and oil and ga s produced to surface while drilling. The r e mediation process will involve r e - p erforation of the larg e r fracture systems u s ing a tubi n g convey e d perforati o n (TCP) g un, with t h e o bjective of achieving a deeper p e netration o f the form a tion, followed by the i s olation an d acidizing o f the perforat e d section s to comple t e the well b ore clean up, enable better com m unication between t h e p erforated s ections an d the oil b e aring Austin Chalk fo r mation an d potentiall y facilitate o il producti o n a t greater l e vels. Foll o wing reme d iation a fl o w test will b e carried o ut to esta b lish the flo w capacity o f the reservoir, the installation of th e flow line w ill be com p leted and the well will be put into production.

P ryme is c o nfident th a t the ultim a te perfor m ance of th e well will c onfirm its v iew that t h e Deshotels 2 0-H No.1 w ill be a significant oil p roducer w h ich will pr o vide an att r active fina n cial return. S hareholde r s will be k e pt informe d as activiti e s progres s .

P ryme has a 40% wor k ing interes t (30% net r evenue interest (NRI)) in this we l l.

Project Description

T he Deshotels 20-H N o .1 well, in Pryme’s T u rner Bayo u Chalk project in the N orth Bayou Jack Fiel d , i s the first d eep well t o be drille d within th e Turner B a you 3D s e ismic surv e y. The well has be e n d rilled to a d epth of 16 , 400 feet (5,000 metre s ) verticall y with a 3,7 5 5 feet (1,1 4 4 metre) h orizontal l e g through the Austin Ch a lk formatio n which is p redomina n tly oil bearing in this r e gion. The well locati o n w as confir m ed using high resoluti o n 3D seis m ic data fr o m a surve y carried o u t in 2007 and data fro m s urroundin g well bores.

T urner Bay o u is one o f Pryme’s high valu e projects. It is locat e d in Avoy e lles Paris h , Louisian a . P ryme has a 40% int e rest in th e Turner B a you Chal k project a r ea, which is contain e d within t h e T urner Bay o u 3D seismic survey, and a 52 % interest in the bala n ce of Tur n er Bayou. The Turn e r B ayou proj e ct compris e s approxi m ately 80 s q uare mile s (50,000 a c res) which have been imaged by a p roprietary 3D seismi c survey. Primary t a rgets are contained within six prospectiv e formatio n s r anging in depth from t h e Frio for m ation at 3, 0 00 feet, t o the Tuscaloosa form a tion at 18, 0 00 feet.

F or further information pl e ase contac t :

Justin Pettett Ryan Messer Managing Director Chief Operating Officer Pryme Oil and Gas Limited Pryme Oil and Gas Limited T elephone: + 61 7 3371 1103 Telephone: +1 7 1 3 401 980 6 Website: www.prymeoilandgas.com ASX Code: PYM OTCQX Code: POGLY

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