HYDROCARBON DYNAMICS LIMITED — Capital/Financing Update 2012

Jan 2, 2012

3 January 2012

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Rabalais 35 No.1 Drilling Update Turner Bayou Chalk Project

The Turner Bayou project is a significant part of Pryme’s exploration portfolio and comprises approximately 80 square miles (50,000 acres) which have been imaged by a proprietary 3D seismic survey. Primary targets are the Wilcox formation at 12,500 feet, the Austin Chalk at 15,300 feet and the Eagle Ford and Tuscaloosa Marine Shales at 16,000 feet. Pryme has approximately 9,600 net acres within the Turner Bayou project covering all depths representing up to 30 potential drilling locations in the Austin Chalk alone.

Rabalais 35 No.1 (8.8% Working Interest / 6.6% NRI)

The Rabalais 35 No.1 well in the Turner Bayou Chalk project continues drilling horizontally within the Austin Chalk formation at a vertical depth of approximately 14,850 feet (4,525 metres) and a measured depth of 19,793 feet (6,030 metres). Approximately 70% of the planned 7,000 feet (2,130 metres) lateral has been drilled. Drilling of the well commenced on 10 November and completion is estimated to be achieved later this month. The targeted total measured depth is approximately 22,000 feet (6,705 metres). The operator is Anadarko E & P Company.

“Drilling operations remain on plan,” said Ryan Messer, Pryme’s Chief Operating Officer. “Based on the current drilling rate we expect to reach target depth early next week.”

For further information please contact:

Justin Pettett Managing Director Pryme Energy Limited Telephone: +61 7 3371 1103

Ryan Messer Chief Operating Officer Pryme Energy Limited Telephone: +1 713 401 9806

Website: www.prymeenergy.com ASX Code: PYM OTCQX Code: POGLY

Competent Person Statement

The information contained in this announcement has been 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 reviewed this announcement and consents to the inclusion of the geological and engineering descriptions and any estimated hydrocarbons in place in the form and context in which they appear. Any resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, further information on which is available at www.spe.org.

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Source: Louisiana Department of Natural Resources www.sonris.com

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