HYDROCARBON DYNAMICS LIMITED — Capital/Financing Update 2014

Aug 5, 2014

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 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Pryme Energy 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 be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued	(a) Fully paid ordinary shares (b) Sub-underwriter Options (c) Management Options
	(a) 12,659,010 Fully paid ordinary shares (b) 200,000,000 Sub-underwriter Options (c) 90,738,040 Management Options

• See chapter 19 for defined terms.

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3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid+securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion) 4 Do the+securities rank equally in all respects from the+issue date 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 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets)	(a) Fully paid ordinary shares (b) The Sub-underwriter Options will convert on a one-for-one basis with an exercise price of 2 cents exercisable at any time prior to 5:00pm (AEST) on 23 July 2016. (c) The Management Options will vest in tranches subject to achievement of specified performance conditions and will convert on a one-for-one basis with an exercise price of 2 cents exercisable at any time prior to 5:00pm (AEST) on 23 July 2016.
	(a) Yes, the fully paid ordinary shares issued will rank equally with the existing class of fully paid ordinary shares traded under the code PYM. (b) Yes, the Sub-underwriter Options issued will rank equally with the existing class of options traded under the code PYMO. (c) No, unvested Management Options will not rank equally with the existing class of options traded under the code PYMO. However vested Management Options will rank equally with the existing class of options traded under the code PYMO.
	(a) Fully Paid Ordinary Shares: No subscription price (recipients paid 2 cents per share under the March 2014 Rights Issue) (b) Sub-underwriter Options: Nil consideration (c) Management Options: Nil consideration
	No funds were raised from the issue of Securities the subject of this Appendix 3B. Funds raised upon exercise of the Sub-underwriter Options and Management Options will be used to: (a) fund the Capitola Oil Project; and (b) provide general working capital Please refer to the Prospectus and Notice of Extraordinary General Meeting lodged with ASX on 30 June 2014 for further details.

6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h_in relation to the+securities_ the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the+issue date and both values. Include the source of the VWAP calculation. 6h If+securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements	Yes
	23 April 2014
	2,500,000 Fully Paid Ordinary Shares on 16 April 2014
	Not applicable
	Under ASX LR 7.3 Fully Paid Ordinary Shares: 33,586,412 Sub-underwriter Options: 200,000,000 Management Options: 18,147,608 Under ASX LR 10.11 Fully paid ordinary shares: 12,659,010 Management Options:72,590,432 Date of Meeting: 6 August 2014
	Not applicable
	Not applicable
	Not applicable

• See chapter 19 for defined terms.

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6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and+class of all +securities quoted on ASX (_including_the+securities in section 2 if applicable) 9 Number and+class of all +securities not quoted on ASX (_including_the+securities in section 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	As per Annexure 1, post issue, the issue capacity is as follows: • Listing Rule 7.1: 115,729,911 fully paid ordinary shares • Listing Rule 7.1A: 78,819,941 fully paid ordinary shares.	As per Annexure 1, post issue, the issue capacity is as follows: • Listing Rule 7.1: 115,729,911 fully paid ordinary shares • Listing Rule 7.1A: 78,819,941 fully paid ordinary shares.
	(a) Fully Paid Ordinary Shares: 6 August 2014 (b) Sub-underwriter Options: 6 August 2014 (c) Management Options: 6 August 2014
	Number	~~+~~Class
	790,699,412 400,000,023	Fully paid ordinary shares Options expiring 23 July 2016
	Number	~~+~~Class
	90,738,040	Options expiring 23 July 2016
	None

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

Tick to indicate you are providing the information or documents

• 35[If the ][+][securities are ][+][equity securities, the names of the 20 largest holders of ] the additional[+] securities, and the number and percentage of additional +securities held by those holders

36[If the ] +securities setting out the number of holders in the categories[+][securities are ][+][equity securities, a distribution schedule of the additional ] 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• 37[A copy of any trust deed for the additional ][+][securities ]

Entities that have ticked box 34(b)

Items 38 to 42 are not applicable.

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.

• See chapter 19 for defined terms.

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• 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 is not available now, we 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: 6 August 2014 (Director) Print name: JUSTIN PETTETT

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Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

Part 1	Part 1
Rule 7.1 – Issues exceeding 15% of capital
Step 1: Calculate “A”, the base figure from which the placement capacity is calculated
Insertnumber of fully paid+ordinary securities on issue 12 months before the +issue date or date of agreement to issue	289,708,568
Addthe following: • Number of fully paid+ordinary securities issued in that 12 month period under an exception in rule 7.2 • Number of fully paid+ordinary securities issued in that 12 month period with shareholder approval • Number of partly paid+ordinary securities that became fully paid in that 12 month period	339,500,157 (Issued on 28 July 2014 to Sub-underwriters appointed by the Underwriter to the Rights Issue announced on 30 June 2014) 60,499,843 (Issued on 23 July 2014 under the Rights Issue announced on 30 June 2014) 44,845,422 (Issued under the March 2014 Rights Issue on 16 April 2014) 1,400,000 (Issued under the March 2014 Rights Issue on 4 June 2014) 33,586,412 (Adjusting Offer to non-Directors participants refreshed by shareholders at the Extraordinary General Meeting on 6 August 2014) 12,659,010 (Adjusting Offer to Directors and their related parties – approved by shareholders at the Extraordinary General Meeting on 6 August 2014 ) 6,000,000 (Issued to vendors of the Capitola Oil Project on 14 March 2014 and refreshed by shareholders at the Annual General Meeting on 23 April 2014) -

• See chapter 19 for defined terms.

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Appendix 3B Page 7

Note:

• Include only ordinary securities here – other classes of equity securities cannot be added

• Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• It may be useful to set out issues of securities on different dates as separate line items

Subtract the number of fully paid[+] ordinary Nil securities cancelled during that 12 month period

“A”

788,199,412

Step 2: Calculate 15% of “A”

“B”

0.15

Multiply “A” by 0.15

[Note: this value cannot be changed] 118,229,911

Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used

Insert number of[+] equity securities issued or agreed to be issued in that 12 month period not counting those issued:

2,500,000 fully paid ordinary shares issued on 16 April 2014

• Under an exception in rule 7.2

• Under rule 7.1A

• With security holder approval under rule 7.1 or rule 7.4

Note:

• This applies to equity securities, unless specifically excluded – not just ordinary securities

• Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• It may be useful to set out issues of securities on different dates as separate line items

“C” 2,500,000

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1	Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2	118,229,911
Subtract“C” Note: number must be same as shown in Step 3	2,500,000
Total[“A” x 0.15] – “C”	115,729,911 [Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

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Appendix 3B Page 9

Part 2

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Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement
capacity is calculated
“A” 788,199,412
Note: number must be same as shown in
Step 1 of Part 1
Step 2: Calculate 10% of “A”
“D” 0.10
Note: this value cannot be changed
Multiply “A” by 0.10 78,819,941
Step 3: Calculate “E”, the amount of placement capacity under rule
7.1A that has already been used
Insert number of [+] equity securities issued Nil
or agreed to be issued in that 12 month
period under rule 7.1A
Notes:
• This applies to equity securities – not
just ordinary securities
• Include here – if applicable – the
securities the subject of the Appendix
3B to which this form is annexed
• Do not include equity securities issued
under rule 7.1 (they must be dealt with
in Part 1), or for which specific security
holder approval has been obtained
• It may be useful to set out issues of
securities on different dates as separate
line items
“E” 0
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Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2	78,819,941
Subtract“E” Note: number must be same as shown in Step 3	0
Total[“A” x 0.10] – “E”	78,819,941 Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

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Appendix 3B Page 11