HYDROCARBON DYNAMICS LIMITED — Capital/Financing Update 2014

Mar 16, 2014

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C o mpany An n ounceme n ts Office 1 7 March 2014 A u stralian Securities Ex c hange 2 0 Bridge Str e et S y dney NS W 2000 D e ar Sirs

Rights Issue

W e refer to t he annou n cement m a de on 14 March 20 1 4 regardi n g a non-r e nounceable rights is s ue (Rights Issue).

Pl e ase find a t tached lett e rs that will be mailed to shareho l ders today regarding t he Rights I s sue.

Y o urs Sincer e ly,

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S w apna Kes k ar C o mpany Se c retary

For further inf o rmation ple a se contact:

Justin Pettett Ryan Messer Managing Director Chief Operating Officer Pryme Energy Limited Pryme Energy Limited Telephone: +61 7 3371 11 0 3 Telep h one: +1 71 3 401 9806 Website: www.prymeenergy.com ASX Code: PYM OTCQX Code: POGLY

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1 7 March 20 1 4

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D e ar Shareh o lder,

O n 14 Marc h 2014, Pr y me Energ y Limited ( Pryme ) an n ounced to the Austra l ian Securi t ies Excha n ge ( ASX ) that it propos e d to rais e up to a pproximately $5.9 m illion of new equi t y through a n o n renounc e able rights issue ( Rights Issue ) in accorda n ce with section 708A A of the C o rporations A ct 2 0 01.

S h areholder s with an address in A u stralia or N ew Zealan d recorded on Pryme’ s register o f members will b e offered th e opportuni t y to subsc r ibe for 1 fully paid ordinary share in Pryme ( New Shares ) for eve r y 1 fully paid ord i nary share held at 7. 0 0pm (AES T ) on 24 March 2014, with fracti o nal entitle m ents roun d ed u p .

T h e New Sh a res will be offered at an issue p r ice of $0.0 2 per shar e ( Issue Price ). The D irectors h a ve re s erved the right to of f er at the I s sue Price any additi o nal share s that are n ot subscribed for in the Ri g hts Issue ( Shortfall Shares ) in a ccordanc e with Listin g Rule 7.2 E xception 3 .

T h e Rights I ssue (incl u ding the issue of a n y Shortfall Shares), may resu l t in the i s sue of up to 2 9 5,708,568 fully paid ordinary sh a res. This w ill result i n a total number of u p to 591,41 7 ,136 ordinary fully paid shares on issue. New S h ares and S hortfall Sh a res will ra n k equally w ith existin g ordinary f u lly p a id shares.

D e tails of the terms and conditions of the offe r of New S h ares and h ow to appl y for Short f all Shares will b e contained in the offe r document that will b e sent to Eli g ible Shar e holders on 25 March 2 014. Subject to any chang e s that ma y be made b y your Dir e ctors, the o ther key d a tes for thi s Rights Iss u e are:

E vent	Da te
S hares quot ed on ex-en titlementb asis	18 March 20 14
R ecord Date for determ ining entitle ments	7.0 0pm (AEST ) 24 March 2014
D A espatch of cceptance Offer Docu Form – Off ment andE er Opens ntitlement and	25 March 201 4
C losing Date	5.0 0pm (AEST ) on 8 Apri l 2014
A S nticipatedd hares ate for allo tment and issue of Ne w	16 iss April 2014 ued at any (ShortfallS time up to8 hares may July 2014 be )
A c nticipatedd onfirmation ate of mail statements out of tran saction	22 April 2014

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T h e addition a l funds, af t er the expenses of t h e Rights I s sue and n o rmal wor k ing capital requireme n ts, wi l l be used primarily t o fund the C ompany’s share of c osts in th e Capitola O il Project located in the P e rmian Basin, Texas.

Your Directors recommend that you read the offer document carefully when you receive it. The offer will be made without a disclosure document and accordingly it is important that you review Pryme’s ASX announcements made in relation to the Rights Issue, together with past ASX announcements made regarding Pryme, its business operations, financial position and prospects before deciding whether to participate in the Rights Issue. A ll ASX a n nouncem e nts re l eased by Pryme a nd any d ocuments relating t o the Ri g hts Issue can be accessed at w w w.prymee n ergy.com o r at www. a sx.com.au.

If y ou have a ny questio n s in relati o n to this l e tter please seek prof e ssional ad v ice or contact Pryme on + 6 1 7 3371 1103 during office hour s .

Y o urs sincer e ly,

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D e ar Shareh o lder,

Pryme Energ y Limited ( Pryme ) is i n the proce s s of raisin g up to approximately $ 5.9 millio n of new eq u ity th r ough a n o n renoun c eable righ t s issue ( Rights Issue ) in acc o rdance wi t h section 708AA of the C o rporations Act 2001. Details o f the Rights Issue a r e as ann o unced to t he Australian Securi t ies E x change ( ASX ) on 14 M arch 201 4 .

S h areholder s with an a d dress in A ustralia or New Zeal a nd record e d on Pry m e’s regist e r of members wi l l be offere d the oppo r tunity to s u bscribe fo r one fully p aid ordina r y share in Pryme ( New Shares ) for e v ery one fu l ly paid or d inary shar e held at 7 .00pm (Sydney, Australia time) on 24 Ma r ch 2014, w ith fr a ctional entitlements r o unded up. T he New Shares will b e offered at $0.02 per share.

Pryme has d e termined, in accorda n ce with Li s ting Rule 7 .7.1(a) of the ASX Li s ting Rule s , that it w o uld b e unreason a ble to offer participation in the R ights Issu e to shareh o lders outside of Australia and N ew Z e aland due to the leg a l limitations in some countries, the relativ e ly small n u mber of shares held by shareholders in other c ountries, t he likely f u nds that would be raised fro m shareholders in th o se countries an d the cost o f complying with regul a tory requir e ments in t h ose count r ies.

A c cordingly, a s you do n ot have an address in Australia o r New Zealand recorded on Pry m e’s register of m e mbers, Pryme unfortunately m u st advise y ou that you will not be extended the opportunity to participate in the Rights Issue .

U n der the te r ms of the o ffer you are not eligible to subscribe for Ne w Shares a nd you will not be se n t a copy of the o f fer docum e nts. T h is notice is to inform y ou of the R ights Issu e . It is not a n offer to i s sue New S hares to y o u, nor is it an in v itation to apply for Ne w Shares. You are n o t required to do anything in response to this letter.

If y ou have a ny questio n s in relati o n to this l e tter please seek prof e ssional ad v ice or contact Pryme on + 6 1 7 3371 1103 during office hour s .

Y o urs sincer e ly,

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