HYDROCARBON DYNAMICS LIMITED — Interim / Quarterly Report 2013

Oct 29, 2013

==> picture [596 x 114] intentionally omitted <==

September 2013 Quarterly Activity Report

30 October 2013

Company Snapshot

ASX Code:	PYM
Recent price: (27 October 2013)	$0.018
Cash on hand:	$1,941,000
Shares outstanding:	289,708,568
Market Capitalisation:	$5m
Share price range (12 months):	$0.012 – $0.14

Production

Quarterly Sales Report (net to Pryme)

Project	September 2013 Quarter	September 2013 Quarter	Calendar Year to Date	Calendar Year to Date
	Natural Gas (Mcf)	Oil/Condensate (Bbls)	Natural Gas (Mcf)	Oil/Condensate (Bbls)
Four Rivers*	0	2,732	0	8,909
Raven*	11,667	221	32,315	623
Turner Bayou*	0	2,118	0	7,814
Total	11,667	5,071	32,315	17,346
Total(BOE)**	7,015		22,732

• Actual sales for the last month of the quarter is an estimate based on production data from prior months of production.

** Natural gas is converted to BOE on the basis of 6 Mcf of natural gas is equivalent to 1 BOE.

Average net daily sales to Pryme’s account for the September quarter were 55 Bbls/day of oil and 127 Mcfd of natural gas (76 BOE/day). This represents a decrease of 7.6% from the June 2013 quarter and is mainly attributable to a decline in sales from Turner Bayou.

ABN: 75 117 387 354 Tel: +61 7 3371 1103 | Fax: +61 7 3371 1105 Level 7 320 Adelaide Street Brisbane Qld 4000 Australia | GPO Box 111 Brisbane Qld 4001 www.prymeenergy.com

BRISBANE – HOUSTON

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Projects

We have spent the last quarter evaluating strategic acquisitions in the USA with a goal to immediately increase bottom line production and cash flow whilst preserving upside through both low risk development drilling and risk mitigated exploration throughout the Gulf Coast states of the USA. We are planning to be in a position to release further details on the first of a series of strategic acquisitions and partnerships before years end. Our project profile moving forward will also include a mixture of low risk, low cost shallow Middle Wilcox oil wells in our Four Rivers project area.

In Turner Bayou our efforts have been focused on optimizing production from our three existing wells and progressing discussions with several interested parties to buy an interest in or farm into Tuner Bayou to fund additional drilling opportunities. Additional interest in the project has been generated during the quarter and we remain positive about our efforts to source a partner to fund further exploration and development in the project area in a way that would minimise Pryme’s financial exposure. This would enable Pryme to retain an interest in the project and share in any upside through successful drilling efforts.

Turner Bayou Chalk Project

Deshotels 20H and 13H Production (40% WI / 30% NRI) Rosewood Plantation 21H No.1 (61.53% WI / 46.15% NRI)

The average daily production rate for these wells during the September 2013 quarter was 76 Bbls/day (23 Bbls/day net to Pryme.) Production has remained fairly stable on the Deshotels 13 & 20H wells despite the mechanical issues which impeded their effective completion.

The three production units hold approximately 3,360 acres by production.

About Turner Bayou

The Turner Bayou project comprises approximately 80 square miles (50,000 acres) which have been imaged by a proprietary 3D seismic survey. Pryme has a 40% working interest in approximately 19,000 gross acres (15,000 net acres) in the Turner Bayou Project and is initially targeting development of the Austin Chalk horizon. In addition to the Austin Chalk potential of the Turner Bayou project area, exploration drilling within Pryme’s Turner Bayou leases has intersected the Tuscaloosa Marine Shale which is analogous to the Eagle Ford Shale in South Texas.

Four Rivers Project (8% – 25% Working Interest)

Third quarter oil sales of 2,732 barrels (30 Bbls/day net to Pryme) were 9% lower than for the previous quarter. This is mainly attributable to timing of oil deliveries and normal decline.

About Four Rivers

The Four Rivers project extends from Winn, Concordia and Catahoula Parishes in Louisiana to Adams, Jefferson and Wilkinson Counties in Mississippi. The project is targeting multiple “stacked” oil zones throughout the Middle-Wilcox formation at depths ranging from 4,000 to 7,000 feet. Wells drilled in the Middle-Wilcox exhibit long production lives with low decline rates after the initial flush oil is produced and relatively steady production is established. They are relatively inexpensive to drill with the potential for rapid conversion to production and typically have low operating and maintenance costs.

Raven Project (35% WI / 25.38% NRI)

Third quarter sales for the Raven project were 11,667 Mcf of natural gas and 221 barrels of condensate net to Pryme (127mcfd and 2.4 Bbls/day net to Pryme respectively), reflecting 15% increase in gas sales over the previous quarter and a 25% increase in condensate sales due timing of oil sales.

2 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Financial

Cash on hand at 30 September 2013 was $1.941m. Cash receipts from oil & gas sales for the quarter totalled $0.65m. Revenue before royalty payments for the quarter totalled $0.62m. Cash receipts may differ to reported revenue due to cash receipts from sales being disbursed net of royalties and the timing of working interest holder distributions by the operator.

==> picture [372 x 312] intentionally omitted <==

For further Company information please visit our website at www.prymeenergy.com or contact:

Justin Pettett Ryan Messer Managing Director Chief Operating Officer Pryme Energy Limited Pryme Energy Limited Telephone: +61 7 3371 1103 Telephone: +1 713 401 9806 Email: justin@prymeenergy.com Email: ryan@prymeenergy.com

Glossary

Bbls ......................................................................................................................................... Barrels of oil Bbls/day ...................................................................................................................Barrels (of oil) per day BOE .......................................................................................................................Barrels of Oil Equivalent BOE/day ...................................................................................................Barrels of Oil Equivalent per day Mcf.....................................................................................................Thousand Cubic Feet (of natural gas) Mcfd...................................................................................... Thousand Cubic feet (of natural gas) per day NRI .............................................................................................................................Net Revenue Interest WI ...................................................................................................................................... Working Interest 3.28 feet ................................................................................................................................Equals 1 metre

3 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Appendix 5B Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity ABN Quarter ended (“current quarter”) Pryme Energy Limited 75 117 387 354 30 September 2013

Consolidated statement of cash flows

Cash fo 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 1.10 1.11 1.12 1.13	ws related to operating activities Receipts from product sales and related debtors Payments for (a) exploration and evaluation (b) development (c) production (d) administration Dividends received Interest and other items of a similar nature received Interest and other costs of fnance paid Income taxes paid Other (provide details if material) Net Operating Cash Flows	Current quarter $A’000	Year to date (9 months) $A’000
		566 (485) - (113) (490) - 10 (110) - 33	1,955 (1,950) - (612) (1,632) - 32 (326) - 62
		(589)	(2,471)
	Cash fows related to investing activities Payment for purchases of: (a) prospects (b) equity investments (c) other fxed assets Proceeds from sale of: (a) prospects (b) equity investments (c) other fxed assets Loans to other entities Loans repaid by other entities Other (provide details if material) Net investing cash fows Total operating and investing cash fows (carried forward)	- - - - - 34 - - -	- - (2) - - 34 - - -
		34	32
		(555)	(2,439)

4 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash fows (brought forward)	(555)	(2,439)
Cash fows related to fnancing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) Net fnancing cash fows	- - 17 - - -	932 - 1,300 (11) - -
	17	2,221
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(538) 2,495 (16)	(218) 2,074 85
	1,941	1,941

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to theparties included in item 1.10	Current quarter $A’000
		216
		-
1.25	Explanation necessaryfor an understandingof the transactions
	N/A

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest N/A

5 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Appendix 5B

Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standbyarrangements	Amount available $A’000	Amount used $A’000
	7,122	7,122
	-	-

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	-
	-
	98
	488
Total	586

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash fows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	1,941	2,495
	-	-
	-	-
	-	-
Total: cash at end ofquarter(item 1.22)	1,941	2,495

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	-	-	-	-
	-	-	-	-

6 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Appendix 5B

Mining exploration entity quarterly report

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note 3) (cents)
7.1 Preference+securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions			N/A
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs	289,708,568	289,708,568	Various	Fully Paid
	-	-	-	-
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	Nil -	- -	- -	- -
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	9,521,250 - - -	- - -	Exercise Price $0.15 - - -	Expiry Date 30 November 2013 - - -
7.11 Debentures (totals only)			NA
7.12 Unsecured notes(totals only)			NA

7 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T

==> picture [596 x 28] intentionally omitted <==

----- Start of picture text -----

PRYME ENERGY LIMITED
----- End of picture text -----

Appendix 5B

Mining exploration entity quarterly report

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ...................................................... Date: 30 October 2013

(Director)

Print name: Justin Pettett

Notes

• 1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

• 2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

8 | S E P T E M B E R 2 0 1 3 Q U A R T E R L Y R E P O R T