HYDROCARBON DYNAMICS LIMITED — Share Issue/Capital Change 2010

Sep 5, 2010

Appendix 3B New issue announcement

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 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

PRYME OIL AND GAS 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 3 Principal terms of the+securities (eg, 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)	Ordinary Shares
	21,250,000
	Ordinary Fully Paid Shares

• See chapter 19 for defined terms.

24/10/2005 Appendix 3B Page 1

• 4 Do the[+] securities rank equally in The shares will rank equally with the existing all respects from the date of class of ordinary fully paid shares allotment 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 8 cents per share 6 Purpose of the issue To supplement working capital and ensure that: (If issued as consideration for the • If a decision is taken to commence a second acquisition of assets, clearly Turner Bayou Chalk project well prior to identify those assets) significant revenue flows from a successful Deshotels 20-H No.1 well, Pryme will be able to participate at its current working interest level;

• • In the event of cost overruns on the Deshotels 20-H No.1 well, the Company can continue to fund its proportionate share; and

• • The Company can continue with its planned land-based drilling program on the periphery of Catahoula Lake once the water level has been lowered to a level permitting access to drill locations.

7 Dates of entering +securities 6 September 2010 into uncertificated holdings or despatch of certificates Number +Class 8 Number and +class of all 200,051,337 Ordinary Fully Paid +securities quoted on ASX Shares ( including the securities in clause 2 if applicable)

• See chapter 19 for defined terms.

Appendix 3B Page 2

1/1/2003

Number +Class 9 Number and +class of all 500,000 $0.15 Options +securities not quoted on ASX expiring on 20 ( including the securities in January 2012 clause 2 if applicable) 1,106,855 Performance Rights/Restricted Stock Units

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

None

Part 2 - Bonus issue or pro rata issue

Items 11‐33 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

Items 35 to 42 are not applicable

• See chapter 19 for defined terms.

24/10/2005 Appendix 3B Page 3

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.

• 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 not available now, 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.

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Sign here: ............................................................ Date: 6 September 2010
(Managing Director)
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Print name: Justin Pettett

• See chapter 19 for defined terms.

Appendix 3B Page 4

1/1/2003

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Company Announcements Office Australian Securities Exchange 20 Bridge Street Sydney NSW 2000

6 September 2010

Dear Sirs

Section 708A(5)(e) Notice

Pryme Oil & Gas Limited ( Pryme ) refers to the Appendix 3B released today for the issue of 21,250,000 fully paid ordinary shares at $0.08 per share on 6 September 2010.

Pryme hereby notifies ASX under section 708A(5)(e) of the Corporations Act ( the Act ) that:

• (a) Pryme issued the shares without disclosure to the investor under Part 6D.2 of the Act;

• (b) as at 6 September 2010, Pryme has complied with the provisions of Chapter 2M of the Act as they apply to Pryme, and section 674 of the Act; and

• (c) as at 6 September 2010, there is no information:

• (i) that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

• (ii) that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of:

  • A. the assets and liabilities, financial position and performance, profits and losses and prospects of Pryme; or

  • B. the rights and liabilities attaching to the shares.

Yours sincerely,

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Justin Pettett Managing Director

For further information please contact:

Justin Pettett Managing Director Pryme Oil and Gas Limited Telephone: +61 7 3371 1103

Ryan Messer Chief Operating Officer Pryme Oil and Gas Limited Telephone: +1 713 401 9806

Website: www.prymeoilandgas.com ASX Code: PYM

OTCQX Code: POGLY

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Pryme Oil and Gas Limited is an Australian oil and natural gas producer and explorer with interests in the Gulf States of the U.S. The company has oil and gas exploration projects focused on Louisiana, the fifth-largest oil-producing state in the U.S. These projects are funded in part by existing cash flow. Pryme’s board of directors and management team has over 100 years of energy industry experience and has uniquely focused local knowledge, underscored by the proven track records of its managers and directors. Directors of the company are George Lloyd (Non Executive Chairman), Justin Pettett (Managing Director), Ryan Messer (Executive Director) and Greg Short (Non Executive Director).

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