KEY PETROLEUM LIMITED — Capital/Financing Update 2012

Aug 22, 2012

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 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

Name of entity

Key Petroleum Limited

ABN

58 137 176 393

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	Fully paid ordinary shares
	142,436,710

• 3 Principal terms of the[+] securities Fully paid ordinary shares (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)

• See chapter 19 for defined terms.

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4 Do the[+] securities rank equally in Yes all respects from the date of 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 $0.028 6 Purpose of the issue To provide working capital and funding for the (If issued as consideration for the Company’s upcoming exploration well Cyrene-1 acquisition of assets, clearly EP438, onshore Canning Basin. identify those assets) 6a Is the entity an[+] eligible entity that No 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 N/A resolution under rule 7.1A was passed 6c Number of +securities issued N/A without security holder approval under rule 7.1 6d Number of[+] securities issued with N/A security holder approval under rule 7.1A

• See chapter 19 for defined terms.

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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 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 Dates of entering+securities into uncertificated holdings or despatch of certificates 8 Number and +class of all +securities quoted on ASX (_including_the securities in section 2 if applicable)	N/A
	N/A
	N/A
	N/A
	N/A
	23 August 2012
	Number	+Class
	450,509,417	Fully paid ordinary shares

• See chapter 19 for defined terms.

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9 Number and +class of all +securities not quoted on ASX (_including_the securities in section 2 if applicable)	Number	+Class
	7,000,000 7,000,000 7,000,000 3,250,000 3,250,000	Unlisted options exercise price $0.055 expiry 06/08/2017 Unlisted options exercise price $0.064 expiry 06/08/2017 Unlisted options exercise price $0.074 expiry 06/08/2017 Performance Rights A Performance Rights B

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

Part 2 – DELETED – 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 are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000

• See chapter 19 for defined terms.

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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

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.

Sign here: (Director/Company secretary)

Date: 23 August 2012

Print name: Dennis Wilkins

== == == == ==

• See chapter 19 for defined terms.

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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

NOT APPLICABLE

• See chapter 19 for defined terms.

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Petroleum Ltd Key

23 August 2012

The Manager Companies Announcement Office ASX Limited Level 10, 20 Bridge Street SYDNEY NSW 2000

NOTIFICATION UNDER SECTION 708A OF THE CORPORATIONS ACT 2001 (CTH)

On 23 August 2012, Key Petroleum Limited ("Company") issued a total 142,436,710 fully paid ordinary shares at an issue price of $0.028 each ("Securities").

Secondary Trading Exemption

The Act restricts the on-sale of securities issued without disclosure, unless the sale is exempt under section 708 or 708A. By the Company giving this notice, sale of the Securities noted above will fall within the exemption in section 708A(5) of the Act.

The Company hereby notifies ASX under paragraph 708A(5)(e) of the Act that:

• (a) the Company issued the Securities without disclosure to investors under Part 6D.2 of the Act;

• (b) as at 23 August 2011 the Company has complied with the provisions of Chapter 2M of the Act as they apply to the Company, and section 674 of the Act; and

• (c) as at 23 August 2011 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 the Company; or

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

Yours faithfully

Dennis Wilkins Company Secretary

Key Petroleum Ltd

Suite 6, 330 Churchill Avenue, Subiaco, Western Australia 6008 T: +61 (0)8 6489 1670 F: +61 (0)8 6489 1601 E: info@keypetroleum.com.au W: www.keypetroleum.com.au ABN 52 120 580 618