TALIUS GROUP LIMITED - Capital/Financing Update 2012

ADVANCE ENERGY LIMITED ABN 62 111 823 762

PROSPECTUS

For an offer of up to 600,000,000 Shares at an issue price of $0.005 (0.5 cents) each

THIS OFFER CLOSES AT 5.00PM WST ON 12 OCTOBER 2012 VALID APPLICATIONS MUST BE RECEIVED BEFORE THAT TIME.

Please read the instructions in this Prospectus and on the accompanying Application Form prior to applying for Shares under the Offer.

THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT SHOULD BE READ IN ITS ENTIRETY.

THE SHARES OFFERED IN CONNECTION WITH THIS PROSPECTUS ARE OF A SPECULATIVE NATURE. IF YOU ARE IN DOUBT ABOUT WHAT TO DO, YOU SHOULD CONSULT YOUR PROFESSIONAL ADVISER WITHOUT DELAY.

IMPORTANT INFORMATION

This Prospectus is dated 12 September 2012 and was lodged with the ASIC on that date with the consent of all Directors. Neither ASIC nor ASX nor their respective officers take any responsibility for the contents of this Prospectus.

No Shares will be issued on the basis of this Prospectus any later than 13 months after the date of this Prospectus (being the expiry date of this Prospectus).

A copy of this Prospectus is available for inspection at the registered office of the Company at Suite 4, 16 Ord Street, West Perth, Western Australia, during normal business hours. The Company will provide a copy of this Prospectus to any person on request. The Company will also provide copies of other documents on request (see Section 4.3).

The Shares offered by this Prospectus should be considered speculative. Please refer to Section 3 for details relating to investment risks.

Revenues and expenditures disclosed in this Prospectus are recognised exclusive of the amount of goods and

services tax, unless otherwise disclosed.

The Prospectus will be made available in electronic form. Persons having received a copy of this Prospectus in its electronic form may obtain an additional paper copy of this Prospectus (free of charge) from the Company's principal place of business by contacting the Company. The Offer contemplated by this Prospectus is only available in electronic form to persons receiving an electronic version of this Prospectus within Australia.

Applications for Shares will only be accepted on an Application Form which is attached to, or provided by the Company with a copy of this Prospectus either in paper or electronic form. The Corporations Act prohibits any person from passing on to another person an Application Form unless it is accompanied by a complete and unaltered copy of this Prospectus.

No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer.

No action has been taken to permit the offer of Shares under this Prospectus in any jurisdiction other than Australia.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus.

This document is important and should be read in its entirety before deciding to participate in the Offer. This does not take into account the investment objectives, financial or taxation or particular needs of any Applicant. Before making any investment in the Company, each Applicant should consider whether such an investment is appropriate to his/her particular needs, and considering their individual risk profile for speculative investments, investment objectives and individual financial circumstances. Each Applicant should consult his/her stockbroker, solicitor, accountant or other professional adviser without delay. Some of the risk factors that should be considered by potential investors are outlined in Section 3.

This Prospectus includes forward looking statements that have been based on current expectations about future acts, events and circumstances. These forward looking statements are, however, subject to risks, uncertainties and assumptions that could cause those acts, events and circumstances to differ materially from the expectations described in the forward looking statements.

By returning an Application Form, you acknowledge that you have received and read this Prospectus and you have acted in accordance with the terms of the Offer detailed in this Prospectus.

Definitions of certain terms used in this Prospectus are contained in Section 6. All references to currency are to Australian dollars and all references to time are to WST, unless otherwise indicated.

CORPORATE DIRECTORY

Current Directors

Mr Anthony Short Mr Kip Plankinton Mr Gordon Sklenka

Managing Director Non-Executive Director Non-Executive Director

Company Secretary

Mr Alistair Jobling

Company and Registered Office

Share Registry

Advanced Share Registry Services Suite 2, 150 Stirling Highway Nedlands 6009 Western Australia Telephone: +61 8 8389 8033 Facsimile: +61 8 9389 7871

Website: www.advanceenergyltd.com.au

ASX Code : AVD

Suite 4, 16 Ord Street West Perth 6005 Western Australia

Telephone: +61 8 9429 2900

Facsimile: +61 8 9486 1011

PROPOSED TIMETABLE

PROPOSED TIMETABLE
Lodgement of Prospectus with ASIC and ASX	12 September 2012
Opening Date	13 September 2012
Closing Date	12 October 2012

The above timetable is indicative only and subject to change. Subject to compliance with all applicable laws, the Directors reserve the right to vary these dates, including the Closing Date for the Offer, without prior notice. Any extension of the Closing Date will have a consequential effect on the anticipated date for issue of the Shares.

RISK FACTORS

An investment in Shares is subject to risks and uncertainties and should be considered speculative. Some of the more significant risks which affect an investment in the Company include (but are not limited to):

(a) Operating Risks in Ukraine - The Company is acquiring assets in Ukraine, which has a less developed legal system than more established countries and where there are additional risks that include political instability, currency, laws affecting foreign ownership, government participation, exploration licensing and government control over mineral properties. Refer to Sections 3.1(a) and 3.1(b) for more details.
(b) Risks associated with the acquisition of an established company - The Company is acquiring Epic Energy Ukraine Ltd, a company that was incorporated in 2007 and which has been party to contracts, agreements and transactions. These risks have been minimised where possible by appropriate due diligence and protection with the Share Purchase Agreement but the Company may not have been made aware of all of them. Refer to Section 3.1(v) for more details;
(c) Technical Risk - The Company plans to undertake the re-entry of a well that was drilled in 1993-94 but was not brought into production. While a substantial amount of technical information has been obtained with regard to the original well, the condition of the well will not be known until operations commence. Furthermore, there is no guarantee of success that hydrocarbons can be commercially produced from the well. Refer to Section 3.1(d) for more details;
(d) License Risks - Advance is acquiring a company that has entered a Joint Activity Agreement with the holder of the subsoil license. The continuing validity of the company’s interest in the licenses is subject to several factors including the company meeting the JAA work programs. Refer to Sections 3.1(e) and 3.1(f) for more information ;
(e) Funding Requirements - The company seeks to raise sufficient funds to conduct limited confirmatory seismic, to undertake a re-entry of the well and to provide working capital until such time as revenues from production (if successful) occur. At this stage, the Company does not have an accurate estimate of the cost of the proposed re-entry and is unable to predict when the proceeds from a successful well would commence. There is therefore a risk that the company may need to obtain additional capital. Refer to Section 3.1(t) for further information;
(f) Oil and Gas Commercial Risks - The company will continue to be exposed to a range of oil and gas commercial and operational risks including oil and gas price volatility, hydrocarbon reserves and resource estimates, exchange rate risks, environmental risks and contract risks. Refer to Sections 3.1(c), 3.1(g), 3.1(h), 3.1(k) and 3.1(l) for further details.

Section 3 includes further details of the risks of an investment in the Company.

	TABLE OF CONTENTS
Section	Page No
1.	Details of the Offer ........................................................................................................ 1
2.	Effect of the Offer ......................................................................................................... 6
3.	Risk Factors ................................................................................................................. 9
4.	Additional information ................................................................................................. 17
5.	Authorisation .............................................................................................................. 23
6.	Glossary of Terms ...................................................................................................... 24

1. Details of the Offer

1.1 The Offer

The Company is offering, pursuant to this Prospectus, 600,000,000 Shares each at an issue price of $0.005 (0.5 cents) to raise up to $3,000,000 (before costs) ( Offer ). The Offer is being made to selected professional, sophisticated and retail investors who are sent a copy of this Prospectus (together with an Application Form).

At a general meeting of Shareholders held on 20 July 2012, Shareholders approved the issue of Shares under the Offer. Refer to Section 4.1 for a summary of the rights attaching to the Shares.

1.2 Purpose of the Offer and Status of Celiastad Acquisition

The Company has executed a binding heads of agreement to acquire Celiastad Pty Ltd ( Celiastad Acquisition ). Celiastad Pty Ltd ( Celiastad ), through its wholly owned subsidiary Celiastad Holdings Ltd, has executed a purchase and sale agreement to acquire Epic Energy Ukraine Ltd ( Epic ), a Ukrainian company which has entered a Joint Activity Agreement ( JAA ) with ZakhidUkrGeologiya ( ZUG ) to develop the Ortynytska Project in Western Ukraine. The consideration for the acquisition is $50,000.

Refer to the Company's ASX announcements of 12 June 2012, 4 September 2012 and 10 September 2012 as well as the notice of meeting dated 20 June 2012 for further details of the Celiastad Acquisition and the Ortynytska Project.

The conditions precedent to the Celiastad Acquisition are to be satisfied or waived by the Company no later than 10 October 2012 and completion of the Celiastad Acquisition will occur 5 days after these conditions precedent are satisfied or waived. Refer to the Company’s announcement of 11 September 2012 for further details. The Company will issue the Shares pursuant to the Celiastad Acquisition before issuing the Shares under this Offer.

Completion of the Offer will result in an increase in the cash on hand of up to approximately $3,000,000 (before the payment of costs associated with the Offer).

The funds raised pursuant to the Offer will be used towards the exploration activities on the Ortynytska Project and for general working capital purposes.

1.3 Proposed Use of Funds

Funds raised under the Offer are proposed to be expended as follows:

Description of Cash Outflows	A$	%
1. Payment to Vendor of Epic EnergyUkraine Ltd(1)	50,000	1.7%
2. Expenditure with respect to Ortynytska Project including:
a)Shoot & interpret 2D Seismic	335,000	11.2%
b)Re-entryDesign and sitepreparation	150,000	5.0%
c)Re-entryof Ortynytska-3 well	1,500,000	50.0%
d)Connection togaspipeline	100,000	3.3%
e)Workprogram contingency	193,658	6.5%
f) Ukraine Office Expenses and Technical Team(9 months)	150,000	5.0%
g)Travel to Ukraine and accommodation	60,000	2.0%
3. Perth Office administrative and compliance expenses and fees (9 months)	250,000	8.3%
4. Costs of Offer	211,342	7.0%
Total funds raised under the Offer	3,000,000	100%

(1) The consideration under the Purchase and Sale Agreement between Celiastad Holdings Ltd and Mr Gennady Varitskiy for the acquisition of Epic Energy Ukraine Ltd

Actual expenditure may differ significantly from the above estimates due to a number of factors including market conditions, the development of new opportunities, the results obtained from the staged approach to exploration, appraisal and development activities and other factors (including the risk factors outlined in Section 3).

The Company also intends to capitalise on other oil and gas opportunities as they arise which may result in costs being incurred which are not included in the above estimates. To capitalise on future opportunities and depending on the success of its activities the Company may require further equity fund raisings.

Unallocated working capital may be utilised by the Company to pay for cost overruns in budgeted expenditures (if any), additional exploration and development expenditure, the acquisition of new oil and gas opportunities and in the administration of the Company.

1.4 Option Entitlement Offer

As announced by the Company on 11 September 2012, the Company has resolved to undertake a non-renounceable entitlement offer of options ( Options ) on the basis of 1 Option for every two shares held at the record date. The Options will be issued with an exercise price of $0.02 and will expire on 30 December 2014. The timetable for the proposed offer has yet to be finalised but the record date will be after the issue of Shares offered under this Prospectus.

1.5 Opening and Closing Dates

The Company will accept Application Forms until 5.00pm WST on 12 October 2012 or such other date as the Directors in their absolute discretion shall determine, subject to the requirements of the Listing Rules ( Closing Date ).

1.6 Application Form

If you wish to subscribe for Shares under the Offer you should complete and return the Application Form, which will be provided with a copy of this Prospectus by the Company at the Company's discretion, in accordance with the instructions in the Application Form. Completed Application Forms must be received by the Company prior to 5.00pm WST on the Closing Date. Application Forms should be delivered to Advance Energy Limited at Suite 2, 16 Ord Street, West Perth, Western Australia, mailed to PO Box 1779, West Perth WA 6872 or sent by facsimile to (08) 9486 1011.

If you are in doubt as to the course of action, you should consult your professional advisor.

The Company reserves the right to reject any Application or to issue a lesser number of Shares than those applied for. Where the number of Shares issued is less than the number applied for, surplus Application Monies will be refunded (without interest) as soon as reasonably practicable after the Closing Date.

Acceptance of a completed Application Form by the Company creates a legally binding contract between the Applicant and the Company for the number of Shares accepted by the Company. The Application Form does not need to be signed to be a binding acceptance of Shares.

If the Application Form is not completed correctly it may still be treated as valid. The Directors’ decision as to whether to treat the acceptance as valid and how to construe, amend or complete the Application Form is final.

1.7 Minimum Subscription

There is no minimum subscription in respect of the Offer.

1.8 Effect on Control

The Offer will have no impact on the control of the Company as no person as a result of the Offer will increase their voting power in the Company:

(a) from 20% or below to more than 20% of issued capital of the Company; or
(b) from a starting point that is above 20% and below 90% of issued capital of the Company.

1.9 Issue and dispatch

Subject to completion of the Celiastad Acquisition, the Company intends to issue the Shares under the Offer progressively as Applications are received. Security holder statements will be dispatched as soon as possible after issue of the Shares.

It is the responsibility of Applicants to determine their allocation prior to trading in the Shares. Applicants who sell Shares before they receive their holding statements will do so at their own risk.

1.10 Application Monies held on trust

All Application Monies received for the Shares will be held in trust in a bank account maintained solely for the purpose of depositing Application Monies received pursuant to this Prospectus until the Shares are issued. All Application Monies will be returned (without interest) if the Shares are not issued.

1.11 ASX quotation

Application will be made to ASX no later than 7 days after the date of this Prospectus for the official quotation of the Shares. If permission is not granted by ASX for the official quotation of the Shares offered by this Prospectus within 3 months after the date of this Prospectus (or such period as ASX allows), the Company will repay, as soon as practicable, without interest, all Application Monies received pursuant to this Prospectus.

1.12 CHESS

The Company participates in the Clearing House Electronic Subregister System, known as CHESS. ASX Settlement, a wholly owned subsidiary of ASX, operates CHESS in accordance with the Listing Rules and the ASX Settlement Operating Rules.

Under CHESS, Applicants will not receive a certificate but will receive a statement of their holding of Shares.

If you are broker sponsored, ASTC will send you a CHESS statement.

The CHESS statement will set out the number of Shares issued under this Prospectus, provide details of your holder identification number, the participant identification number of the sponsor and the terms and conditions applicable to the Shares.

If you are registered on the Issuer Sponsored subregister, your statement will be dispatched by Advanced Share Registry Services and will contain the number of Shares issued to you under this Prospectus and your security holder reference number.

A CHESS statement or Issuer Sponsored statement will routinely be sent to Shareholders at the end of any calendar month during which the balance of their Shareholding changes. Shareholders may request a statement at any other time, however, a charge may be made for additional statements.

1.13 Risk factors

An investment in Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company which are in Section 3.

1.14 Residents Outside Australia

This Prospectus, and any accompanying Application Form, do not, and is not intended to, constitute an offer of Securities in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus or the Securities under the Offer. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

1.15 Broking Fees

The Company has not appointed a lead manager to the Offer, however, the Company may, at its sole discretion, pay placement fees to brokers and AFSL holders who assist with the raising of funds under the Offer. The placement fees may comprise of up to 6% (plus GST) of the total amount placed by the broker and/or the AFSL holder.

1.16 Taxation implications

The Directors do not consider it appropriate to give Applicants advice regarding the taxation consequences of subscribing for Shares under this Prospectus.

The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Applicants. As a result, Applicants should consult their professional tax adviser in connection with subscribing for Shares under this Prospectus.

1.17 Major activities and financial information

A summary of the major activities and financial information relating to the Company for the financial year ended 31 December 2011 is in the Annual Financial Report which was lodged with ASX on 24 April 2012.

A summary of the major activities relating to the Company for the six months ending 30 June 2012 is in the Half Yearly Accounts which was lodged with ASX on 27 August 2012.

The Company's continuous disclosure notices (i.e. ASX announcements) since the lodgement of its Annual Report listed in Section 4.3.

Copies of these documents are available free of charge from the Company. Directors strongly recommend that potential Applicants review these and all other announcements prior to deciding whether or not to participate in the Offer.

1.18 Privacy

The Company collects information about each Applicant provided on an Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant’s security holding in the Company.

By submitting an Application Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Application Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the share registry, the Company’s related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities.

If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application.

An Applicant has an entitlement to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company’s registered office.

1.19 Enquiries concerning Prospectus

Enquiries relating to this Prospectus should be directed to the Company Secretary by telephone on +61(8) 9429 2900.

2. Effect of the Offer

2.1 Capital Structure on completion of the Offer

Balance at the date of this Prospectus Shares to be issued to satisfy interest payable to holders of Listed Convertible Notes(2) Shares to be issued pursuant to the Celiastad Acquisition(3) To be issued under the Offer Balance after the Offer (if fully subscribed)	Number of Shares Number of Listed Convertible Notes Number of Unlisted Performance Shares 411,192,886 6,675,500(1) 9 33,029,791 500,000,000 - - 600,000,000 - -
	1,544,222,677 6,675,500 9

(1) Listed Convertible Notes may only be exercised on 31 December or 30 June each year. The listed Convertible Notes mature in December 2014.
(2) The Company will satisfy interest of $158,543 payable to the holders of Listed Convertible Notes for the quarter ending 30 September 2012 by issuing shares at 80% of the Volume Weighted Average Price of Shares sold on the 5 days prior to 30 September 2012 ( 5 Day VWAP ). The exact number of Shares to be issued cannot be known at this time. It is therefore assumed that the 5 Day VWAP is therefore $0.006 and that the Shares will be issued at $0.0048. In the event that the 5 Day VWAP is higher than $0.006, then fewer Shares will be issued and if it is lower, then more Shares will be issued.
(3) The conditions precedent to the Celiastad Acquisition are to be satisfied or waived by the Company by no later than 10 October 2012 and the Shares will be issued 5 days thereafter.
(4) Assuming that the Offer is fully subscribed and that no further Shares are issued, the Company will offer up to 772,111,338 Options after the Offer is complete. See Section 1.4 for further details

2.2 Pro forma statement of financial position

	Pro-Forma Pre Acquisition and Offer (Audit Reviewed) 30 June 2012	Proforma Adjustments	Pro-Forma Post Acquisition & Offer
	$	$	$

Current assets
Cash and cash equivalents	42,063	2,768,658	2,810,721
Trade & other receivables	75,057		75,057
Total Current Assets	117,120		2,885,778

Non-Current Assets
Property, Plant and equipment	4,413		4,413
Oil and Gas Exploration	615,813		615,813
Other Financial Assets	58,724	2500000	2,558,724
Total Non-Current Assets	678,950		3,178,950

Total Assets	796,070		6,064,728

Current Liabilities
Trade and otherpayables	513,880		513,880
Interest BearingLiabilities	186,700		186,700
Accrued Interest - Convertible Notes	158,543	(158,543)	0
Total Current Liabilities	859,123		700,580

Non-Current Liabilities
Interest BearingLiabilities	6,675,500		6,675,500
Total Non-Current Liabilities	6,675,500		6,675,500

Total Liabilities	7,534,623		7,376,080

Net Assets	(6,738,553)		(1,311,352)

Equity
Contributed equity	16,579,561	5,703,543	22,283,104
Reserves	(687,337)		(687,337)
Accumulated losses	(22,630,777)	(276,342)	(22,907,119)

Total Equity	(6,738,553)		(1,311,352)

Basis of Preparation

The pro-forma statement of financial position below has been prepared in accordance with the draft ASIC Guide to Disclosing Pro-Forma Financial Information (issued July 2005).

The pro-forma statement of financial position is based on the audit reviewed statement of financial position at 30 June 2012 adjusted by the material transactions between 30 June 2012 and 31 August 2012 and the following adjustments

(a) The issue of 5,000,000 shares at $0.004 per Share to raise $20,000 and the issue of 6,250,000 Shares at $0.004 to satisfy the provision of professional services;
(b) The issue of 49,544,688 shares at $0.0032 to satisfy interest payable to Listed Convertible Noteholders for the quarter ending 30 June 2012;
(c) Operating loss of $40,000 for the two months since 30 June 2012;
(d) the issue of 500,000,000 Shares at a deemed issue price of $0.005 per share (0.5 cents) to the vendors of Celiastad Pty Ltd; and
(e) the issue of 600,000,000 Shares each at $0.005 under the Offer; and
(f) payment of costs associated with the Offer as outlined in Section 4.8.

2.3 Market price of Shares

The highest and lowest market sale prices of the Company’s Shares on ASX during the 3 months immediately preceding the date of lodgement of this Prospectus with ASIC and the respective dates of those sales were:

Highest: $0.007 on 11 September 2012 Lowest: $0.003 on 7 August 2012

The latest available market sale price of the Company’s Shares on ASX prior to the date of lodgement of this Prospectus with ASIC was $0.007 per Share on 11 September 2012.

2.4 Dividend policy

The Directors are not able to say when and if dividends will be paid in the future, as the payment of any dividends will depend on the future profitability, financial position and cash requirements of the Company.

3. Risk Factors

Activities in the Company and its controlled entities, as in any business, are subject to risks, which may impact on the Company’s future performance. The Company and its controlled entities have implemented appropriate strategies, actions, systems and safeguards for known risks, however, some are outside its control.

The Directors consider that the following summary, which is not exhaustive, represents some of the major risk factors which Shareholders need to be aware of in evaluating the Company’s business and risks of increasing your investment in the Company. Shareholders should carefully consider the following factors in addition to the other information presented in this Prospectus.

The principal risks include, but are not limited to, the following:

3.1 Specific Risks associated with the Company

(a) Risks Associated with operating in Ukraine

The Ortynytska Project is located in Western Ukraine and the Company will be subject to the risks associated with operating in that country. Such risks can include economic, social or political instability or change, hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, export duties, repatriation of income or return of capital, environmental protection, labour relations as well as government control over mineral properties or government regulations.

Changes to Ukraine’s fiscal regime for oil and gas companies or investment policies and legislation or a shift in political attitude may adversely affect the Company’s operations and profitability.

(b) Ukraine Legal Environment

Ukraine’s legal system is less developed than more established countries and this could result in the following risks:

(i) political difficulties in obtaining effective legal redress in the courts whether in respect of a breach of law or regulation or in an ownership dispute;
(ii) a higher degree of discretion held by various government officials or agencies;
(iii) the lack of political or administrative guidance on implementing applicable rules and regulations, particularly in relation to taxation and property rights;
(iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or
(v) relative inexperience of the judiciary and court in matters affecting the Company.

The business of oil and gas exploration, project development and production, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on many factors such as:

(i) the discovery and/or acquisition of economically recoverable reserves;
(ii) access to adequate capital for project development;
(iii) design and construction of efficient development and production infrastructure within capital expenditure budgets;
(iv) securing and maintaining title to interests;
(v) obtaining consents and approvals necessary for the conduct of oil and gas exploration, development and production; and
(vi) access to competent operational management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

Whether or not income will result from projects undergoing exploration and development programs depends on successful exploration and establishment of production facilities. Factors including costs, actual hydrocarbons and formations, flow consistency and reliability and commodity prices affect successful project development and operations.

Drilling activities carry risk and as such, activities may be curtailed, delayed or cancelled as a result of weather conditions, mechanical difficulties, shortages or delays in the delivery of drill rigs or other equipment.

Industry operating risks include fire, explosions, unanticipated reservoir problems which may affect field production performance, industrial disputes, unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment, mechanical failure or breakdown, blow outs, pipe failures and environmental hazards such as accidental spills or leakage of liquids, gas leaks, ruptures, discharges of toxic gases or geological uncertainty (such as lack of sufficient sub-surface data from correlative well logs and/or formation core analyses). The occurrence of any of these risks could result in legal proceedings against, and substantial losses to the Company due to injury or loss of life, damage to or destruction of property, natural resources or equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation, and penalties or suspension of operations. Damage occurring to third parties as a result of such risks may give rise to claims against the Company.

There is no assurance that any exploration on current or future interests will result in the discovery of an economic deposit of oil or gas. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically developed.

(d) Risks associated with well re-entries

The Company plans to undertake the re-entry of a well that was drilled in 1993-94 and encountered gas shows but was not brought into production. While a substantial amount of technical information has been obtained with regard to the

original well, the condition of the well bore will not be known until operations commence. Furthermore, the risks of re-entering a well are less predictable than those of drilling a new well and there is no guarantee that hydrocarbons can be commercially produced from the well

(e) Risks associated with exploration licence retention and renewal and work programs

The ability of the Company to develop and exploit oil and gas reserves in Ukraine depends on the continued compliance of Epic, being the participant in the Ortynytska Project JAA, with the obligations of its current exploration and development licences and Epic's ability to convert these licences into production licenses. The continuing validity of the licenses and their renewal depends on the steps taken by Epic. The continued good standing and, where appropriate, renewal of these approvals, permits and licenses cannot be assured. In addition, exploration and development licenses held by Epic may not be converted into production licenses. In addition, Epic may be required to cease production at a field for a period of up to seventy days while an application for conversion is considered by governmental authorities.

Ukrainian legislation in relation to the issue of licenses to explore and develop oil and gas reserves is in some cases unclear and subject to ambiguity. There can be no assurance that the regulators will not adopt a more stringent approach to granting, maintaining, renewing or converting licenses than has been the case to date.

(f) Risks relating to ability to convert licences from exploration to production

According to The Law of Ukraine “On Oil & Gas” dated 12 July 2001 ( Oil and Gas Law ) in the case of discovery of oil and gas deposit, the permit holder that performed exploration, subject to meeting other conditions of the application, has the preferential right to receive special permit for production of oil and gas.

According to Article 15 of the Oil and Gas Law, in the case where the holder of permit performed geological survey for further industrial development and received a positive decision regarding confirmation of the deposits, the oil and gas subsoil shall be transferred into permit holder’s use without application.

The exploration and production subsoil licence granted to ZakhidUkrGeologiya was granted for an initial five year period and has been extended until 24 December 2014.

In the event that either ZakhidUkrGeologiya or Epic must apply for a production permit in accordance with Oil and Gas Law, there is no guarantee that the permit will be granted. Even if a production permit is granted, the license holder must continue to comply with the conditions of the permit to return the licence and carry out its production activities. There are risks that the relevant permit can be suspended and cancelled for non-compliance or breach.

(g) Oil and Gas Price Volatility

The demand for, and price of, oil and natural gas is highly dependent on a variety of factors, including international supply and demand, the level of consumer product demand, weather conditions, the price and availability of alternative fuels, actions taken by governments and international cartels, and global economic and political developments.

International oil and gas prices have fluctuated widely in recent years and may continue to fluctuate significantly in the future. Fluctuations in oil and gas prices and, in particular, a material decline in the price of oil or gas may have a material adverse effect on the Company's business, financial condition and results of operations.

(h) Hydrocarbon Reserves and Resource Estimates

Hydrocarbon reserve and resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates, that were valid when originally calculated, may alter significantly when new information or techniques become available. In addition, by their very nature, resource and reserve estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional drilling and analysis the estimates are likely to change. This may result in alterations to development and production plans which may in turn, adversely affect the Company’s operations.

(i) Oil Reserves and Commercial Oil Flow

Oil reserves are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, oil reserves are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and commercial oil flow plans which may, in turn, adversely affect the Company’s operations.

(j) General Economic and Political Risks

Changes in the general economic and political climate in the Ukraine, Australia and on a global basis that could impact on economic growth, the oil and gas prices, interest rates, the rate of inflation, taxation and tariff laws, domestic security which may affect the value and viability of any oil and gas activity that may be conducted by the Company.

(k) Commodity Price Volatility and Exchange Rate Risks

If the Company achieves success leading to hydrocarbon production, the revenue it will derive through the sale of commodities exposes the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for oil and gas, technological advancements, forward selling activities and other macro-economic factors.

Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets.

(l) Environmental Risks

The Company will be subject to environmental laws and regulations in connection with operations it may pursue in the oil and gas industry. Such operations are currently in Ukraine. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with all applicable laws. However, the Company may be the subject of accidents or unforeseen circumstances that could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations that may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect its operations in any area.

(m) Competition

The Company will compete with other companies, including major oil and gas companies. Some of these companies have greater financial and other resources than the Company and, as a result, may be in a better position to compete for future business opportunities. Many of the Company's competitors not only explore for and produce oil and gas, but also carry out downstream operations on these and other products on a worldwide basis. There can be no assurance that the Company can compete effectively with these companies.

(n) Regulatory

Changes in relevant taxes, legal and administration regimes, accounting practice and government policies may adversely affect the financial performance of the Company.

(o) Insurance

Insurance against all risks associated with oil and gas production is not always available or affordable. The Company will maintain insurance where it is considered appropriate for its needs. However, it will not be insured against all risks either because appropriate cover is not available or because the Directors consider the required premiums to be excessive having regard to the benefits that would accrue.

(p) Operating Risks

The operations of the Company may be affected by various factors, including failure to locate or identify oil reserves, failure to achieve predicted well production flow rates, operational and technical difficulties encountered in production, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated reservoir problems which may affect field production performance, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment.

(q) Transport and infrastructure risk

The Company's drilling and production activities may be impaired due to inadequate state infrastructure in Ukraine. The deterioration of the state gas and oil pipeline in Ukraine could disrupt the transportation of goods and supplies and

interrupt business operations. In general, Ukraine's physical infrastructure, including power generation and transmission stations, communication systems and road network largely dates back to Soviet times and are relatively poor in comparison with other developed countries. The Ukrainian Government has been implementing plans to develop Ukraine's rail, electricity and telephone systems which may result in increased charges or tariffs while failing to generate sufficient funding to repair, maintain or improve these systems. The failure to maintain adequate transport services and networks or a disruption in transport services could cause transportation delays for the Company's products and impair the Company's ability to supply its customers.

(r) Drilling contract risks

Oil and gas development and exploration activities are dependent on the availability of drilling rigs and related equipment and the provision of third party services in the particular areas where such activities will be conducted. The Company will need to lease equipment and obtain services from third parties to undertake its proposed operations. Such equipment and services may be in short supply and may not be readily available at the times and places required. Demand for limited equipment such as drilling rigs may affect the availability of such equipment to the Company and may delay its development and exploration activities. Failure by the Company to secure necessary equipment could adversely affect the Company's business, results of operations or financial condition. The failure of a third party provider, or supplier, to perform its contractual obligations, or an inability to achieve a commercially viable contract with a third party provider or supplier would have a material adverse impact on the Company's business, the results of operations or financial condition.

(s) Energy demand from Ukraine

Although Ukraine's economic outlook has stabilised significantly over recent years, there can be no assurance that anticipated levels of growth in its economy or its energy requirements will in fact materialise. Should its economy fail to grow, then demand for energy and accordingly oil and gas may not continue to increase in accordance with projected growth rates or may decline. In such circumstances, the Company may need to find alternative markets for certain of its future oil and gas developments. Such markets may not be available or it may not be economical to access such alternative markets. Should any of these factors occur and if no alternative markets for the Company's anticipated production is then available, the productivity of the Company may decline. Even if such markets are available, the costs of accessing such alternative markets may be much higher. Any of these factors may have a material adverse effect on the Company's business, results of operations or financial condition.

(t) Uncertainty with regard to funding requirements

The Company has prepared a budget which includes seismic acquisition and interpretation, well design and re-entry and administrative costs and aims to raise sufficient funds to meet these budgeted expenses. However, the company does not yet have an accurate estimate of the cost of the proposed re-entry or of any contingencies that may eventuate nor is it able to predict when the cash flows from a successful well might commence. There is therefore a risk that the company may need to obtain additional capital.

(u) Impact of Future funding

The Company may require further financing in the future, in addition to amounts raised pursuant to the Offer. Any additional equity financing may be dilutive to Shareholders, may be undertaken at lower prices than the current market price (or Offer price) or may involve restrictive covenants which limit the Company's operations and business strategy. Debt financing, if available, may involve restrictions on financing and operating activities.

Although the Directors believe that additional capital can be obtained, no assurances can be made that appropriate capital or funding, if and when needed, will be available on terms favourable to the Company or at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and this could have a material adverse effect on the Company's activities and could affect the Company's ability to continue as a going concern.

(v) Commercial Risks associated with the acquisition of Epic

The Company is acquiring Epic Energy Ukraine Ltd, a company that was incorporated in 2007 and which has been party to contracts, agreements and transactions. These risks have been identified and considered as part of the due diligence process and minimised where possible by obtaining warranties from the vendor. Nonetheless, there may still be undisclosed issues and risks that the Company may have to deal with post-completion that may result in delays to the program.

3.2 General Risks

(a) Securities investments

There are risks associated with any securities investment. The prices at which the Shares trade may fluctuate in response to a number of factors.

Furthermore, the stock market, and in particular the market for mining and exploration companies, has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of such companies. There can be no guarantee that these trading prices will be sustained. These factors may materially affect the market price of the Shares regardless of the Company’s operational performance.

(b) Share market conditions

Share market conditions may affect the value of Shares regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(i) general economic outlook;
(ii) interest rates and inflation rates;
(iii) changes in investor sentiment toward particular market sectors;
(iv) the demand for, and supply of, capital; and
(v) terrorism or other hostilities.

The market price of the Shares may fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company, or any return on an investment in the Company.

(c) Economic Risk

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include the level of direct and indirect competition against the Company, industrial disruption, the rate of growth of gross domestic product in Australia, or any other country in which the Company may operate, interest rates and the rate of inflation.

3.3 Investment Speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company.

The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. Potential investors should consider that the investment in the Company is speculative and should consult their professional adviser before deciding whether to apply for Shares pursuant to this Prospectus.

4. Additional information

4.1 Rights attaching to Shares

A summary of the rights attaching to Shares in the Company is set out below. This summary is qualified by the full terms of the Constitution (a full copy of the Constitution is available from the Company on request free of charge) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of Shareholders. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For a Shareholder to obtain a definitive assessment of the rights and liabilities which attach to Shares in any specific circumstances, the Shareholder should seek legal advice.

(a) Voting

At a general meeting, on a show of hands every Shareholder present in person has one vote. At the taking of a poll, every Shareholder present in person or by proxy and whose Shares are fully paid has one vote for each of his or her Shares. On a poll, the holder of a partly paid share has a fraction of a vote with respect to the share. The fraction is equivalent to the proportion which the amount paid (not credited) bears to the total amount paid and payable (excluding amounts credited).

(b) General Meetings

Each Shareholder is entitled to receive notice of, attend and vote at general meetings of the Company and to receive all notices, financial statements and other documents required to be sent to Shareholders under the Constitution of the Company, the Corporations Act and the Listing Rules.

(c) Dividends

The Directors may pay to Shareholders any interim and final dividends as, in the Directors' judgement, the financial position of the Company justifies. The Directors may fix the amount, the record date for determining eligibility and the method of payment. All dividends must be paid to the Shareholders in proportion to the number and the amount paid on the Shares held.

(d) Transfer of Shares

Generally, all Shares in the Company are freely transferable subject to the procedural requirements of the Constitution, and to the provisions of the Corporations Act, the Listing Rules and the ASTC Operating Rules. The Directors may decline to register an instrument of transfer received where the transfer is not in registrable form or where refusal is permitted under the Listing Rules or the ASTC Operating Rules. If the Directors decline to register a transfer the Company must give reasons for the refusal. The Directors must decline to register a transfer when required by the Corporations Act, the Listing Rules or the ASTC Operating Rules.

(e) Variation of Rights

The Company may only modify or vary the rights attaching to any class of shares with the prior approval by a special resolution of the holders of shares of that

class, or with the written consent of the holders of at least three-fourths of the issued shares of that class.

(f) Directors

The minimum number of Directors is three. Currently, there are five Directors. Directors, other than the managing Director must retire on a rotational basis so that 1-third of Directors must retire at each annual general meeting. Any other Director who has been in office for three or more years must also retire. A retiring Director is eligible for re-election. The Directors may appoint a director either in addition to existing Directors or to fill a casual vacancy, who then holds office until the next annual general meeting.

(g) Decisions of Directors

Questions arising at a meeting of Directors are decided by a majority of votes. The Chairman has a casting vote.

(h) Issue of Further Shares

Subject to the Constitution, the Corporations Act and the Listing Rules, the Directors may issue, or grant options in respect of, Shares to such persons on such terms as they think fit. In particular, the Directors may issue preference shares, and may issue shares with preferred, deferred or special rights or restrictions in relation to dividends, voting, return of capital and participation in surplus on winding up.

(i) Officers' Indemnity

To the full extent permitted by the law the Company shall indemnify each officer, auditor or agent of the Company, out of the property of the Company, against all losses and liabilities incurred by the person as an officer, auditor or agent of the Company, including costs and expenses incurred in defending proceedings, whether criminal or civil..

(j) Alteration to the Constitution

The Constitution can only be amended by a special resolution passed by at least 75% of Shareholders present and voting at a general meeting. At least 28 days' notice of the intention to propose the special resolution must be given.

(k) ASX Listing Rules Prevail

To the extent that there are any inconsistencies between the Constitution and the Listing Rules, the Listing Rules prevail.

4.2 Company is a disclosing entity

The Company is a disclosing entity under the Corporations Act. It is subject to regular reporting and disclosure obligations under both the Corporations Act and the Listing Rules of ASX.

Copies of documents lodged with ASIC in relation to the Company may be obtained from, or inspected at, an ASIC office (see Section 4.3 below).

4.3 Copies of documents

Copies of documents lodged by the Company in connection with its reporting and disclosure obligations may be obtained from, or inspected at, an office of ASIC. The Company will provide free of charge to any person who requests it during the period of the issue, a copy of:

(a) the Annual Financial Report of the Company for the year ended 31 December 2011, being the last financial year for which an annual financial report has been lodged with ASIC in relation to the Company before the issue of this Prospectus; and
(b) the following continuous disclosure notices given by the Company to notify ASX of information relating to the Company during the period from the date of lodgement of the Annual Financial Report referred to in paragraph (a) above and before the date of issue of this Prospectus are as follows:

Date Lodged Subject of Announcement

11/09/2012 Option Entitlement Offer and Acquisition Update 10/09/2012 Investor Presentation 07/09/2012 Appendix 3B- Exercise and Expiry of Options 04/09/2012 Update on the Acquisition of the Ortynytska Project 27/08/2012 Half Yearly Accounts 09/08/2012 Appendix 3B and Section 708A Notice 06/08/2012 Expiration of Options 31/07/2012 Quarterly Activities and Cashflow Statement 24/07/2012 Appendix 3B 20/07/2012 Results of General Meeting 16/07/2012 Change in substantial holding 10/07/2012 Appendix 3B and s 708A Notice 27/06/2012 Research Report Available on Company Website 22/06/2012 Issue of Shares for Convertible Note Interest 20/06/2012 Notice of General Meeting/ Proxy Form 12/06/2012 Acquisition of Ukraine Gas Project 04/06/2012 Change in substantial holding 04/06/2012 Becoming a substantial holder 31/05/2012 Results of Annual General meeting- Amended 31/05/2012 Results of Annual General Meeting 29/05/2012 Appendix 3B and s708A Notice 25/05/2012 Response to ASX Diversity Policy Query 27/04/2012 Notice of Annual General Meeting 27/04/2012 Quarterly Activities and Cashflow Report

The following documents are available for inspection throughout the application period of this Prospectus during normal business hours at the registered office of the Company at Suite 4, 16 Ord Street, West Perth, Western Australia:

(i) this Prospectus;
(ii) Constitution; and
(iii) the consents referred to in Section 4.9 and the consents provided by the Directors to the issue of this Prospectus.

4.4 Information excluded from continuous disclosure notices

There is no information which has been excluded from a continuous disclosure notice in accordance with the Listing Rules, and which is required to be set out in this Prospectus.

4.5 Determination by ASIC

ASIC has not made a determination which would prevent the Company from relying on section 713 of the Corporations Act in issuing the Shares under this Prospectus.

4.6 Directors' interests and benefits

(a) Directors’ interests in Company securities

Set out in the table below are details of Directors' relevant interests in the securities of the Company at the date of this Prospectus:

Director	No of Shares	No. of Options	No. of	No of Converting
	Held (1)	Held	Convertible	Preference

			Notes	Shares


Anthony Short	25,792,438	24.072,937	Nil	3
Kip Plankinton	Nil	Nil	Nil	Nil
Gordon Sklenka	10,927,499	10,198,997	Nil	1

(1) Held directly or indirectly by the Director or a related party of the Director.

(b) Remuneration of Directors

The following table shows the total remuneration, including Directors’ fees, paid to Directors since 1 January 2010.

Director	Year	Salary & Fees	Superan nuation	Other non-cash benefit	Total


Anthony Short	20121	-	-	-	-
	2011	44,821	-	-	44,821
	2010	121,000	-	-	121,000
Kip Plankinton	20121	-	-	-	-
	2011	18,329	-	-	18,329
	2010	21,122	-	-	21,122
Gordon Sklenka	20121	-	-	-	-
	2011	53,837	-	-	53,837
	2010	55,000	-	-	55,000

(1) No fees were paid between 1 January 2012 and 31 August 2012

Except as disclosed in this Prospectus, no Director or proposed director, and no firm in which a Director or proposed director is a partner:

(i) has any interest nor has had any interest in the last two years prior to the date of this Prospectus in the formation or promotion of the Company, the Shares offered under this Prospectus or property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offer; or
(ii) has been paid or given or will be paid or given any amount or benefit to induce him or her to become, or to qualify as, a Director, or otherwise for services rendered by him or her in connection with the formation or promotion of the Company or the Offer.
(d) Other interests and benefits
(i) GBU Capital Pty Ltd, a Company of which Mr Short and Mr Sklenka are Directors, has been appointed to provide corporate advisory services to the Company. GBU Capital receives $7,500 per month for the provision of on-going corporate advisory services.
(ii) AAG Management Pty Ltd, a Company of which Mr Short and Mr Sklenka are Directors, has been engagement to provide a range of services including office facilities, financial administration, company secretarial services telecommunication and is paid $20,000 per month.

4.7 Interests of Named Persons

Except as disclosed in this Prospectus, no expert, promoter or other person named in this Prospectus as performing a function in a professional, advisory or other capacity:

(a) has any interest nor has had any interest in the last two years prior to the date of this Prospectus in the formation or promotion of the Company, the Offer or property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or
(b) has been paid or given or will be paid or given any amount or benefit in connection with the formation or promotion of the Company or the Offer.

Advanced Share Registry Services has been appointed to conduct the Company’s share registry functions and to provide administrative services in respect to the processing of Applications received pursuant to this Prospectus, and will be paid for these services on standard industry terms and conditions.

4.8 Expenses of Offer

The estimated expenses of the Offer are as follows:

ASIC lodgement fee ASX quotation fee Broker Fees Legal expenses Printing, mailing and other expenses Total	$ 2,171 12,171 180,000 15,000 2,000 211,342

4.9 Consents

In accordance with the Corporations Act, Advanced Share Registry Services has given and, as at the date hereof, has not withdrawn, its written consent to be named as the Company's share registry as at the date of lodgement of this Prospectus with the ASIC. Advanced Share Registry Services has had no involvement in the preparation of any part of this Prospectus other than being named as the share registry of the Company. Advanced Share Registry Services has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for, any part of this Prospectus.

To the maximum extent permitted by law, Advanced Share Registry Services expressly disclaims and takes no responsibility for any part of this Prospectus other than the references to their name.

5. Authorisation

This Prospectus is authorised by each of the Directors of the Company. This Prospectus is signed for and on behalf of Company by:

==> picture [213 x 73] intentionally omitted <==

Anthony Short Managing Director

Dated: 12 September 2012

6. Glossary of Terms

These definitions are provided to assist persons in understanding some of the expressions used in this Prospectus.

Acceptance means a valid application for Shares made pursuant to this Prospectus on an Application Form.

Annual Financial Report means the financial report lodged by the Company with ASIC in respect to the year ended 31 December 2011 and includes the corporate directory, Shareholder information, Directors’ declaration, financial statements and the notes thereto, of the Company and its controlled entities for the year ended 31 December 2011, together with a Directors’ report in relation to that financial year and the auditor’s report for the year to 31 December 2011.

Applicant means a person who submits an Application Form.

Application Form means the application form provided by the Company with a copy of this Prospectus.

Application Monies means application monies for Shares received by the Company from an Applicant.

ASIC means Australian Securities and Investments Commission.

ASTC means ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532.

ASX means ASX Limited ACN 008 624 691.

Board means the Directors meeting as a board.

Business Day means Monday to Friday inclusive, other than a day that ASX declares is not a business day.

Celiastad means Celiastad Pty Ltd (ACN 158 828 838)

Celiastad Acquisition means the Binding Heads of Agreement between the Company and Celiastad

CHESS means ASX Clearing House Electronic Subregister System.

Closing Date means 12 October 2012 or such later date as the Directors may determine.

Company or Advance Energy means Advance Energy Limited ACN 111 823 762.

Constitution means the constitution of the Company as at the date of this Prospectus.

Convertible Notes means the convertible notes issued by the Company at the date of this Prospectus.

Corporations Act means Corporations Act (Cth) 2001.

Directors mean the directors of the Company as at the date of this Prospectus.

Epic means Epic Energy Ukraine Ltd, a company incorporated in Ukraine which is a party to the JAA

Half Yearly Accounts means the financial report for the six months ending 30 June 2012 lodged with ASX on 27 August 2012

Heads of Agreement means the Heads of Agreement between the Company and Celiastad for the acquisition of 100% of the issued capital of Celiastad

Issuer Sponsored means securities issued by an issuer that are held in uncertificated form without the holder entering into a sponsorship agreement with a broker or without the holder being admitted as an institutional participant in CHESS.

JAA means the Joint Activity Agreement between ZUG and Epic dated 15 December 2012

Listed Convertible Notes means the Listed Convertible Notes issued by the Company as described in Section 2.1

Listing Rules means the Listing Rules of ASX.

Offer means as defined in Section 1.1.

Official List means the official list of ASX.

Official Quotation means quotation of Shares on the Official List.

Option means the right to acquire one Share in the capital of the Company as described in Section 1.4.

Ortynytska Project means the Company's Ortynytska Project located in Western Ukraine.

Prospectus means this prospectus dated 12 September 2012.

Section means a section of this Prospectus.

Shareholder means a holder of Shares.

Share means a fully paid ordinary share in the capital of the Company.

$ means Australian dollars.

WST means Western Standard Time, being the time in Perth, Western Australia.

ZUG means ZakhidUkrGeologiya , the holder of the License and a subsidiary of National Joint Stock Company .

ADVANCE ENERGY LIMITED APPLICATION FORM

Please read all instructions on reverse of this form and the Company’s Prospectus dated 12 September 2012.

A Number of Shares applied for B Application Monies

at $0.005 each = A$

Share Registrars use only

Broker reference – stamp only Broker code Adviser Code

You may be allocated all of the Shares above or a lesser number.

C

Full name details title, given name(s) (no initials) and surname or company name

Name of applicant 1

D Tax file number(s)

Or exemption category

Applicant 1/company

Name of joint applicant 2 or

Joint applicant 2/ trust

Name of joint applicant 3 or

Joint applicant 3/exemption

E Full postal address

Number/street

F Contact details

Contact name

Suburb/town State/postcode

Contact daytime telephone number ( ) Contact email address

G CHESS HIN (if applicable)

H Payment Details: Application Monies are only to be paid by cheque (attached to the Application Form):

Cheque payment details

Please fill out your cheque details and make your cheque payable to: " Advance Energy Limited – Subscription Account " Drawer Cheque number BSB number Account number Total amount of cheque

Return of the Application Form with your cheque will constitute your offer to subscribe for Shares in the Company. I/We declare that:

(a) this Application is completed according to the declaration/appropriate statements on the reverse of this form and agree to be bound by the Constitution of the Company; and

(b) I/we have received personally a copy of this Prospectus accompanied by or attached to the Application Form or a copy of the Application Form or a direct derivative of the Application Form, before applying for Shares.

No signature is required.

You should read the Prospectus dated 12 September 2012 carefully before completing this Application Form. The Corporations Act 2001 (Cth) prohibits any person from passing on this Application Form (whether in paper or electronic form) unless it is attached to or accompanies a complete and unaltered copy of the Prospectus (whether in paper or electronic form).

This Application Form does not require execution.

Guide to Advance Energy Limited – Application Form

This Application Form relates to the Offer contained in the Company’s Prospectus dated 12 September 2012.

Please complete all relevant sections of the Application Form using BLOCK LETTERS. These instructions are cross referenced to each section of the Application Form. Further particulars and the correct forms of registrable titles to use on the Application Form are contained below.

A Insert the number of Shares you wish to apply for.
B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by A$0.005.
C Write the full name you wish to appear on the statement of holdings. This must be either your own name or the name of the company. Up to three joint applicants may register. You should refer to the table below for the correct forms of registrable title. Applicants using the wrong form of title may be rejected. Clearing House Electronic Sub-Register System (CHESS) participants should complete their name and address in the same format as that are presently registered in the CHESS system.
D Enter your Tax File Number (TFN) or exemption category. Where applicable, please enter the TFN for each joint Applicant. Collection of TFN(s) is authorised by taxation laws. Quotation of your TFN is not compulsory and will not affect your Application.
E Enter your postal address for all correspondence. All communications to you from the share registry will be mailed to the person(s) and address as shown. For joint applicants, only one address can be entered.
F Enter your telephone number(s), area code, email address and contact name in case we need to contact you in relation to your Application. G The Company will apply to ASX to participate in CHESS, operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of ASX Limited. If you are a CHESS participant (or are sponsored by a CHESS participant) and you wish to hold Shares allotted to you under this Application in uncertificated form on the CHESS sub register, complete Section G or forward your Application Form to your sponsoring participant for completion of this section prior to lodgement. Otherwise, leave Section G blank and on allotment, you will be sponsored by the Company and an SRN will be allocated to you.
H Your Application Monies must be paid by cheque payable to " Advance Energy Limited – Subscription Account " account as described in Section H. The amount should agree with the amount shown in Section B.
I By lodging the Application Form the applicant(s) agrees that this application is for shares in the Company and to take any number of Shares equal to or less than the number of Shares indicated in Section A that may be allotted to the applicant(s) and declares that all details and statements made are complete and accurate. It is not necessary to execute the Application Form.

Correct Form of Registrable Title

Only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable title may be included by way of an account designation if completed exactly as described in the example of correct forms of registrable title below:

Type of investor	Correct form of Registrable Title	Incorrect form of Registrable Title
Individual Usenamesin full,noinitials	Mr John Alfred Smith	JA Smith
Minor(a person under the age of 18) Use the name of a responsible adult, do not use the name of a minor.	John Alfred Smith	Peter Smith
Company Use company title,not abbreviations	ABC Pty Ltd	ABC P/L ABC Co
Trusts Use trustee(s) personal name(s), donot use thename ofthe trust	Mrs Sue Smith	Sue Smith Family Trust
Deceased Estates Use executor(s) personal name(s), do not use the name of the deceased	Ms Jane Smith	Estate of late John Smith
Partnerships Use partners personal names, do not use the name of the partnership	Mr John Smith and Mr Michael Smith	John Smith and Son

Lodgement of Application Form

Return your completed Application Form to the Company by hand or fax along with the Application Monies agreeing to the amount shown in Section B.