EXECUTIVE SUMMARY

Petrel Energy (‘Company’ or ‘PRL’) is a junior petroleum exploration and development company with oil and gas projects in four global locations at different stages of maturity. The Company has funded active work programs

tailored to maximise results critical for ongoing evaluation at minimal cost. Both the Uruguay (9% of land mass under lease) and Spain projects (multi TCF potential) are

company making projects in their own right. PRL’s flagship asset is in Uruguay In Uruguay, the Company holds a 25% working interest in the Piedra Sola and Salto concessions (comprising 2.5 million acres) in

the onshore Norte Basin, which is an extension of Brazil’s Parana Basin. PRL is aiming to confirm the existence of a new South American petroleum system. The Company’s two Uruguay concessions have the potential to host very large unconventional and conventional oil resources in the virtually unexplored onshore Norte Basin.

Uruguay is becoming an attractive investment destination for major oil companies. Companies such as BP, BG Group, Petrobas and Total have committed to significant Uruguay offshore exploration programs. More relevant to PRL, Total and YPF have recently committed to

onshore activity, having acquired concessions to the North of PRL’s Uruguay projects. Further, there is increasing interest in onshore oil potential in Uruguay, underpinned by the recent oil discovery announced by ANCAP (located around four kilometres North of one of PRL’s concessions), which. While not commercial, the results nonetheless offer evidence that a live petroleum system exists in

onshore Uruguay.

The Cardium Project in Canada (PRL: 40%) - near term low-risk production potential complementing the much larger

potential Uruguay unconventional project. The Cardium play is recognised as one of Canada’s most

successful, emerging unconventional oil plays. Over the short term, the Cardium project offers PRL significant low risk potential to grow production, reserves and cashflow. PRL has a number of options to monetise the Lochend Cardium Project.

PETREL ENERGY LIMITED (PRL)

IInniittiiaattiinngg CCoovveerraaggee

SPECULATIVE

21 October 2013

Important Disclosure Investors should be aware that Petrel Energy Ltd is a corporate client of Alpha and that Alpha will receive a consultancy fee from Petrel Energy Ltd for compiling this research report

Share Trading Info

ASX Code PRL

Sector Energy

Current Share Price (cps) 13.0

Trading Low /High (Rolling Year) (cps) - $3.985.0 - 16.0

Ordinary Shares on Issue (m) 409.2

Unlisted Options (m) 8.9

Mkt Captalisation (undiluted) ($m) 53.2

Cash (as at 30 June 2013) ($m) 8.7

Board of Directors

Stephen Mitchell Executive Chairman

David Casey Managing Director

Major Shareholders

David Casey 9.2%

Stephen Mitchell 7.8%

Cameron Richard P/L 6.5%

Alexander Sundich 5.4%

David Hobday Non Executive Director

Alexander Sundich Non Executive Director

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3,000

8.0

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Price (cps)Volume ('000)

PRL 6-month Price Chart

Price

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Petrel Energy (PRL)

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The key catalysts for the Canadian JV over the short-term include potentially drilling one to two new wells in order to complete appraisal of the Lochend Cardium Project. Should these results allow for an initial reserve (PRL estimate net reserves potential 3-4MMbbls), PRL and its JV partner are likely to

monetise the Lochend Cardium Project. PRL’s options for monetising its interest in Canada includes booking reserves, or to sell/borrow against reserves/production, subject to favourable market conditions, in order to fund Uruguay exploration.

Spain Project - Potential for Large Onshore Gas Field

PRL’s indirect interest in the Tesorillo concession in southern Spain is attractive given the proximity to infrastructure (the target well is located three kilometres from a gas pieline that connects to Northern Africa) that underpins the potential for rapid commercialisation/early cashflow.

Further, the outlook for European spot gas markets (where prices range up to ~US$14/MMBtu) is

positive, supported by an increasing number of Europe's utilities seeking to decouple their gas contracts from oil and link closer to spot markets, such as Britain's National Balancing Point, Europe's biggest gas hub. According to Energy Aspects, 40-45% of long-term gas contracts are now hub-indexed. Further, many utilities this decade are due to renew gas supply contracts, which have typically lasted more than 20 years. These factors underpin the expectation that the spot gas market will strengthen over

the next three to four years, according to energy researchers Wood Mackenzie.

Well Funded to Progress Development of Uruguay Project The cash balance as at 30 June 2013 was $8.67 million, which was supported by the completion of a $10.65 million equity raising1 in May 2013, shortly followed by the sale of PRL’s conventional and

CSG interests which generated gross proceeds of $1.05 million.

Post the $10.65 million equity raising and the sale of the non-core NSW CSG assets, PRL remains fully funded to exercise the second option payment of US$5.5m which will fund the 2014 seismic studies over 200-380 kiliometres and a possible additional corehole-well with a view to determining an independent resource estimate.

PRL has reduced its reliance on obtaining funding from external sources over the short term at least, as oil production from the Canadian project has since been achieved. Cash outflow expectations for the Sept 2013 quarter are $0.7 million and there in no debt on the balance sheet. Capital Structure

PRL currently has 409.2 million shares on issue, as well as ~8.9 million in-the-money options (issued equally to two option holders) with an exercise price of 4.6 cents and an expiry date of 31 December 2013.

As at 1 October 2013, there were 1.431 shareholders, of which 125 held an unmarketable parcel of

securities. The share register is tightly held, with the top 20 shareholders accounting for 55% of the total shares on issue. Further, there is a strong alignment of interests between the company management and shareholders, as the combined interests of the Company’s directors comprise almost one-quarter of the total shares on issue.

1 This comprised of a $7.65 million placement to sophisticated and professional investors at 8.5 cents per share and a Share Purchase Plan (SPP) that raised $3 million. The SPP was supported to two-thirds of the funds, with the balance issued to sophisticated and professional investors at 8.5 cents per share.

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11.. CCOOMMPPAANNYY BBAACCKKGGRROOUUNNDD AANNDD OOVVEERRVVIIEEWW

The Company was established as a private company called Petrel Energy P/L by Stephen Mitchell (current Executive Chairman of PRL) and David Hobday (current non Executive Director of PRL) in mid-2011

as an upstream petroleum company, initially targeting conventional and unconventional petroleum projects primarily in North America. Both Messrs Mitchell and Hobday had had previous success at Molopo Energy. The transition of Petrel Energy P/L into a listed entity began when the then ASX-listed company Orion Petroleum Ltd announced in November

2011 its intention to merge with Petrel Energy P/L. The merger was approved by Orion shareholders in January 2012 and resulted in Orion shareholders emerging with 57% of the total shares of the enlarged

group, with Petrel shareholders holding the remaining 43%. The company was also renamed Petrel Energy Ltd. Following the merger, Mr Mitchell joined the Board as Executive Chairman and Mr Hobday joined as a non Executive Director.

Shortly after the appointment of Mr David Casey as Managing Director in September 2012, the Company announced a significant expansion of its project portfolio, by using existing cash resources to acquire an initial 25% interest in Schuepbach Energy International LLC (SEI) in October 2012 for US$2.5 million. SEI is a US private company that

holds the Piedra Sola and Salto concessions in Uruguay and an 85% interest in two licenses prospective for gas in Spain, totaling 82,700 ha (204,000 acres) in southern Spain. As part of the new strategic direction, PRL undertook a $10.65 million equity raising and divested its NSW CSG assets for $1.05 million2 in

order to support funding requirements for the development of the

Company’s Uruguay project. In March 2013, PRL further expanded its project portfolio by acquiring a 40% working interest in up to eight gross sections of land (3.2 net sections or 2,048 net acres) in the highly prospective southern extension of the Cardium play in Canada. At present, PRL has projects in four jurisdictions, as detailed in Table 1.

Table 1: Summary of PRL’s Global Portfolio

Project and Location

PRL Interest

Exploration Target and Current Status

Norte Basin, Uruguay - Piedra Sola & Salto Concessions

25% (up to 60%)

Unconventional and conventional oil targets in two concessions (3.5M acres). Currently drilling two coreholes. Option payment to 51% in late 2013 will fund 2014 program.

Lochend Cardium, Alberta Canada

40%

‘Tight oil’ in lower siltstone and sandstone in 8 sections over 5,120 acres. One section includes a recently-completed horizontal well (16-19 Lochend), relatively stable production around 30-40 bopd. Lochend portion of Cardium targeted by successful operators

Cadiz Province, southern Spain - Tesorillo & Ruedalabola Concessions

21.25% (up to 43.35%)

Conventional sandstone gas reservoirs in 94,000 acres. Focus is on the Tesorillo concession which hosts a 1956 gas discovery, Almarchal-1

Fort Worth Basin Texas - Barnett Shale, US

25%

Unconventional liquids rich gas in 3,710 net acres in Erath County, Texas.

2 The NSW exploration licenses were considered non-core as these formed part of the Orion assets originally obtained from Eastern Star Gas and which formed the basis of the Orion Petroleum Limited IPO in 2007.

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22.. UURRUUGGUUAAYY –– NNoorrttee BBaassiinn CCoonncceessssiioonnss ((PPRRLL:: 2255%%))

2.1 Asset Overview

PRL’s Uruguay project, held through its interest in SEI, covers two concessions, Piedra Sola and Salto, totaling over 14,000km2 (3.5 million acres) in the onshore Norte Basin. The project is prospective for both unconventional oil within the shales and conventionally reservoired oil in the underlying and overlying sandstones. Figure 1: Location of Piedra Sola and Salto Concessions in Uruguay and proximity to Surrounding Infrastructure (Source: PRL)

The Company’s initial entry was acquired via a US$2.5 million investment for 25% of SEI’s Piedra Sola and Salto concessions (Stage

1). PRL holds an option to increase its shareholding to 51% for US$5.5 million (Stage 2). Additionally a second option can subsequently be exercised to increase the shareholding to 60% for an additional US$6

million (Stage 3). The staged investment parallels a planned staged work program. Stage 1 enables PRL to complete its main work program consisting of a series

of early coreholes to determine the distribution of organic-rich shales and other potential reservoirs. Subject to results from the drilling currently underway in two coreholes, subsequent programs will be followed up by seismic data acquisition to guide follow-up exploration drilling and resource delineation and may include more coreholes and drilling deeper wells with resource pay or conventional targets. In particular,

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Stage 2 may include seismic studies over 200-380 kiliometres and a possible additional corehole-well - Late 2013 to 1Q 2014.

Subject to positive results from Stage 2, Stage 3 may involve seismic studies over 270-380 kiliometres and a possible deeper well - 2014.

2.2 Attractions of the Norte Basin

Uruguay’s Norte Basin covers about 90,000Km2 and is situated in northern Uruguay between Brazil’s offshore subsalt discoveries to the NE and Argentina’s shale gas plays to the West and SW. The Norte Basin is considered to be the southern extension of the Parana Basin

(shale play) in Brazil and is largely covered by volcanic rocks. Further,

the Norte Basin forms part of the same oil-producing Devonian basinal system which extends into the Parana Basin. The US Geological Survey estimates that the Norte Basis holds 500 million cubic metres of technically recoverable shale gas. The Norte Basin is also productive in Bolivia and Argentina but largely unexplored

in Uruguay. Figure 2: Location and Distribution of the Norte Basin (Source: ANCAP)

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PRL consider that the Norte Basin has similarities to the Bakken Shale Play and the Eagle Ford Play, namely the same Devonian-age shales,

similar geological environments and both have organic-rich sections. The Bakken Shale Play (28,000km2, or ~7,000 acres) is the largest US oil development in recent times and is currently producing >500,000 bopd and is anticipated to increase to 1-2 million barrels of oil per day (bopd) by 2020. The US Geological Survey estimates that Bakken has

potential recoverable oil of 4.3 billion barrels. The Eagle Ford Shale Play in South Texas, US (47,800km2, or ~11,800 acres) has a resource estimate of 3.35 million barrels of oil and 20.8 Tcf gas, with near-term oil production expectations of 420,000 bopd. Figure 3: Formation of Bakken Shale Play and Eagle Ford Play relative to PRL’s Uruguay’s concessions (Source: PRL)

2.3 Planned Work Program

In early 2013, PRL acquired four magnetotelluric (MT) electromagnetic survey lines across the Piedra Sola and Salto concessions, with results

confirming the existence of a NW-trending rift basin extending across both concessions with Devonian and potential Permian sediments. The MT survey also assisted in identifying suitable corehole locations in order to test the extent and potential size of the resource. To this end, two corehole locations - Cardozo Chico E-1 and Cerro Padilla E-1 - were identified in the shallower Piedra Sola concession. The two coreholes

were selected in order to confirm the existence of the basic reservoir parameters critical for oil generation and accumulation and to confirm that the majority of the newly defined Devonian rift system resides within the prospective oil window.

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PRL has first mover advantage in onshore Uruguay, with the two coreholes representing the first deep onshore petroleum exploration in

Uruguay for over 30 years and the first focused on unconventional targets. In early September 2013, PRL commenced a 2,000 metre corehole program comprising depth of 750 metres and 1,250 metres for the Cardozo Chico E-1 and Cerro Padilla E-1 locations, respectively. These

two coreholes represent the first deep onshore petroleum exploration in Uruguay for over 30 years and the first focused on unconventional targets. Laboratory results are expected 1–2 months after well completion. The primary objective for both coreholes is to undertake a stratigraphic test

of the basement with emphasis on source rock quality, thermal

maturity and distribution of the Devonian (Cordobes Shale) and Permian section in the Norte Basin. As per the Company’s ASX announcement on 16 October 2013, the shallower Cardozo Chico E-1 corehole (which was coring at 620 metres of the planned 750 metres) intersected a 10-metre laminated shale at a depth of 457 metres. While more detailed analysis will be undertaken

of this and other core samples when it is shipped to the US, an analysis of three initial samples showed an average Total Organic Carbon content (TOC) of 3.3%, with a maximum value of 6%. Maturation measured 0.76 to 0.78, which is within the peak oil window. Further, strong streaming fluorescence was observed in two of the three samples confirming oil generation.

The deeper Cerro Padilla E-1 corehole has encountered delays due to the local drilling contractor not supplying a blowout preventer in

accordance with the agreed specification. This required a replacement blowout preventer to be ordered from outside Uruguay, which was being installed at the time of writing. PRL are confident that the lost

time can be recovered and have commented that “the delays are unlikely to impact scheduling of next year’s seismic programme with permitting and approvals processes already commenced.”

Figure 4: Uruguay Contour Basement Map highlighting the two corehole locations identified from Mapping of MT Data and results from MT Survey. (Source: PRL)

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2.4 Factors Underpinning Uruguay as an Ideal

Operating Environment

Favourable fiscal terms, economic and political stability in Uruguay are

attracting foreign investment. A recent successful offshore licensing round have seen oil majors such as BT, BG Group and Total acquire extensive offshore and (more recently) onshore permits, with substantial explorations commitments3. Total was granted two onshore shale blocks in the Norte Basin in late 2012. Uruguay consumes about 87 million cubic metres of gas per year but

currently has no gas or oil production. The country has a ready local market for oil and gas at international prices, with Uruguay currently importing 40,000 bopd into the La Teja Refinery in Montevideo, as well

as access to equipment in neighbouring countries Brazil and Argentina. Although Uruguay is open to bid more onshore blocks for oil exploration to private companies, ANCAP (Uruguay’s petroleum refining company)

will maintain its monopoly on the areas of Pepe Núñez and La Paloma,

where ANCAP considers that the potential for oil discovery is higher. Figure 5: Map Highlighting Location of Uruguay’s Onshore Licenses, including PRL, Total and YPF (Argentina’s nationalised Oil Company) (Source: PRL)

3 In one Uruguayan bidding round, BP, BG Group, Tullow Oil and Total were awarded eight offshore blocks and will invest US$1.56 billion in exploration of oil and natural gas in the blocks, which cover a maritime area spanning nearly 50,000Km2.

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2.4.1 Significance of ANCAP’s Recent Oil Discovery

In August 2013, ANCAP announced the presence of free oil in rocks 450 metres below ground level in the Pepe Núñez region, approximately four kilometres North of the northern boundary of the Piedra Sola Block. The oil was discovered in a clastic section above a 20-metre thick black shale in a lower Permian section with measured high TOC values.

ANCAP noted that the results, while not commercial as they were obtained from 100 rock samples, are significant as it is first indication of a working hydrocarbon system in the onshore Norte Basin and also shows the potential for oil generation deeper in the Norte Basin.

The results has positive implications for PRL’s current corehole program

- The Canada de Charrua corehole drilled by ANCAP discovered traces of oil in similar aged rocks to the Piedra Sola concession.

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33.. CCAANNAADDAA -- LLoocchheenndd CCaarrddiiuumm ((PPRRLL:: 4400%%))

3.1 Project Overview

In March 2013, PRL acquired a 40% interest in the Canadian Cardium tight oil project (or play) in Alberta (5,120 gross acres). PRL’s JV partner is a private Canadian group, Bernum Petroleum Ltd4. PRL and Bernum agreed to a 40%-60% JV that will give PRL a 40% working

interest in up to eight gross sections of land (3.2 net sections or 2,048 net acres) in the highly prospective southern extension of the Cardium play. One of the sections includes a recently-completed horizontal well (16-19 Lochend), which has achieved an Initial Production for 30 days (IP

30) of 150 bopd. Subsequently, the well experienced a steep decline to

a relatively stable production around 30-40 bopd. PRL Consider that this early performance and subsequent decline is characteristic of Cardium wells in the area.

Figure 6: Location of PRL JV Acreage Areas in Canada (Source: PRL)

4 The acquisition price of C$3.3 million consists of a C$2.8 million purchase price, with the balance comprising payments for equipping the 16-19 Lochend well and costs associated with the freehold leasing program. In addition, Petrel has signed an Area of Mutual Interest (AMI) agreement with Bernum to jointly pursue other opportunities in the surrounding townships (covering a 6mi2 land area), with a view to PRL gaining an interest in additional planned wells.

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The Cardium formation covers much of western Alberta and is estimated to host around 10 billion barrels (Bbbls) oil-in-place, of which 1.8 Bbbls have been produced to date. The formation hosts the giant Pembina oil field discovered by Mobil in 1953, which was originally exploited by vertical wells targeting the conventional Cardium "B"

sandstones and conglomerates.

Recent advances in horizontal drilling techniques and multi-stage fracture stimulations have allowed development of the overlying Cardium "A" tight oil sands, previously considered sub-commercial.

Modern technology has resulted in total Cardium oil production increasing from 40,000 bopd to over 110,000 bopd within the space of a few years. Renewed focus in the Cardium came with the development of horizontal wells and multi-stage fraccing. (The Cardium was first developed in the 1950s using vertical wells).

A cross-section of the Lochend Cardium is detailed in Figure 7. Cardium A, the JV’s primary target, is present throughout the Bernum acreage. Multiple operators are achieving success in this area with IPs ranging from 100 to 1,000 bopd.

Figure 7: Cross-Section of Lochend Cardium (Source: TriOil Resources)

3.2 Current Producers in the Lochend Cardium

The rejuvenation of the Cardium play has seen a move from fields that once produced conventionally to exploitation of the tight oil reservoirs by unconventional means.

The Lochend portion of the Cardium is an emerging extension of the play being targeted by successful operators such as Lightstream Resources (previously PetroBakken), TriOil and Pengrowth, who have implemented aggressive work programs and who have leased significant land positions close to PRL’s acreage. (See Figure 8)

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Figure 8: Location of PRL acreage relative to Majors (Source: PRL Presentation on Lochend Cardium, March 2013)

TriOil Resources has determined 97 net horizontal wells in the

Cardium and has a 30-day IP rate of 150-300 bopd. Production in 2012

was 2,130 bopd and the estimated average production for 2013 is 4,100 bopd. Bernum lands on trend with TriOil’s highest productivity wells. These include:

IP30 for 6 (Eastern) wells 180 bopd, 250 MMbbl recoverable (90% oil),

IP30 for 13 (Western) wells 331 bopd, 530 MMbbl recoverable (85% oil).

Lightstream Resources (Formerly Petrobakken) has 275 net sections of land in the Cardium and produces 16,500 bopd and has 72.2 million BOE of proved and probable reserves.

Pengrowth has 500 gross sections of land in the Cardium and a 30-day IP rate of +380 bopd (2012 average). The average cost of horizontal wells in 2012 cost C$4.1 million each, on which Pengrowth is

understood to be generating an economic return.

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44.. SSPPAAIINN -- TTeessoorriilllloo//RRuueeddaallaabboollaa CCoonncceessssiioonnss

((PPRRLL:: 2211..2255%%))

As part of PRL’s investment in SEI in late 2012, the Company gained an indirect interest in two onshore contiguous licenses in the Cadiz province in southern Spain. The two licenses, the Tesorillo and Ruedalabola concessions, cover a combined area of 38,000ha (94,000 acres). The Tesorillo permit hosts a 1956 gas discovery, Almarchal-1, which flowed gas from stacked porous and permeable conventional sandstones at shallow depths. SEI holds an 85% interest in the two

licenses. The concessions are located in a known conventional hydrocarbon

system. Offshore discoveries were made in the Gulf of Cadiz in the 1970s and onshore gas discoveries were made in the 1980’s in the Guadalquivir Basin, the foredeep of the Betic Ford Belt (which is the location of the Almarchal-1 discovery).

The concession area is considered attractive for gas production, as it is transected by the major Magreb trans-Mediterranean pipeline with the Almarchal-1 well located just three kilometres from a 40-inch undersea gas pipeline tie-in-point with excess capacity that connects gas from North Africa to Europe.

Figure 9: Location of key oil and gas fields in Spain. Almarchal-1 is located in the south of Spain.

Source: PRL Presentation, 6 June 2013

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Figure 10: Map of Key Onshore & Offshore Oil and Gas Fields in Spain. Exploration commenced in the early 1900s and the first discoveries were in the Cantabrian Basin – Armentia gas discovery (1959) and Ayoluengo oil & gas discovery (1964) (both onshore)

Source: PRL Presentation, 6 June 2013

Almarchal-1 was drilled in 1956/1957 by Spanish company Valdebro over a 12 month duration. There is evidence that the hole was drilled sub-optimally, encountering many hole problems due to swelling shales, several sidetracks and flared gas from leaky surface casing. Most of the 39 Drill Stem Tests (DST) recovered small amounts of gas, with little to no water. However, several DSTs flowed gas to surface

and many others recovered gas-cut mud or gas in the drill string from tests conducted over a thick gas columns. (See Figure 11)

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Figure 11: The chart on the left of the diagram show high gas shut-in pressure indicative of >400 metre columns

Source: PRL Presentation, 6 June 2013

A review of the Almarchal-1 well indicated a net gas column >500

metres with good porosy of permeability. Despite the good reservoir quality, PRL contend that the DST recoveries were poor most likely due to the reservoirs probably damaged by fresh water drilling fluids reacting with swelling shales in combination with heavy mud. In addition to Almarchal-1, Valdebro drilled three well locations within

the Ruedalabola concession – Puerto de Ojen-1 (1957), Tarifa-1 (1966) and Tarifa-2 (1996). Puerto de Ojen-1, like Almarchal-1, encountered good gas shows in >1,000 section but could not be tested due to mechanical problems. PRL believe that a re-drill of the Almarchal-1 discovery well using modern drilling and completion techniques is likely to yield more

definitive results. Specifically, PRL are planning to drill and test a twin well of Almarchal-1 with inhibited mud system to protect reservoirs and to ensure best quality gas rates. To this end, the Company is seeking a

farm-in partner to finance further appraisal of the Almarchal-1 discovery, including a new well possibly in late 2014, and to progress the permit to commercialisation.

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55.. TTEEXXAASS -- BBaarrnneetttt SShhaallee GGaass PPrroojjeecctt,, EErraatthh CCoouunnttyy,,

((PPRRLL:: 2255%%))

PRL is participating in two shale gas JVs with The Cumming Company, Inc (CCI - operator) in Erath County, Texas. The Company’s net acreage position in Erath County is 3,711 acres from a total of 8,211

gross acres leased by CCI. This acreage is held through a 25%-50% interest in approximately 6,600 gross acres which are the focus of initial field activities and a 73% interest in a further 1,600 acres held under an Area of Mutual Interest agreement. The Erath County leases are located West of Fort Worth in the Barnett

Shale in the Forth Worth Basin, which is presently the largest-producing gas field in Texas and the 2nd largest in the US. The Barnett Shale

contains over 200 active producers and to date has produced 10 Tcf, most of which has been since 2005. It is estimated that recoverable reserves may exceed 40 Tcf. Three gas development wells and a saltwater disposal well have been

drilled with the installation of necessary surface production infrastructure allowing modest gas sales into the nearby Enbridge wet sales gas pipeline. To date, the wells are not performing to CCI’s expectations, with compressor downtime and shut-ins limiting production. PRL, in consultation with its operator CCI, have been assessing different

completion techniques and additional production zones such as the Marble Falls, to improve gas production from existing and future wells. To date, the JV has reviewed the issue of frac effectiveness, by re-fraccing the GW Stewart-1 well, which initially failed to consistently

produce despite repeated workovers. Recent remedial work at the GW Stewart-1 well has improved performance.

PRL believe that better production rates are achievable, as the wells have the necessary Gas-in-Place, reservoir quality and thickness. While the Company is confident that it can overcome the technical and operational challenges it is facing with drilling horizontal wells in Erath County (where horizontal wells have proved extremely successful in other areas of the Barnett Shale), further work in the area has been

placed on hold due to low gas and NGL prices and the lower production rates achieved to date. Further, PRL a reassessment of recoverable gas estimates for Erath has resulted in PRL writing down the project in the Balance Sheet by $3.14 million.

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66.. BBOOAARRDD OOFF DDIIRREECCTTOORRSS

DIRECTOR BACKGROUND

Stephen Mitchell Executive Chairman

Interest in PRL: ~32.04 million ordinary shares

Mr Mitchell has nearly 10 years experience as a natural resources specialist at investment banks and advisory firms in New York, London, Hamburg, Sydney and Melbourne. From 1999-2011 he was Managing Director of Molopo Energy Ltd, an ASX-listed oil and gas company holding assets in Australia, Canada, USA, China, India and South Africa. Under his stewardship, Molopo expanded its market capitalisation from $1 million to at times in excess of $400 million.

David Casey Managing Director Interest in PRL: ~37.54 million ordinary shares

Mr Casey has over 20 years' experience in the management and evaluation of all aspects of unconventional oil and gas exploration and appraisal, from initial reservoir characterisation and fairway identification through to drilling, testing and production operations. David’s most recent executive role was Managing Director of Eastern Star Gas Limited, which he and his team grew from modest beginnings to recently being the subject of a $924 million takeover by Santos Limited valuing the Narrabri Project at $1.42 billion. David was executive director and chief operating officer at Molopo Energy from 2001 to 2005 where he worked closely with Stephen Mitchell in developing a very successful unconventional energy company with assets in Australia, the US, Canada, China and South Africa.

Alexander Sundich Non Executive Director Interest in PRL: ~22.22 million ordinary shares

Mr Sundich has over 20 years' experience in the financial services industry. He is a Non Executive Director of Eastern Star Gas Limited and Executive Director of Harvest Capital Partners, an investment firm that he co-founded in 2008. From 2003 to 2008, Alex held senior management positions within the funds management industry. Prior to that, Mr Sundich was an investment banker providing advice to corporate clients on merger and acquisition transactions and debt and equity capital raisings, with a particular focus on the oil, gas and mining industries. He worked with Goldman Sachs

and Credit Suisse First Boston during this period which included six years working in New York.

David Hobday Non Executive Director

Interest in PRL: ~4.74 million ordinary shares; ~4.44 million unlisted options @ 4.6c exp 31 Dec 2013

Mr Hobday holds a PhD in Geology from Louisiana State University and worked at the Texas Bureau of Economic Geology before spending time with Sydney Oil Company, Bridge Oil and serving on the boards of several listed Australian and overseas companies. He has gained experience in international oil and gas exploration in Argentina, Russia, Turkmenistan, Azerbaijan, China, India, Namibia, Angola and the Congo Basin. Between 2000 and 2003, he worked with Parsons Energy on project development. He was the recipient of the Wallace Pratt Memorial Award from the American Association of Petroleum Geologists for "significant contributions to petroleum geology". Mr Hobday has also worked in corporate finance and funds management. He was a director of Molopo Energy and is currently a director of Lowell Resources Fund Management.

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DIRECTORY – ALPHA SECURITIES Corporate

George Karantzias

george@alphasecurities.com.au

0401 670 620

Research Analyst

John Haddad

john@alphasecurities.com.au 0407 219 222

Disclaimer This document has been prepared (in Australia) by Alpha Securities Pty Ltd ABN 94 073 633 664

(“Alpha”), who holds an Australian Financial Services License (License number 330757). Alpha has made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, Alpha makes no representation and gives no warranties about the accuracy or completeness of the information and material, including any forward looking statements and forecasts made by Petrel Energy Ltd to Alpha, and it should not be relied upon as a substitute for the exercise of independent judgment.

Except to the extent required by law, Alpha does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report, or as a result of errors or omissions on the part of Alpha or by any of their respective officers, employees or agents. This report is for information purposes only and is not intended as an offer or solicitation with respect

to the sale or purchase of any securities. The securities recommended by Alpha carry no guarantee with respect to return of capital or the market value of those securities. There are general risks

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General Advice Warning

This report may contain general securities advice or recommendations, which, while believed to be accurate at the time of publication, are not appropriate for all persons or accounts. This report does not contain specific securities advice and does not take into account particular investment objectives, financial situation and needs of any particular person. You should carefully assess whether such information is appropriate in light of your individual circumstances before acting on it.

Disclosure

Alpha, its Directors and associates declare that they may have a relevant interest in the securities mentioned herein. This position can change at any time. Alpha also receives fees for advisory services.

Alpha does and seeks to do business with companies covered in its research reports and investors should be aware that Alpha received a consultancy fee from Petrel Energy Ltd for compiling this research report.