CARNARVON PETROLEUM LIMITED ABN 60 002 688 851

NOTICE OF ANNUAL GENERAL MEETING

TIME: 1.00pm {AWST)

DATE: Friday, 13 November 2015

PLACE: Meeting Room 8

Perth Convention and Exhibition Centre 21 Mounts Bay Road

Perth WA 6000

This Notice of Meeting and the accompanying Explanatory Statement set out important details regarding the resolutions that will be put to Shareholders at the 2015 Annual General Meeting of Carnarvon Petroleum Limited. You should read all of the documents carefully.

If you are in doubt as to how you should vote, you should seek independent advice from your accountant, solicitor or other professional adviser prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary, Mr Thomson Naude on (+618) 9321 2665.

CONTENTS PAGE

Time and Place of Meeting and How to Vote 2-4

Notice of Annual General Meeting (setting out the proposed resolutions) 5-9

Explanatory Statement (explaining the proposed resolutions) 10-31

Glossary 32-33

TIME AND PLACE OF MEETING AND HOW TO VOTE VENUE

The Annual General Meeting of Shareholders to which this Notice of Meeting relates will be

held at 1.00pm (AWST) on Friday, 13 November 2015 at Meeting Room 8, Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia.

MEETING DOCUMENTS

This Notice of Meeting and the accompanying Explanatory Statement set out important details regarding the resolutions that will be put to Shareholders at the 2015 Annual General Meeting of Carnarvon Petroleum Limited. You should read all of the documents carefully.

ENTITLEMENT TO VOTE

In accordance with Regulation 7.11.37 of the Corporations Regulations 2001 (Cth), Shareholders eligible to vote at the Annual General Meeting will be those persons who are registered Shareholders of the Company at 4.00pm (AWST) on Wednesday, 11 November 2015.

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important. If you are in doubt as to how you should vote, you should seek independent advice from your accountant, solicitor or other professional adviser prior to voting.

HOW TO VOTE

You may vote by attending the Annual General Meeting in person, by proxy or attorney, or by an authorised representative (if you are a body corporate).

VOTING IN PERSON

To vote in person, attend the Annual General Meeting on the date and at the place set out above.

VOTING BY PROXY

A Shareholder has the right to appoint a proxy (who need not be a Shareholder). A proxy can be an individual or a body corporate.

If you are entitled to cast two or more votes at the meeting, you may appoint two proxies and you may specify the proportion or number of votes each proxy may exercise. Where two proxies are appointed, a separate form should be used for each.

You are requested to show on the form a specified proportion of your voting rights which a proxy may exercise. If you appoint two proxies and the appointment does not specify the number or proportion of votes each proxy may exercise, each proxy may exercise half the votes.

A Shareholder can direct its proxy to vote for, against or abstain from voting on each resolution by marking the appropriate box in the voting directions section of the proxy form. If a proxy holder votes, they must cast all votes as directed. Any directed proxies that are not voted will automatically default to the Chairman, who must vote the proxies as directed.

The Chairman will vote all undirected proxies in favour of Resolutions 1 to 9.

If the Chairman is to act as your proxy (whether by appointment or by default) and you have not given directions on how to vote in the voting directions section of the proxy form for Resolutions 3 - 8, the proxy form expressly directs and authorises the Chairman to cast your votes 'for' the relevant resolution. This express authorisation is included because without it the Chairman would be precluded from casting your votes as these resolutions are connected with the remuneration of key management personnel.

To vote by proxy, please complete and sign the enclosed proxy form and return (together with the original of any power of attorney or other authority, if any, or a certified copy of that power of attorney or other authority under which the proxy form is signed).

Proxy forms should be returned to Link Market Services Limited in accordance with the instructions on the attached proxy form by 1.00pm {AWST) Wednesday, 11 November 2015.

Proxy forms received later than the time specified above will be invalid.

The following methods of delivery for proxies are specified:

By post: Link Market Services Limited Locked Bag A14

Sydney South NSW 1235

Online: www.linkmarketservices.com.au.

Select 'Investor Login' and enter Carnarvon Petroleum Limited or the ASX code (CVN) in the Issuer name field, your Security Reference Number (SRN) or Holder Identification Number (HIN) (which is shown on the front of your proxy form), postcode and security code which is shown on the screen and click 'Login'. Select the 'Voting' tab and then follow the prompts. You will be taken to have signed your Proxy Form if you lodge it in accordance with the instructions given on the website.

By facsimile: (+612) 9287 0309 (from overseas)

(02) 9287 0309 (from Australia)

By delivery: Link Market Services Limited 1A Homebush Bay Drive Rhodes NSW 2138

VOTING BY CORPORATE REPRESENTATIVE

A body corporate which is a Shareholder, or which has been appointed as a proxy, is entitled to appoint an individual to act as its representative at the AGM in accordance with section 250D of the Corporations Act.

To appoint a corporate representative, a body corporate must provide the Company with a letter or certificate executed in accordance with the Corporations Act authorising that person to act as the corporate Shareholder's representative at the Meeting. The certificate of appointment of a corporate representative must be lodged with the Company and/or the Share Registrar, Link Market Services Limited, before the AGM or at the registration desk on the day of the AGM. Certificates of appointment of corporate representatives are available on request by contacting Link Market Services Limited on telephone number +61 1300 554 474 or shareholders can download and fill out the 'Appointment of Corporate Representative' form from the website of the share registry of the Company at www.linkmarketservices.com.au select the 'Investor Services' tab and click on 'Forms'.

KEY DATES

ENQUIRIES

Shareholders are asked to contact the Company Secretary, Mr Thomson Naude, on (+618) 9321 2665 if they have any queries in respect of the matters set out in these documents.

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that an Annual General Meeting of Shareholders will be held at 1.00pm (AWST) on Friday, 13 November 2015 at Meeting Room 8, Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the AGM. The Explanatory Statement forms part of this Notice of Meeting.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

ORDINARY BUSINESS

ANNUAL FINANCIAL STATEMENTS AND REPORTS

To receive and consider the Annual Financial Report, the Directors' Report and the Audit Report of Carnarvon Petroleum Limited for the financial year ended 30 June 2015.

RESOLUTION 1 - RE-ELECTION OF DR PETER MOORE AS A DIRECTOR

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

'That Dr Peter Moore, having been appointed a director on 18 June 2015 in accordance with rule 35(a) of the Company's Constitution, retires under rule 35(b) and, being eligible, offers himself for re-election, be re-elected as a director of the Company.'

RESOLUTION 2 - RE-ELECTION OF MR PETER LEONHARDT AS A DIRECTOR

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

'That Mr Peter Leonhardt, who retires by rotation in accordance with rule 35(c) of the Company's Constitution and, being eligible, offers himself for re-election, be re-elected as a Director of the Company.'

RESOLUTION 3 - ADOPTION OF THE REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2015

To consider and, if thought fit, to pass the following resolution as a non-binding resolution:

'That for the purposes of section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Directors' Report of the Company for the year ended 30 June 2015.'

Note: Section 250R(3) of the Corporations Act provides that the vote on this Resolution is advisory only and does not bind the Directors or the Company.

Voting Prohibition

A vote on Resolution 3 must not be cast (in any capacity) by or on behalf of any of the following persons:

1. a member of the key management personnel, details of whose remuneration are included in the Remuneration Report;

2. a closely related party of such a member.

   However, a person described above may cast a vote on Resolution 3 as a proxy if the vote is not cast on behalf of a person described above and either:

   
   

3. the person is appointed as a proxy by writing that specifies the way the proxy is to vote on the resolution; or

4. the person is the Chairman of the AGM and the appointment of the Chairman as proxy:

5. does not specify the way the proxy is to vote on the resolution; and

6. expressly authorises the Chairman to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel for the Company.




SPECIAL BUSINESS




RESOLUTION 4 - RE-ADOPTION OF CARNARVON EMPLOYEE SHARE PLAN




To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

'That for the purpose of ASX Listing Rule 7.2 (Exception 9) and section 260C(4) of the Corporations Act and for all other purposes, the Company approves the issue of shares under the Carnarvon Employee Share Plan, a summary of which is included in the Explanatory Statement accompanying this Notice of Meeting.'

Voting Prohibition




A vote on Resolution 4 must not be cast by a person appointed as a proxy if:




1. the proxy is either:

2. a member of the key management personnel; or

3. a closely related party of a member of the key management personnel; and

4. the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

5. the proxy is the Chairman of the AGM; and

6. the appointment expressly authorises the Chairman to exercise the proxy even though the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

Voting Exclusion

The Company will disregard any votes cast on Resolution 4 by or on behalf of a Director (except a Director who is ineligible to participate in any employee incentive scheme of the Company) and any associate of such a Director.

However, the Company will not disregard a vote if:

1. it is cast by a person who is a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

2. it is cast by the Chairman of the AGM as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.




RESOLUTION 5 - ISSUE OF SHARES TO MR ADRIAN COOK




To consider and, if thought fit, to pass the following resolution as an ordinary resolution:




'For the purposes of ASX Listing Rule 10.14, Chapter 2E of the Corporations Act and for all other purposes, the Company approves the allotment and issue of 1,159,917 fully paid ordinary shares and the associated loan to Mr Adrian Cook, Managing Director and Chief Executive Officer of the Company, or his nominee under the Carnarvon Employee Share Plan on the terms and conditions set out in the Explanatory Statement accompanying this Notice of Meeting.'




Voting Prohibitions




A vote on Resolution 5 must not be cast by a person appointed as a proxy if:




1. the proxy is either:

2. a member of the key management personnel; or

3. a closely related party of a member of the key management personnel; and

4. the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

5. the proxy is the Chairman of the AGM; and

6. the appointment expressly authorises the Chairman to exercise the proxy even though the resolution is connected







directly or indirectly with the remuneration of a member of the key management personnel.

A vote on Resolution 5 must not be cast (in any capacity) by or on behalf of Mr Cook or any of his associates. However, this prohibition does not apply if:

1. the vote is cast by a person as proxy and the proxy form specifies how the proxy is to vote on Resolution 5; and

2. the vote is not cast on behalf of Mr Cook, his associates or any related party of Mr Cook.

Voting Exclusion




The Company will disregard any votes cast on Resolution 5 by or on behalf of a Director who is eligible to participate in the Carnarvon Employee Share Plan and any associate of such a Director.

However, the Company will not disregard a vote if:

1. it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

2. it is cast by the Chairman of the AGM as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.




RESOLUTION 6 - GRANT OF OPTIONS TO MR WILLIAM FOSTER




To consider and, if thought fit, to pass the following resolution as an ordinary resolution:




'That for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve grant of up to 500,000 Options to Mr William Foster on the terms and conditions set out in the Explanatory Statement accompanying this Notice of Meeting.'




Voting Prohibitions




A vote on Resolution 6 must not be cast by a person appointed as a proxy if:




1. the proxy is either:

2. a member of the key management personnel; or

3. a closely related party of a member of the key management personnel; and

4. the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

5. the proxy is the Chairman of the AGM; and

6. the appointment expressly authorises the Chairman to exercise the proxy even though the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

A vote on Resolution 6 must not be cast (in any capacity) by or on behalf of Mr Foster or any of his associates. However, this prohibition does not apply if:

1. the vote is cast by a person as proxy and the proxy form specifies how the proxy is to vote on Resolution 6; and

2. the vote is not cast on behalf of Mr Foster, his associates or any related party of Mr Foster.

Voting Exclusion




The Company will disregard any votes cast on Resolution 6 by Mr William Foster or any of his associates. However, the Company will not disregard a vote if:




1. it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

   
   

2. it is cast by the Chairman of the AGM as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

   
   

   RESOLUTION 7 - GRANT OF OPTIONS TO DR PETER MOORE

   
   

   To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

   
   

   'That for the purposes of ASX Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve the grant of up to 500,000 Options to Dr Peter Moore on the terms and conditions set out in the Explanatory Statement accompanying this Notice of Meeting.'

   Voting Prohibitions

   
   

   A vote on Resolution 7 must not be cast by a person appointed as a proxy if:

   
   

3. the proxy is either:

4. a member of the key management personnel; or

5. a closely related party of a member of the key management personnel; and

6. the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

7. the proxy is the Chairman of the AGM; and

8. the appointment expressly authorises the Chairman to exercise the proxy even though the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

A vote on Resolution 7 must not be cast (in any capacity) by or on behalf of Dr Moore or any of his associates. However, this prohibition does not apply if:

1. the vote is cast by a person as proxy and the proxy form specifies how the proxy is to vote on Resolution 7; and

2. the vote is not cast on behalf of Dr Moore, his associates or any related party of Dr Moore.

Voting Exclusion




The Company will disregard any votes cast on Resolution 7 by Dr Peter Moore or any of his associates. However, the Company will not disregard a vote if:




1. it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

   
   

2. it is cast by the Chairman of the AGM as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

   
   

   RESOLUTION 8 - CHANGE TO NON-EXECUTIVE DIRECTORS' FEES

   
   

   To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

   
   

   'That, for the purposes of ASX Listing Rule 10.17 and rule 37(a) of the Company's Constitution, the maximum aggregate amount payable to Non-Executive Directors of the Company be increased by $100,000 from $300,000 per annum to $400,000 per annum.'

   Voting Prohibition

   
   

   A vote on Resolution 8 must not be cast by a person appointed as a proxy if:

   
   

3. the proxy is either:

4. a member of the key management personnel; or

5. a closely related party of a member of the key management personnel; and

6. the appointment does not specify the way the proxy is to vote on the resolution. However, the above prohibition does not apply if:

7. the proxy is the Chairman of the AGM; and

8. the appointment expressly authorises the Chairman to exercise the proxy even though the resolution is connected directly or indirectly with the remuneration of a member of the key management personnel.

Voting Exclusion




The Company will disregard any votes cast on Resolution 8 by any Director or any associate of a Director. However, the Company will not disregard a vote if:




1. it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

   
   

2. it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.




RESOLUTION 9 - APPOINTMENT OF AUDITOR




To consider and, if thought fit, to pass the following resolution as an ordinary resolution:




'That, subject to ASIC consenting to the resignation of Crowe Horwath as auditor of the Company, pursuant to section 3278 of the Corporations Act and for all other purposes Ernst & Young be appointed to act as auditor of the Company, with effect from the conclusion of the 2015 Annual General Meeting.'







Dated: 25 September 2015 By order of the Board

Mr Thomson Naude

Company Secretary




EXPLANATORY STATEMENT







This Explanatory Statement has been prepared for the information of Shareholders, in connection with the business to be conducted at the Annual General Meeting to be held at 1.00pm (AWST) on Friday, 13 November 2015 at Meeting Room 8, Perth Convention and Exhibition Centre, 21 Mounts Bay Road, Perth, Western Australia.




The purpose of this Explanatory Statement is to provide information that the Directors believe to be material to Shareholders in deciding whether or not to approve the Resolutions in the Notice of Meeting.




ANNUAL FINANCIAL STATEMENTS AND REPORTS




The Corporations Act requires the Annual Financial Report, the Directors' Report, and the Auditor's Report ('Annual Report') to be received and considered at the AGM. The Corporations Act does not require Shareholders to vote on the Annual Report. However Shareholders attending the AGM will be given a reasonable opportunity to ask questions about, or make comments on, the financial statements and reports contained within the Annual Report which can be downloaded from the Company's website at www.carnarvon.com.au.




The Company's auditor, Crowe Horwath Perth, will be present at the AGM and Shareholders will have the opportunity to ask the auditor questions in relation to the conduct of the audit, the Auditor's Report, the Company's accounting policies, and the independence of the auditor.




RESOLUTION 1 - RE-ELECTION OF DR PETER MOORE AS A DIRECTOR




1. Background

   
   

   Under rule 35(a) of the Company's Constitution, the Directors may appoint a person as a Director, either as an addition to the existing Directors or to fill a casual vacancy. Under rule 35(b) any person so appointed, other than the managing director, must retire from office at the next annual general meeting following his or her appointment.

   
   

   Dr Moore was appointed a director on 18 June 2015. In accordance with rule 35(b), Dr Moore now retires and, being eligible, offers himself for election as a Director.

   
   

   Details of Dr Moore's experience and qualifications are set out below.

   
   

   Qualifications: B.Sc (Hons Geology), MBA, PhD, GAICD

   
   

   Skills and experience: Dr Moore has extensive experience in exploration and

   production in Australia and internationally gained through senior roles with a number of globally recognised companies. Dr Moore led Woodside's worldwide exploration efforts as the Executive Vice President Exploration reporting to the CEO and was the Head of the Geoscience function (Exploration, Development, Production, M&A).

   
   

2. Directors' Recommendation




The Directors (other than Dr Peter Moore) unanimously recommend that Shareholders vote in favour of Resolution 1.




RESOLUTION 2 - RE-ELECTION OF MR PETER LEONHARDT AS A DIRECTOR




2.1 Background




In accordance with rule 35(c) of the Company's Constitution, Mr Peter Leonhardt retires by rotation and, being eligible, offers himself for re-election as a Director.




Details of Mr Leonhardt's experience and qualifications are set out below.




Term of office: Appointed as a Director in March 2005 and appointed as Chairman in April 2005.




Qualifications: FCA, FAICD (life)




Skills and experience: Mr Leonhardt has been a non-executive director in public

listed companies for over 15 years and has extensive business, financial and corporate experience. He is a former Senior Partner of PricewaterhouseCoopers and National Board member and Managing Partner of Coopers & Lybrand in Western Australia.




2.2 Directors' Recommendation




The Directors (other than Mr Peter Leonhardt) unanimously recommend that Shareholders vote in favour of Resolution 2.




RESOLUTION 3 - ADOPTION OF THE REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2015




1. Background

   
   

   The Directors' Report for the year ended 30 June 2015 contains a Remuneration Report which sets out:

   • the Board's policy for the remuneration of Directors and executive officers; and

   • the remuneration details of each Director and each executive officer named in the Remuneration Report.

     
     

     In accordance with section 250R of the Corporations Act, the Company submits its Remuneration Report for the year ended 30 June 2015 to Shareholders for consideration and adoption by way of a non-binding resolution.

     The Corporations Act provides that the vote on this Resolution is advisory only and does not bind the Directors or the Company, nor does it affect the remuneration paid or payable to the Company's Directors or executives. However, the Board will take the outcome of the Resolution into account when considering future remuneration policy.

     
     

     Under the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive annual general meetings, a resolution ('spill resolution') must be put to Shareholders at the second of those meetings to determine whether the Directors who were in office at the date of approval of the applicable directors' report must stand for re-election.

     
     

     If the spill resolution is passed by the requisite majority (being an ordinary resolution), then the Company must convene a general meeting of Shareholders (a 'spill meeting') within 90 days of the second annual general meeting, at which all of those Directors will cease to hold office but may offer themselves for re-election. This is being referred to as the '2 strikes rule'.

     At the Company's 2014 AGM, less than 25% of the votes cast on the resolution to adopt the Company's 2014 remuneration report voted against its adoption. As such, regardless of the voting on Resolution 3, a spill resolution is not required to be considered at the 2015 AGM.

     
     

     The Chairman of the AGM will give Shareholders a reasonable opportunity to ask questions about or to make comments on the Remuneration Report.

     
     

2. Directors' Recommendation




The Directors unanimously recommend that Shareholders vote in favour of Resolution 3. The Directors acknowledge, however, that they have a personal interest in some aspects of the Remuneration Report.




RESOLUTION 4 - RE-ADOPTION OF CARNARVON EMPLOYEE SHARE PLAN




4.1 Background




On 16 October 1997 the Company adopted an employee share plan, known as the Carnarvon Employee Share Plan ('Plan'), as a method for providing appropriate incentives to the Company's employees and executives. Subsequently the Plan has been re-adopted a number of times subject to various amendments. The Directors consider that the Plan is an essential tool for the Company to maintain effective and competitive employment arrangements and align the objectives of management with the interests of Shareholders.




The Plan enables an eligible employee to acquire a Share under the Plan ('ESP Shares') at an issue price determined by the Board ('Issue Price'), which must be at least a 20% premium to the market price of the Company's Shares (determined by the 5 day volume weighted average price ('VWAP') of the Company's Shares sold on ASX prior to the proposed date of offer). As part of an offer under the Plan the Company will loan the eligible employee an amount equal to the acquisition cost of the ESP Shares acquired (being the number of ESP Shares multiplied by the Issue Price).




The Plan is considered the most effective means of providing long term incentives to the Company's employees and executives, because:




• it provides clear incentive targets for recipients, namely to materially increase the Share price above the Issue Price of those Shares (prevailing share price plus a premium of at least 20%);

• unlike performance rights, there is no value in the ESP Shares if the price of those Shares remain below the Issue Price;

• holders of the ESP Shares may only dispose of 25% of their ESP Shares in each of the first four years after issue meaning that there is an incentive for recipients to seek share price appreciation over the longer term;

• the structure of the issue of Shares under the Plan reduces the need for employees to sell at the vesting point to pay tax, unlike performance rights and some option schemes; and

• there is no cash cost to the Company in issuing the ESP Shares. Shares have been issued prudently under the Plan in the past.

Additionally, to encourage further investment in the Company by the Company's employees

and executives, the Board has a current policy of offering to match each Share acquired on market by an employee who is eligible to participate in the Plan ('Acquired Share') with the issue of an ESP Share.