Roc-2 well update

8 June 2016

Highlights

• Roc-2 appraisal well on schedule to commence drilling late June or early July 2016

• Latest Roc-1 laboratory results materially exceed expectations and bode well for Roc-2

• Roc-2 well program includes coring and testing to assess potential production flow rates

Carnarvon Petroleum Limited ("Carnarvon") (ASX: CVN) is pleased to confirm the timing and location of the Roc-2 well in WA-437-P. The well has been designed to appraise and test the Roc-1 gas-condensate discovery that Carnarvon announced on 4 January 2016.

Carnarvon Managing Director and CEO, Adrian Cook said:

"Our growth has been very rapid this year with us securing a number of new additions to the portfolio. Encouragingly, we've been able to achieve these goals while simultaneously advancing our existing projects. But of particular interest in the near term is drilling the Roc-2 well with Quadrant Energy, particularly so soon after making the Roc-1 discovery in January this year.

In the success case, the Roc-2 appraisal well will confirm our gas and condensate volume estimates and provide us with important information on the flow rates of these hydrocarbons from the reservoir.

We also have plans to explore a secondary deeper objective in the Roc-2 well, targeting a zone that contained encouraging hydrocarbon shows in the bottom hole section of the Roc-1 well, following success in the primary target and accommodating well conditions.

The Roc-1 well laboratory results have an important bearing on this project, and I'm pleased to report that the results have begun to come in and have exceeded our expectations.

We recently received fast track analysis of a number of sidewall cores across the Caley reservoir section of the Roc-1 well that show permeabilities are substantially better than the 10 millidarcy (mD) to 100mD we reported in January 2016. Certain sections of the reservoir recorded 500mD with Carnarvon interpreting a weighted average over sands one to four of around 130mD. This is significantly better than the permeabilities required to achieve commercial flow rates from these reservoir rocks.

In addition to better permeability results we have also have seen and reported a higher Condensate to Gas Ratio (CGR). The CGR currently is estimated to be approximately 60 barrels per million cubic feet of gas, an increase on the initial range of 20 to 40 barrels per million cubic feet of gas. Higher CGRs generally increase the value of a project due to the value of the liquids that can be produced and sold with the gas production.

Demonstrating a commercial flow rate and a commercial volume of gas and condensate in the Roc-2 well would represent an important milestone in the development potential for the Roc structure and surrounding resources, all of which could realise substantial value for our company."

Roc-2 well timing

The Operator of the WA-437-P exploration permit, Quadrant Energy, has advised that the "Ocean Monarch" rig is expected on location at the Roc-2 site in the last week of June or the first week of July. The Ocean Monarch will have the capability and approvals to undertake well testing if the expected hydrocarbons are confirmed whilst drilling this well.

The Roc-2 appraisal well is required to delineate the extent of the Roc field, calibrate reservoir parameters, understand reservoir deliverability and characterise fluid properties.

Roc-2 will be drilled to a depth of 5,250m with capacity to extend to 5,700m if justified by hydrocarbon shows, reservoir quality and drilling conditions.

Full well-bore coring and flow-testing are planned for this well over the Caley sandstones, taking the total time to drill, core and test to around 98 days.

Roc-2 location and volumes

The Roc-2 well is located in around 100m water depth, approximately 160 km north-east of Port Hedland in the Bedout sub-basin of the greater Roebuck basin (figure 1).

Roc-1 encountered a gross reservoir section of around 120 metres in the Caley, with the top 40 meters being hydrocarbon bearing. The Roc-2 well is designed to appraise this reservoir section in an updip location, around 5km to the east of the Roc-1 well. (figure 2).

The Roc-2 well is designed to appraise the contingent volumes and to explore for the prospective volumes (refer to announcement of 17 March 2016* with results in table 1) in order to aggregate a total contingent volume above the minimum economic field size ("MEFS") threshold.

For contingent volumes, encountering similar quality sands across the same 40m gross column in the Roc-2 location is expected to prove up (in the mid case) a volume of around 270 Bscf and 13 million barrels of condensate recoverable (gross)*.

Encountering the additional 80 metre sands above the gas-water contact in Roc-2, as has been interpreted on 3D seismic, is expected to prove up (in the mid case) an additional volume of around 193 Bscf and 9 million barrels of condensate (gross)*. These quality sands were discovered in the Roc-1 well below the gas- water contact and accordingly were non-hydrocarbon bearing at that location.

A mid case contingent and prospective resource outcome is expected to comfortably satisfy the MEFS threshold.

Table 1: Gross and Volumetric Estimates for Gas and Condensate WA-437-P*

Note: Totals have been estimated using probabilistic methodology; Carnarvon has a 20% equity interest in these resources - see Table 2 for net resources. Refer to announcement of 17 March 2016

Refer to cautionary statement in the report (page 4) relating to estimates of contingent and prospective resources

Roc-2 well testing

The proposed well test in Roc-2 across the Caley reservoir will aim to prove up potential commerciality by demonstrating flow potential. The well test will primarily demonstrate that the Caley sandstone is capable of production at commercial rates.

Additional information that will be collected by the well test include average reservoir properties such as permeability across the tested zones, connected volumes and indications of reservoir architecture including boundaries and calculation of in-flow performance relationship.

The well test can also be used to collect downhole and surface samples of the producing fluid.

The final well test program will be decided once the Roc-2 well has drilled through the Caley reservoir, but it is envisaged to take a total of around 20 days to complete.

Roc-1 Update

Several sidewall core samples from the Roc-1 well were fast tracked through routine core analysis in order to determine porosity and permeability parameters.

The results have given more confidence in the range of gas and condensate in place with porosities being reported of 14.5% for Sand 2 and 12% for Sand 4.

More importantly, the permeabilities reported of 300 to 500mD in Sand 2 and 40mD in Sand 4 are significantly better than expected and give confidence for positive flow rates being achieved during well flow testing.

The Roc prospective and contingent resources are within the WA-437-P exploration permit in the North West Shelf of Australia.

The equity interest holders are:

Carnarvon Petroleum 20%

Quadrant Energy (Operator) 80%

Yours faithfully

Adrian Cook Managing Director Carnarvon Petroleum

Shareholder enquiries: Media enquires:

Mr Thomson Naude Mr Tony Dawe

Company Secretary Professional Public Relations

Phone: (08) 9321 2665 (08) 9388 0944 / 0405 989 743

Email: [email protected] [email protected]