Highlights

• GasandcondensateinPhoenixSouth-2wellneartopoftheprimaryCaleytarget• Elevatedformationpressurespreventfurtherdrillingandevaluation

CarnarvonPetroleumLimited (“Carnarvon”) (ASX:CVN) ispleased to informshareholders that thePhoenixSouth-2wellhaspenetratedadefinitivehydrocarbon-bearingintervalatorneartheprimaryCaleytarget.

Thewelldrilledanestimated39metrehydrocarbon-bearingzonebetweenapproximately5,176and5,215metreswithsignificantgasinfluxandelevatedreservoirporepressures.Thewellwasunabletoassessasmuchas185metresofadditionalpotentialhydrocarbonbearingCaleyreservoirbeneath5,215metresduetothehigherthananticipatedpressuresbeingencountered.Encouragingly, higher formation pressures typically support both larger volumes and higher gas andcondensateflowsratesoveragivenreservoir.Theyalsorequireadifferentwellboredesignfromthatusedinthiswell.Accordingly,forsafetyreasons,nofurtherdrillingandformationevaluationcanoccurinthecurrentwellbore.TheoperatorandCarnarvonwillnowassesstheseresultsandconsiderthemostappropriateforwardplanforassessingtheentireCaleyzoneofinterest.

Carnarvon’sManagingDirectorandChiefExecutiveOfficer,AdrianCooksaid:“WeareveryencouragedwiththeresultsofthisgasandcondensatediscoveryandfeelconfidentthereisasignificantamountofpotentialstilltobeassessedintheCaleyformationbeneaththecurrentwellbore.

Theextentof the increase in reservoirporepressureobservedwhiledrilling into theCaley formationcouldindicateahydrocarbonbodylargerthananythatwehavepreviouslyencounteredinthebasinandevenlargerthanwewereexpectingpre-drill.

We’vetakenanotherveryimportantstepinunlockingthisnewbasinandwecertainlylookforwardtofurtherclarifyingitspotentialasourforwardworkprogramsarefinalised.

In thenear term,wewillworkwith theoperatoron thenextphaseofdrilling in thisand theother targetstructuresinourPhoenixandRocpermits.TheCarnarvonteamwillalsotaketheopportunitytoupdatetheresourceestimatesfortheCaleysandstonewiththisnewinformation.”

The Phoenix South-2 well is located within theWA-435-P exploration permit in the North-West Shelf ofAustralia.Theequityinterestholdersare:CarnarvonPetroleum 20%

QuadrantEnergy(Operator) 80%

PhoenixSouth-2gas&condensatediscovery19December2016

Yoursfaithfully

AdrianCookManagingDirectorCarnarvonPetroleum

Shareholderenquiries: Mediaenquires:MrThomsonNaude MrTonyDaweCompanySecretary ProfessionalPublicRelations Phone:(08)93212665 (08)93880944/0405989743 Email:investor.relations@cvn.com.au tony.dawe@ppr.com.au

Thisdocumentmaycontainforward-lookinginformation.Forward-lookinginformationisgenerallyidentifiablebytheterminologyused,suchas"expect","believe","estimate","should","anticipate"and"potential"orothersimilarwording.Forward-lookinginformationinthisdocumentincludes,butisnotlimitedto,referencesto:well drilling programs and drilling plans, estimates of reserves and potentially recoverable resources, andinformationonfutureproductionandprojectstart-ups.Bytheirverynature,theforward-lookingstatementscontained in thisnews release requireCarnarvonand itsmanagement tomakeassumptions thatmaynotmaterializeorthatmaynotbeaccurate.Theforward-looking informationcontained inthisnewsrelease issubject toknownandunknownrisksanduncertaintiesandother factors,whichcouldcauseactual results,expectations,achievementsorperformancetodiffermaterially, includingwithout limitation: imprecisionofreserveestimatesandestimatesofrecoverablequantitiesofoil,changesinprojectschedules,operatingandreservoirperformance,theeffectsofweatherandclimatechange,theresultsofexplorationanddevelopmentdrillingandrelatedactivities,demandforoilandgas,commercialnegotiations,othertechnicalandeconomicfactorsorrevisionsandotherfactors,manyofwhicharebeyondthecontrolofCarnarvon.AlthoughCarnarvonbelieves that the expectations reflected in its forward-looking statements are reasonable, it can give noassurancesthattheexpectationsofanyforward-lookingstatementswillprovetobecorrect.

Figure1:StratigraphiccolumnencounteredbythePhoenixSouth-2wellwithmajorformationsoutlined.

2016 Gas & Condensate Discovery in Phoenix South-2 2016 Gas & Condensate Discovery in Roc-1 2016 Gas & Condensate Successful Well Test in Roc-2

2014 Oil Discovery in Phoenix South-1

Figure2-LocationofthePhoenixSouth-2well

Figure3:Caleydepthmap

Phoenix South-2

Phoenix South-2