Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

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PETSEC ENERGY LTD ACN 000 602 700

3rd November 2016

Notice of Extraordinary General Meeting Petsec Energy Ltd (the “Company”) is pleased to invite shareholders to attend the Extraordinary General Meeting of the Company to be held on Thursday, 1st December 2016 at 11.00 a.m. in the AGL Theatre, Level 1 of The Museum of Sydney, corner of Bridge & Phillip Streets Sydney, NSW. The Notice of Meeting and Proxy Form for this meeting will be mailed to shareholders on Thursday, 3rd November 2016. Pursuant to ASX Listing Rule 3.17, a copy of the Notice of Meeting, including the proxy form, follows this announcement and will also available on the Company website at www.petsec.com.au. Also attached to this announcement is a copy of the letter to shareholders from the Chairman and Managing Director, Terry Fern, which will accompany the Notice of Meeting and Proxy Form to be mailed to shareholders. Upon conclusion of the formal business of the meeting an informal presentation on the Company’s activities will be delivered by Petsec Energy Ltd Chairman and Managing Director Terry Fern and Petsec Energy (Middle Eastern) Limited Chief Executive Officer Maki Petkovski. This will be followed by light refreshments in the foyer outside the auditorium.

ASX Waiver The ASX Limited (“ASX”) has granted the Company a waiver from listing rule 7.3.2 to the extent necessary to permit the Notice of Meeting (the “Notice”) seeking shareholder approval for the issue of up to US$15 million worth of convertible notes (“Convertible Notes”) to SING RIM Pte. Ltd (the “Noteholder”) (“Facility Agreement”) and the payment of interest under the Convertible Notes through the issue of shares (“Interest Shares”), which in aggregate are convertible into 46,000,000 ordinary shares, not to state the Convertible Notes and Interest Shares will be issued no later than 3 months after the date of the meeting on the following conditions.

1.1. The Notice sets out in detail the milestones (including specific parameters for each milestone) which must be satisfied prior to the issue of Convertible Notes.

1.2. The Notice seeks approval for a stated maximum number of shares that will be issued on conversion of the Convertible Notes and the issue of the Interest Shares, with any shares issued in excess of this to be subject to further shareholder approval under listing rule 7.1.

1.3. The milestones which must be satisfied for the Convertible Notes to be issued are not varied.

1.4. The Convertible Notes and Interest Shares will be issued during the term of the Facility Agreement, and in any event no later than 31 December 2017.

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

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1.5. Any annual report released during a period in which the Convertible Notes are issued or remain to be issued, the annual report discloses details of the Convertible Notes which have been issued or remain to be issued, and details of the conditions which are satisfied prior to the issue of the Convertible Notes.

1.6. Any annual report released during a period in which the Interest Shares are issued or remain to be issued, the annual report discloses details of the Interest Shares which have been issued or remain to be issued and the interest payable under the Convertible Notes.

1.7. In any half year or quarterly report for a period during which any of the Convertible Notes and Interest Shares have been issued or remain to be issued, the Company must include a summary statement of the number of Convertible Notes and Interest Shares issued during the reporting period, the number of Convertible Notes and Interest Shares that remain to be issued and the basis, and the interest payable under the Convertible Notes.

1.8. The Company releases the terms of the waiver no later than the time the Notice is released to the market.

For further Information: Paul Gahdmar Company Secretary & Group Financial Controller Petsec Energy Ltd

Tel: 612 9247 4605 Fax: 612 9251 2410

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Petsec Energy Ltd ACN 000 602 700 (Company)

Notice of Extraordinary General Meeting

Notice is hereby given that an Extraordinary General Meeting of members of Petsec Energy Ltd (Company) will be held in the AGL Theatre, Level 1 of The Museum of Sydney, corner of Bridge & Phillip Streets Sydney, NSW 2000, Australia on Thursday 1st December 2016 at 11.00 a.m. (AEDT).

1. Business

RESOLUTION 1

APPROVAL, FOR PURPOSES OF ASX LISTING RULE 7.1, OF THE CONVERSION OF THE CONVERTIBLE NOTES ACCORDING TO THE DEED POLL, INTO SHARES IN THE COMPANY AT ANY TIME UP TO 31 DECEMBER 2017

“That, for the purposes of ASX Listing Rule 7.1, and for all other purposes, the issue and allotment of all of the Convertible Notes in the Company (including any of the debt securities issued as at the date of this Resolution) pursuant to the Deed Poll, for an aggregate subscription price of US$15,000,000, be immediately convertible equity securities, (including any of the debt securities issued at the date of this Resolution), and the resultant issue of fully paid ordinary shares issued on conversion of the Convertible Notes to Noteholders, at any time up to 31st December 2017, be approved.”

Information regarding this Resolution is set out in the Explanatory Notes.

RESOLUTION 2

RATIFICATION, FOR THE PURPOSES OF ASX LISTING RULE 7.4 AND 7.1, THE ISSUE OF 5,000,000 SHARES, BEING THE FACILITY FEE PURSUANT TO THE DEED POLL.

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

“That, for the purposes of ASX Listing Rule 7.4 and Rule 7.1 and for all other purposes, the issue of 5,000,000 fully paid ordinary shares in the Company to the Registrar, Sing Rim Pte. Ltd., being the facility fee for arranging the subscription of the Convertible Notes, according to the Deed Poll, be approved.

Information regarding this Resolution is set out in the Explanatory Notes.

2. Voting Exclusion Statement

The Company will disregard any votes cast on the Resolutions by Sing Rim Pte. Ltd. and any other Noteholder or any of their associates.

However, the Company need not disregard a vote if:

(a) 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

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(b) it is cast by the Chairman as proxy for a person who is entitled to vote in accordance with the direction on the proxy form to vote as the proxy decides.

3. Voting Intentions of Chairman

The Chairman intends to vote all undirected proxies in favour of all Resolutions.

4. Voting at the meeting

(a) Under section 7.11.37 of the Corporations Regulation 2001 (Cth), the Board has determined that a person’s entitlement to vote at the meeting will be the entitlement of that person appearing on the register of members at 7.00pm (AEDT) on 29th November 2016.

(b) On a show of hands you have one vote. On a poll you have one vote per Share you hold in the Company.

(c) If Shares are jointly held, only one of the joint holders is entitled to vote.

(d) In order to vote, a corporation which is a Shareholder may appoint a person to act as its representative. The appointment must comply with sections 250D and 253B of the Corporations Act 2001 (Cth). The representative should bring to the meeting duly executed evidence of the appointment.

(e) The form of proxy accompanies this Notice of Meeting. A member entitled to attend and vote at the meeting has a right to appoint a proxy (individual or body corporate). Any person appointed as a proxy need not be a member of the Company. A member who is entitled to cast two or more votes may appoint two proxies and may specify the proportion and number of votes that each proxy is appointed to exercise. If the member appoints two proxies and the appointment does not specify the proportion or number of the member’s votes that each proxy may exercise, each proxy may exercise half of the member’s votes. If a member appoints two proxies, neither may vote on a show of hands.

(f) To be effective, the form appointing the proxy, together with any authority under which it was executed, or a certified copy of that authority, must be received at the registered office of the Company not less than 48 hours before the time of holding the Extraordinary General Meeting.

BY MAIL: By using the reply paid envelope provided Share Registry – Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia

BY FAX: + 61 2 9290 9655 IN PERSON: Share Registry – Boardroom Pty Limited, Level 12, 225 George Street, Sydney NSW 2000

Australia VOTE ONLINE: www.votingonline.com.au/petsecegm2016

By order of the Board

Dated this 3rd day of November 2016

Paul Gahdmar Company Secretary

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EXPLANATORY NOTES

These Explanatory Notes form part of this Notice of Meeting and should be read in conjunction with it.

Each of the Resolutions is an ordinary resolution, which requires a simple majority of votes to be cast in favour by Shareholders entitled to vote on each Resolution.

1. OVERVIEW

On 23rd August 2016, the Company announced that it had established a US$15,000,000 secured convertible note facility that would provide the Company with the financial flexibility to progress the Company’s development projects in the USA and the Middle East and North Africa (“MENA”) which will provide early cash flow. The funds available will be used for the development of the Main Pass 270 #3 well “Hummer” substantial gas/oil discovery in the Gulf of Mexico, USA, through to production, the restart and optimisation of the 5,000 to 10,000 bopd capacity An Nagyah Oilfield in Block S-1, Yemen and to acquire other oil production opportunities in Yemen or the MENA region.

The terms of the Convertible Notes are set out in the Secured Convertible Notes Deed Poll dated 23rd August 2016 (subsequently amended by a deed of variation dated 14th September 2016), a summary of which is set out in Schedule 1 of this Notice of Meeting.

The Convertible Notes are currently designated debt securities which require Shareholder approval to allow the intent of the Deed Poll to be honoured to allow Noteholders to effect conversion of the Convertible Notes into Shares. Approval of Resolution 1 allows the Convertible Notes issued according to the Deed Poll, to be converted into Shares without the need for further Shareholder approval at that time a notice to convert is received by the Company.

On 17th October 2016, in accordance with the terms of the Deed Poll, the Company issued 5,000,000 Shares, being the Facility Fee Shares, to the Registrar.

In summary, this Notice of Meeting seeks the approval of Shareholders for the purposes of the ASX Listing Rule 7.1 of the ASX Listing Rules, to permit conversion of the Convertible Notes into Shares at any time up to the 31st December 2017, in accordance with the terms of the Deed Poll (Resolution 1), and to ratify ,for the purposes of the ASX Listing Rule 7.1 of the ASX Listing Rules, the Facility Fee Shares which have been issued under the terms of the Deed Poll (Resolution 2).

2. RESOLUTION 1

APPROVAL, FOR PURPOSES OF ASX LISTING RULE 7.1, OF THE CONVERSION OF THE CONVERTIBLE NOTES ACCORDING TO THE DEED POLL, INTO SHARES IN THE COMPANY AT ANY TIME UP TO 31 DECEMBER 2017

This Resolution seeks the approval of Shareholders to allow, for purposes of ASX Listing Rule 7.1, the issue of Shares upon conversion of Convertible Notes at any time prior to 31st December 2017 in accordance with the terms of the Deed Poll. Approval of this Resolution is to give effect to the convertibility of debt into equity in accordance with the Deed Poll, while maintaining the Company’s 7.1 Capacity. This will allow the Company to issue further securities up to the limit of 15% of the issued capital of the Company in the next 12 month period without Shareholder approval.

Set out below is all information known to the Company that is material to the decision on how to vote on the Resolution.

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2.1 Listing Rule 7.1

Listing Rule 7.1 enables entities with shareholder approval to issue securities comprising more than 15% of the entity’s ordinary securities then on issue. Approval of Resolution 1 allows the Company to issue Shares pursuant to the Deed Poll for Convertible Notes issued at any time up to 31st December 2017 without using the Company’s 7.1 Capacity.

Formula for calculating the 7.1 Capacity

Listing Rule 7.1 provides that entities with shareholder approval must not issue or agree to issue more equity securities than the number calculated according to the following formula:

(A x B) – C

A is the number of fully paid ordinary securities on issue 12 months before the date of issue or

agreement to issue:

(a) plus the number of fully paid ordinary securities issued in the 12 months under an

exception in Listing Rule 7.2;

(b) plus the number of partly paid ordinary securities that became fully paid in the 12

months;

(c) plus the number of fully paid ordinary securities issued in the 12 months with approval

of holders of shares under Listing Rule 7.1 or 7.4;

(d) less the number of fully paid ordinary securities cancelled in the 12 months.

B is 15%.

C is the number of equity securities issued or agreed to be issued before the date of issue or agreement to issue that are not issued:

(a) under an exception in Listing Rule 7.2;

(b) under Listing Rule 7.2; or

(c) with shareholder approval under Listing Rule 7.1 or Listing Rule 7.4.

2.2 ASX waiver

Under Listing Rule 7.3.2, any issue of securities approved with shareholder approval under Listing Rule 7.1 must be issued within 3 months of the Company receiving shareholder approval. The Deed Poll provides that the Convertible Notes can be issued in three Tranches if the conditions applicable to the Issued Convertible Notes can be converted into Shares up until the maturity date of 31st December 2017. Shareholder approval at this meeting in December 2016 granting approval to issue Convertible Notes which may be converted to Shares up to the 31st December 2017 exceeds the 3 month limit set out in Listing Rule 7.3.2.

Consequently, the Company sought and was granted on 21st October 2016 a waiver of Listing Rule 7.3.2 from the ASX. The waiver allows conversion of the Convertible Notes at any time before the Maturity Date without affecting the Company’s 7.1 Capacity.

2.3 The effect on the Company of the issue of the Convertible Notes and the potential conversion into Shares

(a) Capital structure.

The principal effect of the issue of the Convertible Notes on the Company will be to:

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(i) increase the Company’s cash reserves by up to US$15,000,000, before costs of implementing the facility. Issue of the Convertible Notes by the Company is subject to a number of conditions, as summarised in Schedule 1;

(ii) increase the number of unlisted secured convertible notes on issue from nil to US$15,000,000 worth of Convertible Notes; and

(iii) give rise to the Company having a liability for up to US$15,000,000 plus interest at 10% per annum, compounding monthly, capitalising into the principal amount of the Convertible Notes.

(b) Potential increase in number of Shares.

At the date of this Notice of Meeting, the issued capital of the Company was 236,461,630 Shares.

The potential effect of the issue of the Convertible Notes on the Company will be to increase the number of Shares on issue if the Convertible Notes are converted, in accordance with the terms described in Schedule 1.

Should the maximum amount of Convertible Notes be issued (US$15,000,000), then up to 46,000,000 new Shares could be issued if the all of the notes are converted into Shares as permitted by the Deed Poll. The effect on the issued share capital of the Company on conversion of all the Convertible Notes is set out in Schedule 2, which is based on the conversion prices for Shares stated in the Deed Poll:

Tranche 1: Interest –A$0.15/Share;

Tranche 1: Principal (up to 50% may be converted) – A$0.20/Share;

Tranche 2: Principal and interest (up to 50% may be converted) – A$0.30/Share; and

Tranche 3: Principal and interest (up to 50% may be converted) – A$0.40/Share.

Please refer to Schedule 2 for further details.

2.4 Specific Information required by Listing Rule 7.3

The following information is provided to Shareholders in accordance with Listing Rule 7.3, which contains requirements as to the contents of a notice sent to Shareholders for the purposes of Listing Rule 7.1.

Maximum no. of securities to be issued:

The maximum number of Convertible Notes that can be issued is 15,000,000.

The maximum number of Conversion Shares which may be issued in relation to the Convertible Note is restricted to 46,000,000 Shares provided that this number is less than 19.9% of the issued capital or potential issued capital of the Company.

Date by which securities will be issued:

The Company will issue and allot the Convertible Notes on the satisfaction of the conditions applicable to the tranches prior to the Maturity Date. Conversion to Shares may take place up to 31st December 2017.

Issue price per security:

Each Convertible Note has a face value of US$1 and the maximum amount permitted to be issued is US$15,000,000.

The Convertible Notes can be issued in three Tranches as set out in Schedule 1.

Each Convertible Note will convert into Shares at conversion prices ranging from A$0.20 to A$0.40 per share, as follows:

(a) Tranche 1: Interest – A$0.15/Share;

(b) Tranche 1: Principal (up to 50% may be converted) – A$0.20/Share;

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(c) Tranche 2: Principal and interest (up to 50% may be converted) – A$0.30/Share; and

(d) Tranche 3: Principal and interest (up to 50% may be converted) – A$0.40/Share.

Name of allottee:

Sing Rim Pte. Ltd.

Terms of securities:

A summary of the terms and conditions of the Convertible Notes is set out in Schedule 1. Any Conversion Shares issued upon conversion of the Convertible Notes will be fully paid ordinary shares ranking equally in all respects with other existing fully paid ordinary shares in the Company.

Use of funds raised:

The funds raised will be used for the development of the Main Pass 270 #3 well “Hummer” substantial gas/oil discovery in the Gulf of Mexico, USA, through to production, the restart and optimisation of the 5,000 to 10,000 bopd capacity An Nagyah Oilfield in Block S-1, Yemen, and to acquire other oil production opportunities in Yemen or the MENA region.

Voting Exclusion Statement:

A voting exclusion statement applies to this Resolution, as set out in the Notice of Meeting.

RECOMMENDATION: The Directors recommend that Shareholders vote in favour of this Resolution for the reasons set out above. None of the Directors have an interest in the outcome of this Resolution.

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3. RESOLUTION 2

RATIFICATION, FOR THE PURPOSES OF ASX LISTING RULE 7.4 AND 7.1, OF THE ISSUE OF 5,000,000 SHARES, BEING THE FACILITY FEE PURSUANT TO THE DEED POLL

This Resolution seeks the approval of Shareholders for purposes of ASX Listing Rule 7.4 and 7.1, to ratify the issue of 5,000,000 Shares to Sing Rim Pte. Ltd. on 17th October 2016 such that the issue does not use the Company’s 7.1 Capacity. Under the terms of the Deed Poll, the Company agreed that, following the initial subscription for Convertible Notes, the Company would issue the Registrar 5,000,000 fully paid ordinary shares as a Facility Fee for arranging the subscription of the Convertible Notes.

Approval of this Resolution will refresh the ability of the Company to issue further securities up to the limit of 15% of the issued capital of the Company in the next 12 month period without Shareholder approval.

By issuing the Shares as a Facility Fee, the Company has used part of its 15% new issue capacity under Listing Rule 7.1. Accordingly, the Company wishes to restore its capacity and thereby increase its financial flexibility by noting and approving the issue for the purpose of Listing Rule 7.4. Approval of the issue for these purposes will renew the Company’s 15% capacity in accordance with ASX Listing Rule 7.4.

Set out below is all information known to the Company that is material to the decision on how to vote on the Resolution.

3.1 Specific Information required by Listing Rule 7.5

In accordance with Listing Rule 7.5, which contains requirements as to the contents of a notice sent to shareholders for the purposes of Listing Rule 7.4, the following information is provided to Shareholders:

Number of securities issued:

5,000,000 fully paid ordinary shares in the Company.

Issue price per security:

The Facility Fee Shares were issued at A$0.20 per Share in consideration for Sing Rim Pte. Ltd. arranging the subscription of the Convertible Notes.

Name of allottee:

Sing Rim Pte. Ltd.

Terms of securities:

The Facility Fee Shares are fully paid ordinary shares ranking equally in all respects with other existing fully paid ordinary shares in the Company.

Use of funds raised:

There were no funds raised from the issue of the Facility Fee Shares, they were issued in consideration of Sing Rim Pte. Ltd. arranging the subscription of the Convertible Notes.

Voting Exclusion Statement:

A voting exclusion statement applies to this Resolution, as set out in the Notice of Meeting.

RECOMMENDATION: The Directors recommend that Shareholders vote in favour of this Resolution. None of the Directors have an interest in the outcome of this Resolution.

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5. Glossary

7.1 Capacity means the Company’s capacity to issue Shares under Listing Rule 7.1.

A$ means Australian dollars.

AEDT means Australian Eastern Daylight Time.

ASX means ASX Limited, or the Australian Securities Exchange, as the context requires.

Board means the Board of Directors of the Company.

Chairman means the Chairman of the Board.

Company means Petsec Energy Ltd ACN 000 602 700.

Conversion Shares means the Shares which may be issued upon conversion of the Convertible Notes.

Convertible Notes means the convertible notes the subject of Resolution 1 which the Company intends to issue pursuant to the Deed Poll.

Deed Poll means the Secured Convertible Note Deed Poll dated 23rd August 2016 (subsequently amended by a deed of variation dated 14th September 2016) which set out the terms and conditions of the Convertible Notes.

Directors means the current directors of the Company.

EGM or Extraordinary General Meeting means the meeting convened by the Notice of Meeting.

Explanatory Notes means the explanatory notes accompanying the Notice of Meeting.

Facility Fee means the issue of the Facility Fee Shares.

Facility Fee Shares means 5,000,000 Shares issued to the Registrar on 17th October 2016 as consideration for arranging the subscription of the Convertible Notes.

Listing Rules means the ASX Listing Rules.

Maturity Date means 31st December 2017.

MENA means the Middle East and North Africa.

Noteholder means an entity or person whose name is entered on the Register by the Registrar as the holder of Convertible Notes.

Note Facility Limit means US$15,000,000 plus accrued and capitalised interest.

Notice of Meeting means this notice of meeting including the Explanatory Notes.

Registrar means Sing Rim Pte. Ltd., a company registered under the laws of Singapore under registration number 201618210R.

Resolution means each resolution set out in the Notice of Meeting.

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

Shareholder means a holder of Shares.

Tranche means the three equal proportions of the Note Facility Limit that may be issued at different times and subject to different conditions under Deed Poll, referred to as Tranche 1, Tranche 2 and Tranche 3.

US$ means US dollars, the currency of the United States of America.

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Schedule 1 – Key terms of the Convertible Notes

Set out below is a broad summary of the rights, privileges and restrictions attaching to the Convertible Notes. The summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of the Noteholders.

The Convertible Notes can be issued in three Tranches in the amount of US$5,000,000 each, which may be drawn subject to conditions precedent set out below.

(a) Term

The Convertible Notes have a term commencing on the date of issue. The Convertible Notes can be issued prior to Maturity Date, unless earlier redeemed or converted (Term).

(b) Interest

Interest accrues daily at 10% per annum, compounded monthly on the drawn amount, with interest capitalising into the principal amount of the Convertible Notes.

Interest ceases to accrue in respect of a Convertible Note on its Maturity Date, the date on which the Noteholder converts the Convertible Note into Shares or the date on which the Convertible Note is redeemed.

(c) Security

The Convertible Notes constitute unsubordinated and secured obligations of the Company. The Company and the Registrar entered into a general security deed on 23 August 2016 under which the Company granted the Registrar a general security interest over all of the Company’s assets as security for the Company’s obligations under the Convertible Notes. In addition, the Company granted the Registrar mortgages over certain US assets of its US subsidiaries.

(d) Conditions precedent to issue

The Convertible Notes are subject to a number of conditions precedent to issue, as follows:

(i) Tranche 1. US$5,000,000 may be issued by no later than the 31st December 2016. There are no outstanding conditions precedent for this Tranche. To date, the Company has issued Convertible Notes for a face value of US$3,000,000 under this Tranche;

(ii) Tranche 2. US$5,000,000 may be issued no later than 31 March 2017, as follows:

(A) US$2,000,000 may be issued upon clear indication that oil has commenced to flow freely within the Republic of Yemen, shipped and sold, which will be prima facie evidenced by the Yemen companies, Safer and Jana Hunt having produced and transported through the Marib pipeline and shipped and sold no less than 500,000 barrels of oil per month over a two month period;

(B) US$2,000,000 may be issued in parcels of US$500,000 for each 50,000 barrels of oil net to the Company which has been produced, transported, and stored at the shipping terminal, ready for sale; and

(C) US$1,000,000, may be issued in US$500,000 parcels for each 50,000 barrels of oil net shipped and sold.

(iii) Tranche 3. US$5,000,000 may be issued by no later than the 30th June 2017, as follows:

(A) US$500,000 may be issued for each 50,000 barrels net to the Company, produced, transported, shipped and sold, in excess of the 100,000 barrels of crude per month anticipated in Tranche 2.

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(e) Conversion

(i) Subject to Shareholders passing Resolution 1, the Noteholder will be entitled to convert up to 50% of the outstanding amount of the Convertible Notes into Shares, by delivering a conversion notice at any time prior to the Maturity Date. The maximum number of Shares issued on conversion is restricted to 46,000,000 Shares provided that this number is less than 19.9% of the issued capital or potential issued capital of the Company. The Company will apply to ASX for quotation of the Shares issued on conversion of the Convertible Notes. In the event that the 46,000,000 Shares exceeds 19.9%, the cap will be 19.9% of the issued capital or potential issued capital of the Company.

(ii) Shares issued on conversion will rank equally in all respects with fully paid ordinary shares in the Company.

(iii) Each Convertible Note will convert into Shares at conversion prices ranging from A$0.20 to A$0.40 per Share, as follows:

(A) Tranche 1: Interest - A$0.15/Share;

(B) Tranche 1: Principal (up to 50% may be converted) - A$0.20/Share;

(C) Tranche 2: Principal and interest (up to 50% may be converted) - A$0.30/Share; and

(D) Tranche 3: Principal and interest (up to 50% may be converted) - A$0.40/Share.

(f) Redemption and repayments

A Convertible Note must be redeemed by the Company if the Noteholder gives a redemption notice after an Event of Default.

The Company may redeem all or part of a Convertible Note, in the minimum amount of US$1,000,000, during the Term, by notice, upon payment to the Noteholder of a single prepayment fee in the amount of US$250,000.

On the Maturity Date, the Company will redeem the Convertible Notes by payment of the amount drawn plus capitalised interest.

(g) Events of default

There are relatively standard events of default, including:

(i) breach of material obligations by the Company under the Deed Poll;

(ii) there being a material adverse effect that cannot be remedied within 10 business days; and

(iii) insolvency.

On the occurrence of an event of default, the Registrar may require the Company to redeem the Convertible Notes or, alternatively, the Registrar may exercise its rights under the securities granted to the Registrar.

(h) Transferability

Convertible Notes can be transferred.

(i) Unlisted

The Convertible Notes will not be listed on the ASX.

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Schedule 2 – Table of dilution of existing Shareholders

The following table shows the potential effect of the issue of the Convertible Notes on the share structure of the Company based on the issued capital of the Company as at the date of this application, being 236,461,630 Shares.

Calculation of maximum dilution

Converted principal component

Total shares issued

Cumulative potential issued capital (including current issued capital)

% Dilution of original issued Shares

Converted interest component

Existing issued Shares

NIL 236,461,630 236,461,630 NIL

Maximum Tranche 1 Shares to be issued

16,545,334 25,126,347 261,587,978 10.63%

8,581,013

Maximum Tranche 2 Shares to be issued

11,030,223 12,185,231 273,773,209 15.78%

1,155,008

Maximum Tranche 3 Shares to be issued

8,272,667 8,695,014 282,468,223 19.46%

422,347

Total maximum Shares to be issued

46,006,592*

*Note: 6,592 is a rounding error only and to be disregarded.

The table has been prepared on the following assumptions:

1. The Noteholder converts the maximum number of Convertible Notes;

2. The relevant interest rate is 10%, and interest is calculated based on assumptions as to issue dates and conversion dates as follows:

Tranche Issue Date Conversion Date and Share Issue Date

Amount (US$)

1 17 October 2016 31 December 2017 1,500,000

31 October 2016 31 December 2017 1,500,000

7 November 2016 31 December 2017 2,000,000

2 1 January 2017 31 December 2017 5,000,000

3 1 July 2017 31 December 2017 5,000,000

15,000,000

3. The AUD: USD exchange rate used for the above calculation is 0.7555. However, the actual exchange rate at the time of conversion will vary depending on the rate at which one Australian dollars buys United Stated dollars as published by the Reserve Bank of Australia for the business day immediately prior to receipt by the Company of a Conversion Notice.

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TO VOTE ONLINE BY SMARTPHONE

YOUR VOTE IS IMPORTANT For your vote to be effective it must be recorded before 11:00am AEDT on Tuesday 29 November 2016.

STEP 1: VISIT www.votingonline.com.au/petsecegm2016STEP 2: Enter your Postcode OR Country of Residence (if outside Australia)STEP 3: Enter your Voting Access Code (VAC):

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 APPOINTMENT OF PROXYIndicate who you want to appoint as your Proxy.If you wish to appoint the Chair of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chair of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chair of the Meeting will be your proxy. A proxy need not be a securityholder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

Appointment of a Second ProxyYou are entitled to appoint up to two proxies to attend the meeting and vote. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by contacting the company's securities registry or you may copy this form.

To appoint a second proxy you must:(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.(b) return both forms together in the same envelope.

STEP 2 VOTING DIRECTIONS TO YOUR PROXYTo direct your proxy how to vote, mark one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of securities are to be voted on any item by inserting the percentage or number that you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item for all your securities your vote on that item will be invalid.

Proxy which is a Body CorporateWhere a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an "Appointment of Corporate Representative" prior to admission. An Appointment of Corporate Representative form can be obtained from the company's securities registry.

STEP 3 SIGN THE FORM The form must be signed as follows:Individual: This form is to be signed by the securityholder.Joint Holding: where the holding is in more than one name, all the securityholders should sign.Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form should be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 LODGEMENTProxy forms (and any Power of Attorney under which it is signed) must be received no later than 48 hours before the commencement of the meeting, therefore by 11:00am AEDT on Tuesday 29 November 2016. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy forms may be lodged using the enclosed Reply Paid Envelope or:

Online www.votingonline.com.au/petsecegm2016

By Fax +61 2 9290 9655

By Mail Boardroom Pty Limited GPO Box 3993, Sydney NSW 2001 Australia

In PersonBoardroom Pty Limited Level 12, 225 George Street, Sydney NSW 2000 Australia

Attending the MeetingIf you wish to attend the meeting please bring this form with you to assist registration.

Scan QR Code using smartphoneQR Reader App

All Correspondence to:

By Mail: Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Australia

By Fax: +61 2 9290 9655

Online: www.boardroomlimited.com.au

By Phone: (within Australia) 1300 737 760(outside Australia) +61 2 9290 9600

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PROXY FORMSTEP 1 APPOINT A PROXY

the Chair of the Meeting (mark box)

OR if you are NOT appointing the Chair of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered securityholder)you are appointing as your proxy below

STEP 2 VOTING DIRECTIONS* If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your vote will not be counted in calculating the required majority if a poll is called.

For Against Abstain*

STEP 3 SIGNATURE OF SECURITYHOLDERSThis form must be signed to enable your directions to be implemented.

Individual or Securityholder 1

Sole Director and Sole Company Secretary

Securityholder 2

Director

Securityholder 3

Director / Company Secretary

Contact Name…………………………………………….... Contact Daytime Telephone………………………................................ Date / /

I/We being a member/s of Petsec Energy Ltd and entitled to attend and vote hereby appoint:

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chair of the Meeting as my/our proxy at the Extraordinary General Meeting of Petsec Energy Ltd to be held at The Museum of Sydney, corner of Bridge & Phillip Streets, Sydney NSW 2000 on Thursday 01 December 2016 at 11:00am AEDT and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit.

The Chair of the Meeting intends to vote undirected proxies in favour of each of the items of business.

ADVANCE APPROVAL OF ISSUE AND CONVERSION OF CONVERTIBLE NOTES

RATIFICATION OF ISSUE OF 5,000,000 SHARES AS A FACILITY FEE FOR THE CONVERTIBLE NOTE

Your AddressThis is your address as it appears on the company's share register. If this is incorrect, please mark the box with an "X" and make the correction in the space to the left. Securityholders sponsored by a broker should advise their broker of any changes.Please note, you cannot change ownership of your securities using this form.

Resolution 1

Resolution 2

2016

Petsec Energy Ltd ACN 000 602 700

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

PETSEC ENERGY LTD ACN 000 602 700

3rd November 2016,

Dear Shareholder,

On behalf of the Directors of the Company, I am pleased to invite you to attend the Petsec Energy Ltd

Extraordinary General Meeting (“EGM”) to be held at The Museum of Sydney, corner of Bridge &

Phillip Streets Sydney on Thursday 1st December 2016 at 11.00 a.m. (AEDT).

The purpose of the EGM is to seek the approval of Shareholders, for the purposes of the ASX Listing

Rule 7.1 of the ASX Listing Rules, to permit the potential issue of the Company’s shares (Shares) at

any time up to the 31st December 2017, should there be conversion of the Convertible Notes into

Shares in accordance with the terms of the secured convertible note facility established by the

Company on 23rd August 2016, and to ratify, for the purposes of the ASX Listing Rule 7.1 of the

ASX Listing Rules, the issue of 5,000,000 Shares to the Convertible Note Registrar on 17th October

2016, being a facility fee for arranging the subscription of the Convertible Notes, such that the issue

of Shares does not use the Company’s ASX Listing Rule 7.1 capacity to issue further securities up to

15% of the Company’s issued capital at any time.

I recommend that shareholders vote for both resolutions to ensure the Company has optimal financial

flexibility.

On the 23rd August 2016, the Company announced that it had established a US$15,000,000 secured

convertible note facility that would provide the Company with the financial flexibility to progress the

Company’s development projects in the USA and the Middle East and North Africa (“MENA”) which

will provide early cash flow.

The available funds will be used for the appraisal and development of the Hummer gas/oil Field,

discovered by the Company in late 2015 in the Gulf of Mexico, USA, through to production of the

discovery well (Tranche 1: US$5 million); the restart and optimisation of the 5,000 to 10,000 barrels

of oil per day (bopd) capacity An Nagyah Oilfield in the Damis (Block S-1) Production Licence in

Yemen acquired by the Company in February 2016 (Tranche 2: US$5 million); and to acquire other

oil production opportunities in Yemen or the MENA region (Tranche 3: US$5million).

The first tranche of US$5 million will largely be used to fund the Company’s share of the appraisal

and development costs of the Main Pass 270 # 3 discovery well in the Hummer gas/oil Field, which

includes construction and installation of a 4 pile jacket capable of supporting a minimum of four

production wells and production facilities to accommodate production of up to eight wells,

completion of the discovery well in the Bigenerina Humblei (Big Hum) sand reservoir for production

and testing of the completed well to determine production rates and gas and oil volumes to allow

sizing of the production facilities and pipelines, and consequent construction of production facilities

for the platform.

The fabrication and installation of the jacket has now been completed, with the tie-back, well

completion, and testing anticipated to be completed in mid-November 2016. Following completion

and testing of the well, the deck facilities and pipelines will be fabricated and installed.

Commercial production from the well is anticipated during second quarter 2017.

In addition to the Big Hum sand reservoir that will be completed and tested in the Main Pass 270 # 3

well, other sand reservoirs in the Middle Miocene age Texularia W (Tex W) and Cristellaria I (Cris I)

were identified from well logs as hydrocarbon bearing in the discovery well. These additional oil and

gas bearing sands, along with the Big Hum sand reservoir will be drill targets in the future delineation

and development wells, the drilling of which is anticipated to begin mid-year 2017.

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

Hummer Development

Mystic Bayou

ASF #4

Map 1: Petsec Energy Gulf of Mexico and Louisiana Gulf Coast, USA exploration and production leases

The Hummer gas/oil Field age equivalent Middle Miocene reservoirs are prolific producers in nearby

fields on trend to Hummer and with a similar style of trapping mechanism. The most significant of

these fields is the Main Pass 280/281/283 and Viosca Knoll 734 complex of fields, 14 miles to the

East, which have produced approximately 85 million barrels of oil equivalent (“MMboe”), of which

an estimated 37 MMboe comes from age equivalent Big Hum and Cris I reservoirs. Maximum

production rates from those productive reservoir sands were 25 million cubic feet of gas per day plus

1,100 barrels of condensate per day for a gas and condensate reservoir, to approximately 6,200 barrels

of oil per day plus 7.5 million cubic feet of gas per day, for an oil or high condensate yield prone

reservoir.

The Hummer gas/oil Field is a substantial oil and gas discovery covering a large prospective area

extending over three offshore lease blocks of Main Pass 270, 273 and 274. The indicated resource

potential, supported by the discovery well, 3D seismic and data from the proximal analogue fields at

Main Pass 280/281/283 and Viosca Knoll 734, exceeds the Company’s pre-drill mapped target

estimates for the Hummer prospect of 59 billion cubic feet of gas and 1.2 million barrels of oil to 183

billion cubic feet of gas and 3.7 million barrels of oil gross in the Big Hum reservoir. Development of

the Hummer Field will require, on current estimates, up to seven additional wells plus facilities to

define and develop the full extent of the reserves.

CI = 100’

Well Head Platform (Planned)

Development Well Loc. (Planned)

Production Platform

Middle Miocene

Big. Hum. Sand Structure Map

Castex #3Lowest Known Hydrocarbons

Hummer Development

Discovery Well39m Gross Pay

Figure 1: Hummer development project depth structure map

The Company holds a 12.5% working interest and a 10.24% net revenue interest in the Hummer

gas/oil Field.

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

Block 7

Block S-1

Map 2: Petsec licence location and Yemen infrastructure

The balance of the first US$5 million tranche of convertible notes and the second tranche of US$5

million will be applied to the re-start of oil production from the An Nagyah Oilfield on the Damis

(Block S-1) Production Licence in Yemen.

The Damis (Block S-1) is located in the prolific Shabwa Basin approximately 80 kilometres to the

Southwest of the Company’s other lease in Yemen, Block 7, some 450 kilometres connected by oil

pipeline East of the Ras Isa oil terminal on the Red Sea, some 250 kilometres North by road of the Bir

Ali oil export terminal on the Bay of Aden, and 450 kilometres West by road of the Masila Basin

Production Hub.

The Damis (Block S-1) Production Licence holds five sizeable oil and gas discoveries – the developed

and productive (until suspended in 2014) An Nagyah Oilfield, which holds 12.8 million barrels of oil

gross to Petsec Energy as estimated by DeGolyer and McNaughton Canada Limited (5.6 million

barrels net to Petsec with a PV10 in the order of US$155 million 1), and a further four undeveloped oil

and gas fields – Osaylan, An Naeem, Wadi Bayhan, and Harmel which hold in excess of 34 million

barrels of recoverable oil and 550 Bcf of gas 2 which will be a source of future growth of reserves and

production for the Company.

*Wood Mackenzie 2015Osaylan

Gross Recoverable Reserves5 MMbbl

*Wood Mackenzie 2015An Naeem

Gross Recoverable Reserves12 MMbbl Cond.

550 bcf Gas

*Wood Mackenzie 2015Harmel

Gross Recoverable Reserves17 MMbbl

DeGolyer & MacNaughton Canada Ltd 2016 Audited Reserves

An Nagyah Gross 2P Reserves = 12.8Mbbls[5.6 MMbbl net to Petsec]

*Wood Mackenzie 2015Wadi Bayhan

Gross Recoverable Reserves1 MMbbl Cond.

50 bcf Gas

Map 3: Damis (Block S-1) hydrocarbon field locations

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

Figure 2: An Nagyah Central Processing Facility with oil storage in the foreground

The previous operator had invested over US$450 million on the Block over a period of 10 years

developing the An Nagyah Oilfield with attendant production facilities which have the capacity to

process up to 20,000 barrels of oil per day (bopd) producing into an 80,000 bopd pipeline, which joins

the 350,000 bopd Marib export pipeline to the Ras Isa terminal on the Red Sea.

The An Nagyah Oilfield has been shut-in since February 2014 following the declaration of Force

Majeure by the previous operator due to political issues in Yemen. The field at the time of shut-in was

producing at a restricted rate of over 5,600 bopd and of the order of 10,000 bopd at an unrestricted

rate two years earlier.

Since March 2015, Yemen has been in political turmoil which has resulted in an armed conflict

between two major political alliances. The elected government is supported by the UN and a large

coalition of Middle Eastern countries led by Saudi Arabia, which placed an embargo on all oil exports

from Yemen. We anticipate the conflict is nearing its end with ongoing UN sponsored peace

negotiations taking place over the past five months.

In August of this year, oil was shipped from Yemen for the first time since March 2015 when 4

million barrels of oil were shipped from the Ash Shihr terminal near Mukalla on the Gulf of Aden

which services Masila Basin oil production, and in turn the Masila oilfields have returned to

production. The Aden Refinery, which has a 150,000 bopd processing capacity, has returned to

production and the Company anticipates the restart of the Total operated LNG plant at Bal Haf on the

Gulf of Aden. During the conflict the country’s oil and gas infrastructure was largely untouched.

Figure 3: Yemen Ash Shihr oil export terminal showing crude oil storage tanks

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Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia

PO Box R204, Royal Exchange NSW 1225, Australia

Telephone (61 2) 9247 4605 Facsimile (61 2) 9251 2410

Company information is available on: petsec.com.au

With the recommencement of oil shipments from Ash Shihr there is an opportunity for Petsec Energy

to transport An Nagyah oil production by truck either to the Masila hub to the East or South to the Bir

Ali terminal until such time as the Ras Isa terminal on the Red Sea reopens for shipping oil, which

allows production through the Marib pipeline.

The An Nagyah oil production facility has been well maintained during the shut-in period and

preparations are now underway for the re-start of production as soon as the political/logistical

situation allows.

The testing of the Hummer discovery well and the promise of an early restart of production from An

Nagyah should see renewed interest in the assets of the Company and their large potential value.

Yours sincerely

Terrence N. Fern

Chairman and Managing Director

Footnotes

1 The Yemen reserve estimates provided within this letter is based on information contained within the release to the

ASX on 15 March 2016 and is also contained in the 2015 Annual Report.

The Company confirms that it is not aware of any new information or data that materially affects the information

included within the above releases and that all the material assumptions and technical parameters underpinning

the estimates therein continue to apply and have not materially changed.

2. Source: Wood Mackenzie Asia Pacific Pty Ltd.

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