Carbon Energy : Option Expiry Notice - Waiver

to the extent necessary to permit the Company not to send the notice required by paragraph 6.1 of Appendix 6A in relation to the 443,696,404 quoted options (CNXO) exercisable at $0.05941 each, expiring 5pm (AEST) on 31 July 2016.

Accordingly, option expiry notices will not be sent by the Company to quoted option holders.

The Board considered and took guidance from the ASX as to whether a change to the option exercise price or term could be made however ASX Listing Rules prohibit such changes except in exceptional circumstances which do not apply to the Company.

In accordance with the ASX Listing Rules and the conditions of the waiver granted by the ASX, the Company provides the following information:

• The number of options to which this notice applies is 443,696,404;

• On exercise, each option entitles the holder to receive 1 fully paid ordinary share in the capital of the Company;

• The exercise price for each option is $0.05941;

• The due date for payment of the exercise price is 5pm (AEST) on 31 July 2016;

• If payment is not received by 5pm (AEST) on 31 July 2016, the options will lapse and all rights under the options will cease;

• Official quotation of the options on ASX will cease on 31 July 2016

• The closing market price on a fully paid ordinary shares in the Company on 15 June 2016 (being the last trading day prior to this announcement) was $0.009;

• During the three months immediately preceding the date of this announcement, the highest market price of fully paid ordinary shares in the Company was $0.014 and the lowest market price was $0.007;

• The exercise price is not underwritten.