Empire Energy : Rights Issue and Underwriting Shortfall Update

Level 7, 151 Macquarie Street

Sydney NSW 2000

T: 02 9251 1846

F: 02 9251 0244 (ASX: EEG) (OTCQB: EEGNY)

On 14 December 2016 Empire Energy Group Limited (the 'Company') announced a 11 for 5 pro-rata renounceable rights issue ('Offer') to raise approximately $6.1 million. The Offer was fully underwritten by 153 Fish Capital Pte Ltd.

The Offer closed on the 27 January 2017. The shortfall to the Offer was 527,553,373 shares amounting

to approximately $4.2 million ("Shortfall Amount").

The Underwriter has forwarded to the Company Application Forms from Sub underwriters for a total of approximately $5.5 million ("Funds") being approximately $1.3 million more than the Shortfall Amount. However, as of close of business on 17 February 2017 approximately $1.6 million of the Shortfall Amount had been received and shares have been issued.

An issue to an Underwriter under Listing Rule 7.2, Exemption 2, requires the shares in respect of the Shortfall Amount to be issued by the Company not later than 15 business days after the close of the Offer, being Friday 17 February 2017. The Company did not receive cleared funds from the Underwriter within this timeframe.

The Funds are primarily being remitted from Singaporean investors ("Investors"). Due to delays in the transfer of funds the Company did not receive the total Shortfall Amount within the required timeframe.

For the purposes of ASX Listing Rule 7.2, Exemption 2, the Company requested from the ASX an extension to receive the remaining funds. However, this has not been granted.

Accordingly, the Company has now raised approximately $3.5 million of the $6.1 million under the Offer.

We are informed by the Underwriter that necessary Investor approvals have been obtained for the remaining funds to be invested in the Company. As such, the Company has commenced discussions with the Underwriter and Investors to facilitate their investment outside of the Offer. The Company will keep the market updated.

Empire Energy is a conventional oil and natural gas producer with operations in Appalachia (New York and Pennsylvania) and the MidCon (Kansas and Oklahoma). The Company has ~14.6 million acres in the McArthur & Beetaloo Basins, Northern Territory, both of which are considered highly prospective for large shale oil and gas resources. Work undertaken by the Company over the past 5 years demonstrates that the Central Trough of the McArthur Basin, (of which the Company holds around 80%), is a major Proterozoic depo-centre that forms one segment of a series of extensive prolific hydrocarbon basins similar to those extending through Oman, Siberia and Southern China and which contain resources of billions of barrels of oil equivalent.