Texon Petroleum Limited : Issue of Unlisted Incentive Options

ASX Announcement

Date: 21 December 2011

ABN 24 119 737 772

Level 9, 46 Edward Street

Brisbane, Qld Australia 4000

Postal: GPO Box 402

Brisbane, Qld Australia 4001

Telephone: +61 7 3211 1122

Fax: +61 7 3211 0133

Des Olling

cfoss@texozep.com

Issue of Unlisted Incentive Options

The attached Appendix 3B advises the issue of 7,900,000 unlisted incentive options over the ordinary shares of the Company. Newly appointed CEO Mr Clifford S. Foss Jr, has been issued 7,000,000 options in two tranches (refer to our release 30 November 2011 for details), Company Secretary Mr Des Olling has been issued 600,000 and 100,000 options have been issued to each of three Specialist Mappers contracted to Wandoo Energy LLC.

Directors believe the issue of the options will act as an incentive to the option holders who are all working to achieve the Company's goals and objectives.

-Ends

or:

John Armstrong Chairman john.armstrong@texonpetroleum.com.au

www.texonpetroleum.com.au

ME_95745998_1 (W2007)

2

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Information or documents not available now must be given to ASX as soon as available. Information and documents given

to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

ABN

24 119 737 772

We (the entity) give ASX the following information.

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to be issued

Unlisted Options

2 Number of +securities issued or to be issued (if known) or maximum number which may be issued

7,900,000

ME_95745998_1 (W2007)

3

3 Principal terms of the +securities (eg, if options, exercise price and expiry date; if partly paid

+securities, the amount outstanding and due dates for payment; if

+convertible securities, the conversion price and dates for

conversion)

Exercise price for the options issued to Mr Foss and Mr Olling is A70 cents per option. For the three Specialist Mappers, a range between A49.0 and A58.5 cents per option.

The options are exercisable only when the volume weighted average price of Texon shares equals or exceeds 150% of the option exercise price over 20 consecutive trading days.

Expiry date for Mr Foss is 30 November 2016, Mr Olling 31 December 2015, the three Specialist Mappers between 28 June 2015 and 29 August

2015.

4 Do the +securities rank equally in all respects from the date of allotment with an existing +class of quoted

+securities?

If the additional securities do not rank equally, please state: