Key Petroleum Ltd. : Farm-out of the Waugh-1 Well in EP437, Onshore Perth Basin

W E B w w w . e m p i r e o i l . c o m . a u

T R A L I A

30 August 2012

The Manager

The Australian Securities Exchange

The Company Announcements Office

Level 4/20 Bridge Street

SYDNEY NSW 2000

Dear Sir,

RE: FARM-OUT OF THE WAUGH-1 WELL IN EP 437, ONSHORE PERTH BASIN, WESTERN AUSTRALIA

Please find attached the details of the farm-out of the Waugh-1 Well in Exploration Permit EP 437, Onshore Perth Basin, Western Australia.

Empire Oil Company (WA) Limited (Operator) 50% (35% post Farm-out) Key Petroleum Limited 50%

Caracal Exploration Pty Ltd (15% post Farm-in)

Yours faithfully

On behalf of the Board of Directors

JL CRAIG MARSHALL Managing Director EMPIRE OIL & GAS NL

EMPIRE OIL & GAS NL

30 August 2012

Empire Oil & Gas NL ("Empire") is pleased to announce it has farmed out a 15% interest in Exploration Permit EP
437, Onshore Perth Basin, to Caracal Exploration Pty Ltd ("Caracal"). Caracal will contribute 30% of the costs of drilling the Waugh-1 exploration well and thereafter Caracal will contribute 15% of any completion and testing of the well.

Following the withdrawal of CalEnergy (Australia) Limited from the Permit, Empire increased its interest in EP 437 from 22.5% to 50%. With Caracal Exploration's farm-in, Empire's interest in EP 437 will then be 35%.
The Waugh Prospect is a tilted fault block with the main objectives being the Early Triassic Bookara Sandstone. Secondary objectives are present in the fluvial sandstones of the Early Jurassic Cattamarra Coal Measures.
The Waugh-1 well will be drilled up-dip from Dunnart-1, to a total depth of 700 metres. Dunnart-1 encountered oil shows in the Bookara Sandstone which were never tested. Based on the reservoir parameters of the Bookara Sandstone in Dunnart-1 and if the seismically mapped structure is full to its spill point, Empire calculates that estimated potential recoverable oil is 3 million barrels.
The well will also evaluate the unconventional potential of the carbonaceous shale section in the Cattamarra Coal
Measures. This shale had elevated methane and ethane gas reading when drilled in the Dunnart-1 well.
The EP 437 Joint Venture will use DCA Rig 7 and will drill the well upon receipt of all the regulatory approvals.

Competent Person's Statement

Information in this ASX Release relates to exploration results that are based on information compiled by Mr J L Craig Marshall who is a full time employee of Empire Oil & Gas NL. JL Craig Marshall is a Fellow of the Australian Institute of Mining and Metallurgy and is a Certified Practicing Geologist BSc (Hons), F.Aus.Imm, CPGEO, and has more than 30 years' experience relevant to oil and gas exploration and production.

F o r m o r e i n f o r m a t i o n c o n t a c t :

J L C r a i g M a r s h a l l E m p i r e O i l & G a s N L

BSc (Hons), F.Aus. IMM, CPGeo Su i t e 7 , 1 5 4 H a m p d e n R o a d

Ma n a g i n g D i r e c t o r N E D L A N D S W A 6 0 0 9

A U S T R A L I A

P h : + 6 1 8 6 3 8 9 2 6 8 7

F a x : + 6 1 8 9 3 8 6 6 8 1 cmarshall@empireoil.com.au

Northampton

115°00'E 115°30'E

Pindar

28°30'S

Mullewa

EP 437

EP 426

Mt Horner

Oil Field

EP 368

29°00'S

Mingenew

Dongara

Indian

Jingemia

Dongara

Gas Field

Hovea

Oil Field

Moriary 1

North Erregulla 1

Ocean

Cliff Head

Oil Field

Oil Field

Arrowsmith 2

Beharra Springs Gas Field

29°30'S

Three Springs

0 10 20

KILOMETRES

Woodada

Gas Field

Eneabba

O:Empire_OilEP426_368_437.dgn

FIGURE 1

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