Online Stockmarket Trading Update

Orion Petroleum Limited (OIP) is very pleased to announce that it has executed a binding transaction agreement to merge with Petrel Energy Limited, subject to shareholder approval. The merged group will pursue a strategic focus on high quality energy assets at the advanced exploration/appraisal stage and create value by advancing these projects to development. The group’s first project is participation in an emerging onshore shale gas development in the proven Barnett Shale region of Texas.

Petrel is an unlisted company established by Stephen Mitchell and David Hobday for the purpose of conventional and unconventional oil and gas development. Under the terms of the transaction, which are subject to approval by Orion shareholders at a meeting to be convened in January 2012, Orion will acquire 100% of Petrel for the issue of 115.1 million new Orion shares to the current shareholders of Petrel. The Petrel team have developed a first class technical network in North America, generating major successes in their previous endeavours. The initial project provides access to highly prospective acreage in the Barnett Shale region of Texas and shareholders of the merged group will gain exposure to an immediate shale gas drilling campaign with four development wells to be drilled over the next 2-3 months.

“The Orion Board that was constituted in June 2011 has a clear objective of refocusing the company in a way that provides meaningful upside for shareholders without taking on high levels of exploration risk”, said Mr Alex Sundich, Chairman of Orion. “Following an extensive review of available opportunities and with the assistance of our advisers, we believe that the Petrel acquisition is very positive for Orion shareholders. Petrel gives Orion a team with a proven track record of value creation in international energy markets, an existing asset that could enable the company to become a producer in the near term, access to a pipeline of potential investment projects and additional cash resources to pursue those opportunities”, Mr Sundich said.

Petrel is a recently established private upstream petroleum company targeting conventional and unconventional opportunities primarily in North America but with the potential to expand globally. It has been established by Stephen Mitchell and David Hobday, who most recently grew a very successful North American business whilst at Molopo (MPO).

The mechanics of the Petrel acquisition are as follows: Orion to acquire all the outstanding shares in Petrel with Petrel shareholders to receive in exchange 115.1 million new Orion shares; Current Orion shareholders will represent 57% of the enlarged entity; The transaction values Petrel at $4.6 million, which includes cash of $2.1 million, listed equities of $1.1 million and the existing Barnett Shale assets of $1.0 million;

www.orionpetroleum.com.au

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