International Petroleum: Sale of Russian Assets and Loans Swapped to Shares

International Petroleum Limited advises that it  has entered into share purchase agreement pursuant to which it will sell subsidiary companies, IPL Siberia Limited and  International Petroleum Company Limited, to an unrelated company  incorporated in the British Virgin Islands (Buyer) for US$13million (Transaction).

IPL Siberia indirectly holds the Yuzhno-Sardakovsoye Block Licence, the Yanchinsky Block Licence, the  Zapadno-Novomolodezhnoye Block Licence, the Krasnoleninsky Block Licences and the Druzhny Block  Licences in Russia further described below (together, the Russian Assets).

A summary of the key terms of the Agreement are set out below:

(a) the Company (through its wholly owned subsidiary) will transfer 100% of the issued shares in the Subsidiary Companies to the Buyer for US$13million (Acquisition).

(b) As part of the Transaction IPL Cayman will novate to the Buyer any and all debts owed to it  or the Company by any of the companies within the Company Group (Novated Loans).

(c) As part of the Transaction, the Buyer, with such reasonable assistance as may be requested  from IPL Cayman, shall use reasonable efforts to negotiate and settle other third party  debts of the Subsidiary Companies (and their subsidiaries) (Third Party Debts) within 4 and  a half months after Acquisition. If the Buyer fails to achieve any settlement agreement in  respect to any of the Third Party Debts which exceed US$80,000 or are in respect to salaries  of employees of Russian subsidiaries within 4 and a half months after Acquisition, the Buyer  agrees to promptly pay such non-settled Third Party Debts. All remaining Third Party Debts  below US$80,000 are to be settled no later than 6 months after Acquisition.

(d) IPL Cayman provided warranties to the Buyer in respect to the status of Subsidiary  Companies and its assets and liabilities, including in respect to the total of debts owed by  the Subsidiary Companies as at 31 March 2014. International Petroleum Limited Announcement – 11 August 2014 NSX: IOP Page 2 of 2

The Company will apply the funds received from the Transaction towards repayment of creditors,  general working capital and future exploration expenditure.

Following completion of the Transaction, the Company will seek to satisfy outstanding statutory  accounting requirements and then seek a lifting of the suspension of its shares on the National Stock  Exchange of Australia (NSX).

Conversion of US$33,693,577 Loans into Shares

The Company also advises that it has agreed with African Petroleum Corporation Limited (African  Petroleum), Range Resources Limited (Range Resources) and Varesona Participation Corporation (Varesona) to convert, subject to receipt of shareholder approvals, US$33,693,577 of loans into fully  paid ordinary shares.

US$21,515,791 of loans and interest payable to African Petroleum and Range Resources will be  converted at a deemed issue price of A$0.06 per Share (being the last trading price of Shares on  NSX), US$6,579,151 of loans and interest payable to Varesona will be converted at a deemed issue  price of A$0.15 and US$5,598,635 of loans and interest payable to Varesona will be converted at a  deemed issue price of A$0.07 per share. In addition, 5million Options exercisable at A$0.06 per  Option will be issued to each of African Petroleum and Range Resources and they will each be  entitled to nominate one person to the Board of the Company.

Following conversion of the loans and interest payable to African Petroleum, Range Resources and  Varesona, the Company will not have any outstanding loans payable.