Company Number: 1-63551 ARBN: 151 201 704 For personal …prospects seen by Interoil in PPL 236 and PPL 339 Cassowary Prospect Oil Search has high graded an area in the east of the

Appendix 5B Mining exploration entity quarterly report

_____________________________________________________________________________________ Suite 7, 49-53 North Steyne, Manly NSW 2095 Tel: +61 2 9977 0084 1

Rule 5.3

A Company registered in Papua New Guinea

Company Number: 1-63551

ARBN: 151 201 704

31st July 2012

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD

1ST March 2012 to 30th June 2012 _____________________________________________________________________________________

Kina Petroleum Limited (ASX: “KPL”) currently maintains working interests in 5 exploration licences in

PNG. The quarter ended 30 June 2012 was an encouraging period for the company with a significant

upgrade to the contingent resource numbers for Ketu Field as a result of the very successful appraisal

well Ketu 2.

Highlights

Resource upgrade Ketu 2

Updated mapping of PPL 338 delivers a number of promising leads and prospects in PPL338

Oil Search and KPL commit to Nipa seismic program in PPL 338

Oil Search and KPL to follow up InterOil’s Triceratops 2 success with aerogravity/aeromagnetics in PPL 338

A highlight for the June 2012 quarter for KPL was the significant resource upgrade for Ketu Gas field. The

unexpected intersection of a full gas column at Ketu 2 some 9km east of Ketu 1 caused the upwards

readjustment.

Figure 1: Elevala Reservoir Structural Profile

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Figure

2: PRL 21 Well locations

Table 1 below outlines the revised contingent resource range for Ketu Field

Probability Gas Oil

BCF MMBBLS

P90 213 12.3

P50 362 21.1

Pmean 375 21.8

P10 558 32.6

Table 1: Ketu Field Contingent Resource Estimate

1 The assessment of the Ketu 2 Contingent Resources has been based on the Elevala Sandstone depth Map supplied by PRL 21 Horizon Oil (Papua) Limited.

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Petroleum Prospecting License (“PPL”) 337 (Kina Interest 100%)

The Banam Anticline remains the main prospect. KPL has located additional data to the northwest of

Banam anticline and has computed the location data from old base maps such that the SEGY data can be

loaded into its data base. These data will be used to tie well control at Tsumba 1 into the Banam grid to

improve KPL’s understanding of the prospect and to assist in farmout efforts.

Because the Banam structure is covered with hundreds of gas seeps that are composed of predominantly

methane and because of its very large size the structure remains an attractive LNGF candidate. The in

place prospective resource estimate for the full trap volume of Banam Anticline is 36 to 37.5 TCF.

Figure 3: Banam Anticline Prospect & Proposed Seismic Program

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Petroleum Prospecting License (“PPL”) 338 (Kina Interest 100% - subject to Farm In Arrangements with

Oil Search (PNG) Limited (“OSPNG”))

The OSPNG acquired Iviri Seismic Survey has confirmed Nipa Prospect (formerly known as Iviri South

Lead) as a potential candidate for drilling. A follow up seismic program is scheduled for Nipa Prospect in

Nov/Dec 2012. Reference to the Top Darai Time Structure Map shows Nipa Prospect developing on an up

thrown block which forms part of the Uramu Trend extending into PPL 338 from the south. Based on

current mapping the P10 Prospective Resource Estimate of gas in place is 4.5TCF and 3 TCF recoverable

using 25% porosity and a N/G of 80%.

Remapping of the seismic data has identified eight further leads or prospects north of Nipa Prospect.

Figure 4: Nipa Prospect

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Oil search has a right to move to 70% in the licence by carrying KPL through a well to a capped cost. Oil

Search has extended its option to drill by nominating the Nipa Seismic Survey to confirm the height of

independent closure on the Nipa Structure. PPL 338 is also included in OSPNG’s Gulf farm out effort to

confirm enough gas to form a fourth LNG train in Port Moresby. Subject to Nipa demonstrating 1TCF or

more of recoverable gas potential it should form an attractive part of this exploration effort.

Figure

5: InterOil’s Triceratops discovery & possible extension into PPL 338

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Triceratops 2 is a successful appraisal well on the Bwata Triceratops structure north and west of the giant

Elk Antelope Gas Field drilled by NYSE listed InterOil Corporation. Mapping by InterOil suggests the

structure climbs to the west and north into PPL 338 an area with 2 identified gas seeps. Oil Search intends

flying an aerogravity/aeromagnetic survey over this part of PPL 338 (red polygon shown in Fig 5) to

confirm fault orientation and assess the need for follow up seismic acquisition in this area.

Petroleum Prospecting License (“PPL”) 339 (Kina Interest 100% - subject to Farm In Arrangements with

Oil Search (PNG) Limited (“OSPNG”))

Interpretation of Wulai Seismic Survey has been difficult due to complex geology and complicated

structure. A number of potential closures, possibly reefs have been identified and reprocessing of line

Wu 11 2 has improved imaging to the point that analogy can be drawn to the Wahoo/Mako reef

prospects seen by Interoil in PPL 236 and PPL 339 Cassowary Prospect

Oil Search has high graded an area in the east of the licence for Eocene reef development. Oil Search

intends undertaking an aeromag/aerogravity survey in this area to identify if the area warrants seismic

follow up.

Figure 6: Cassowary Prospect potential look a like to Mako Wahoo Prospect PPL 236

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OSPNG has a right to move to 70% in the licence by carrying Kina through a well to a capped cost.

Petroleum Prospecting License (“PPL”) 340 (Kina Interest 100%)

Kina is encouraged by the interpretation of nearby seismic data and believes there is potential to develop

Miocene and Cretaceous prospective trends in PPL 340. Oroi 1 drilled in 1950 intersected gas in the Chiria

Conglomerates. The anticlinal tend may extend into southern PPL 340.

Figure

7: PPL 340 Structural Grain & Proposed Aerogravity Survey

InterOil has conducted an airborne gravity survey adjacent to PPL 340. Kina is assessing acquisition of an

aerogravity and aeromagnetic survey to merge into the InterOil data set.

= == == == ==

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Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

KINA PETROLEUM LIMITED

ARBN Quarter ended (“current quarter”)

151 201 704

30 June 2012

COMPANY NO.

1-63551

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter USD $’000

Year to date ( 3 months) USD $’000

1.1 Receipts from product sales and related debtors

- -

1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration

(2,766) - -

(141)

(6,657) - -

(357) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature

received 30 82

1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (provide details if material) - -

Net Operating Cash Flows

(2,877)

(6,932)

Cash flows related to investing activities

1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets

- - -

- - -

1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets

- - -

- - -

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1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other (provide details if material) - -

Net investing cash flows

- -

1.13 Total operating and investing cash flows (carried forward)

(2,877) (6,932)

1.13 Total operating and investing cash flows (brought forward)

(2,877) (6,932)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from borrowings - - 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other (provide details if material) - -

Net financing cash flows

- -

Net increase (decrease) in cash held

(2,877)

(6,932)

1.20 Cash at beginning of quarter/year to date 8,075 11,734 1.21 Exchange rate adjustments to item 1.20 (146) 250

1.22 Cash at end of quarter 5,052 5,052

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

Current quarter

USD $'000

1.23

Aggregate amount of payments to the parties included in item 1.2

117

1.24

Aggregate amount of loans to the parties included in item 1.10

1.25

Explanation necessary for an understanding of the transactions

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These payments include costs of the Managing Director and Non-Executive Directors Fees (including two

PNG based Directors that were paid in the quarter).

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available Add notes as necessary for an understanding of the position.

Amount available USD $’000

Amount used USD $’000

3.1 Loan facilities

3.2 Credit standby arrangements

Estimated cash outflows for next quarter

USD $’000

4.1 Exploration and evaluation

2,655

4.2 Development

4.3 Production

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4.4 Administration

304

Total

2,959

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Current quarter USD $’000

Previous quarter USD $’000

5.1 Cash on hand and at bank 4,858 8,075

5.2 Deposits at call

194

-

5.3 Bank overdraft

-

-

5.4 Other (provide details)

-

-

Total: cash at end of quarter (item 1.22)

5,052 8,075

Changes in interests in mining tenements

Tenement reference

Nature of interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

6.2 Interests in mining tenements acquired or increased

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Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted Issue price per security (see note 3) (cents)

Amount paid up per security (see note 3) (cents)

7.1 Preference +securities (description)

Nil

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

7.3 +Ordinary securities

173,196,376

75,778,475

$0.20

$0.20

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs (c) Release from escrow

Nil

7.5 +Convertible debt securities (description)

Nil

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

7.7 Options (description and conversion factor)

20,510,155 9,750,000 5,500,000

20,510,155

Exercise price $0.20 $0.20 $0.20

Expiry date 30 November 2012 31 October 2013 31 December 2013

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7.8 Issued during quarter

7.9 Exercised during quarter

7.10 Expired during quarter

7.11 Performance Shares (totals only)

Nil Nil

7.12 Unsecured notes (totals only)

Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: Richard Schroder.............. Date: .....31/07/12.....

(Managing director)

Print name: RICHARD SCHRODER

Notes 1 The quarterly report provides a basis for informing the market how the entity’s activities have

been financed for the past quarter and the effect on its cash position. An entity wanting to disclose

additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining

tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint

venture agreement and there are conditions precedent which will change its percentage interest in a

mining tenement, it should disclose the change of percentage interest and conditions precedent in the list

required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and

7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB

1026: Statement of Cash Flows apply to this report. For

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5 Accounting Standards ASX will accept, for example, the use of International Accounting

Standards for foreign entities. If the standards used do not address a topic, the Australian standard on

that topic (if any) must be complied with.

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Documents

Company Number: 1-63551 ARBN: 151 201 704 For personal …prospects seen by Interoil in PPL 236 and PPL 339 Cassowary Prospect Oil Search has high graded an area in the east of the