CORPORATE GOVERNANCE
STATEMENT

This statement outlines the main Corporate Governance practices that were in place during the financial year.

Board of Directors

The mission of Icon Energy Limited (Icon Energy or Company) is to be a safe, world class gas and oil explorer and producer using techniques and processes that minimise green house gas emissions, with a minimum of long-term environmental damage and with a share price that will continue to grow. In pursuing the Company's mission, the Board is committed to the highest standards of governance as it strives to foster a culture that values and rewards commendable ethical standards, personal integrity and initiative and a respect for all stakeholders.

The Directors' Report sets out the names of the Directors of the Company in office at the date of this statement, their experience and special duties.

The Board of Directors of Icon Energy is responsible for the overall corporate governance of the group and oversees the Company's business and management for the benefit of shareholders and sets out to achieve this objective by:

• establishing corporate governance and ethical standards;
• appointing and where appropriate, removing the Chief Executive Officer and monitoring his performance;
• maximising shareholder value by setting objectives and goals;
• reviewing and ratifying systems of risk management and internal compliance and control, codes of conduct and legal compliance;
• ensuring appropriate persons form the composition of the Board;
• approving and monitoring the progress of major capital expenditure, capital management and acquisitions and divestitures;
• approving and monitoring financial and other reporting.

The Board has specifically reserved for its decision the following matters:

• the appointment of the Managing Director;
• approval of the structure of the direct reports to the Managing Director;
• approval of the overall strategy;
• approval of annual budgets of the business;
• delegation of authority;
• formal determinations that are required by Icon Energy's constitutional documents, by statute or by other external regulation.

The Board maintains the right to make changes to the matters reserved for its decision, subject to the limitations imposed by the constitutional documents and the law.

In particular, the Board has given authority to the Managing Director to achieve the Corporate Mission. The Managing Director has the right to make decisions and actions which, in the Managing Director's judgment, are reasonable and are within the authority given by the Board. The Managing Director continues to be responsible to the Board for the delegated authority and for the performance of the business. The Board oversees the decisions and actions of the Managing Director to ensure that the progress of the business is being made towards the Corporate Objective, within the authority it has delegated. The Board also oversees the performance of the Company through its Committees.

The Managing Director is required to communicate the matters in regards to the progress being made by the Company. The Board and its Committees decide on the information required from the Managing Director and any employee or external party, including the external auditor. Openness and trust are encouraged between individual members of the Board and the Managing Director and other employees. This allows Directors to achieve a better understanding of the business.

Board Composition

The principles applied to the composition of the Board are:

The Board should comprise Directors who have a broad cross section of experience in the petroleum exploration/production industry both in Australia and overseas or should have financial and general management and/or business development experience. Their expertise should encompass the establishment of management strategy and monitoring achievement of these strategies.

Wherever possible, the Chairman of the Board should be a non-executive Director. The Chairman has the casting vote in all Board decisions.

The Board should comprise a majority of non-executive Directors. Currently the Board comprises four non-executive Directors and one executive Director. It is expected that as the Company's activities expand with the development of its coal seam gas, shale gas and other interests, then the number of independent Directors will increase.

If a Board vacancy exists or where the Board considers that an additional Director is required, that appointment would be made from persons who possess the appropriate expertise and skills determined by the Board.

Through the Managing Director, the Board has delegated the following key functions to senior executives:

• the recommendation of Icon Energy's business, operational and corporate strategy to the Board for approval and following their approval, implementation;
• the day to day responsibility for complying with all laws and regulations relevant to Icon Energy's operations and business activities;
• the achievement of the corporate objectives set by the Board;
• the development and implementation of the Company's policies and procedures (including risk management and internal control processes); and
• the engagement of suitable staff and contractors so as to effectively discharge the Company's obligations and various strategic, operational and business objectives.

No Director, except the Managing Director, shall hold office for a period in excess of three years, or until the third Annual General Meeting following the Director's appointment, whichever is the longer, without submitting himself for re-election. At every Annual General Meeting one third of the Directors, or if their number is not a multiple of three, then the number nearest to but not exceeding one third shall retire from office and are eligible for re-election.

In accordance with the Constitution of the Company the Board should comprise of at least three Directors.

A copy of the Company's Board Charter and the Role of Management can be found in the Corporate Governance Section on the Company's website.

Independence of Non-Executive Directors

The Board considers an Independent Director to be a non-executive Director who meets the criteria for independence included in the Australian Securities Exchange's (ASX) Corporate Governance Principles and Recommendations (ASX Principles). Messrs Stephen Barry, Derek Murphy, Howard Lu and Dr Keith Hilless meet the definition of an “independent director” as stated in the ASX Principles.

Independent Professional Advice

The Directors are entitled to seek independent professional advice at the Company's expense if required in the performance of their duties.

The Directors are entitled to direct access to employees and company advisers as may be required.

Board Committees

Two Committees of the Board have been formed to consider and make recommendations to the Board in important areas of decision making. Further Committees will be formed when the Board finds a need for them. These Committees are the Audit and Risk Management Committee and the Remuneration, Nominations and Succession Committee, the membership of which is comprised as follows:

Audit and Risk Management Committee	Remuneration, Nominations and Succession Committee
Keith Hilless (Chairman) (Non Executive Director)	Stephen Michael Barry (Chairman)(Non Executive Director)
Stephen Michael Barry (Non Executive Director)	Derek Murphy (Non Executive Director)
Derek Murphy (Non Executive Director)

Board and Committee Members and Meetings

Details of the number of Board and Committee meetings held and their attendees are set out in the Directors' Report. In addition, details of the qualifications of each Board and Committee member are set out in the Directors' Report. The period of office held by each Director is also set out in the Directors' Report.

Audit and Risk Management Committee

The committee's responsibilities are to:

• oversee the effectiveness of the systems of financial risk management, governance and controls;
• oversee the existence and maintenance of internal controls and accounting systems;
• oversee the financial reporting processes;
• nominate external auditors; and
• review the existing audit arrangements.

The Audit and Risk Management Committee has in place a formal charter which defines the Audit and Risk Management Committee's function, composition, mode of operation, authority and responsibilities. External parties attend Committee meetings by invitation.

The charter of the Audit and Risk Management Committee can be found in the Corporate Governance section on the Company's website.

Remuneration, Nominations and Succession Committee

While larger companies may allocate the separate responsibilities of this Committee to other more focused committees, the combined functions better serve a company of Icon Energy's size. The Committee meets (at least) annually to review the remuneration level for the Managing Director and other senior employees of the Company. It also considers and recommends the appropriate level of Directors' fees (subject to shareholder approval), and that each non-executive Director's appointment is consistent with the Company's Constitution and the Corporations Act 2001.

The Remuneration, Nomination and Succession Committee also reviews and recommends to the Board the following:

• the Company's recruitment, retention and termination policies and procedures for senior management;
• staff and executive incentive schemes; and
• superannuation arrangements.

The current Icon Energy Board of Directors consists of four independent Directors and the Managing Director. The Audit and Risk Management Committee comprises three independent non-executive Directors with at least one member having experience and skills with financial matters. The Remuneration, Nominations and Succession Committee is restricted to two independent non-executive Directors due to the small size of the Company's Board. However, after the appointment of an additional non-executive Director, a new member is available to the Committee and subject to the Board's approval.

The charter of the Remuneration, Nominations and Succession Committee can be found in the Corporate Governance Section on the Company's website.

Board Remuneration

Remuneration and terms of employment for Executive Directors and Senior Executives is formalised in Service Agreements.

Remuneration of non-executive Directors is currently not to exceed a maximum of $500,000, which was approved by shareholders at the 28 November 2010 Annual General Meeting.

Details of Directors' remuneration are contained in the Director's Report.

Performance Evaluation

A formal performance evaluation of the Board, each Committee of the Board and individual Directors was not undertaken during the reporting period, although the Board did undertake a review of its composition. Following that review, the Board resolved to appoint Mr Howard Lu as a Director on 7 January 2011, so as to enable the Board to align its skills set with the strategic objectives being pursued by the Company.

The Managing Director and senior executives participate in annual performance reviews. Performance is measured against key performance indicators relevant to the Company's strategic, operational and business objectives and to each of the Managing Director's and senior executive's specific role.

A performance evaluation for the Managing Director and senior executives was undertaken for the current reporting period in accordance with the process set by the Remuneration, Nomination and Succession Committee and as approved by the Board.

A summary of the performance evaluation process can be viewed in the corporate governance section of the Company's website.

Board Diversity

Upon shareholders' approval to increase the maximum aggregate amount payable to non-executive Directors in the November 2010 AGM, a new non-executive Director, Mr Howard Lu, was appointed on 7 January 2011. The appointment of Mr Lu has enhanced the Board's diversity in many ways, particular from a cultural and international perspective.

The Company recognises the benefit of diversity and respects and values the competitive advantage of diversity. The aim of the Company is to attract employees (including Directors) with the appropriate mix of skills, experience and expertise. All other things being equal, the Board will give a priority to diversity. The Company's official diversity policy is currently under development.

Currently there are no women in senior executive positions or on the Board employed by the Company. The total proportion of women is 33% of the total number of employees of the Company.

Code of Conduct and Ethics

The standard of behaviour required of Icon Energy's Directors and employees, as well as of contractors engaged to perform work on behalf of the Company include:

• compliance with all laws and regulations which govern the group and its operations;
• avoidance and/or management of conflicts of interest;
• to contribute to the well being of the Company's shareholders; and
• to act honestly and with integrity and fairness in all dealings with each other and third parties.

Ethical Standards

The aim of the Company is to ensure that all Directors, managers and employees act in a manner of integrity and ethical standards so as to ensure a high standard of corporate governance to enhance the reputation and performance of the group. The Company has an approved Code of Conduct and Ethics and a Share Trading Policy. A copy of these Policies can be found in the Corporate Governance Section on the Company's website.

Code of Conduct and Ethics

The standard of behaviour required of Icon Energy's Directors and employees, as well as of contractors engaged to perform work on behalf of the Company include:

• compliance with all laws and regulations which govern the group and its operations;
• avoidance and/or management of conflicts of interest;
• to contribute to the well being of the Company's shareholders; and
• to act honestly and with integrity and fairness in all dealings with each other and third parties.

Trading in the Company's Securities by Directors and Employees

The Board has a formal policy regarding trading in the securities of the Company by Directors and employees. The Company's Share Trading Policy provides for windows in which share trading is permitted. All Icon Energy personnel, not in possession of material non-public information, may buy, sell or otherwise deal in Icon Energy's securities only in the three week period commencing the day after:

1. the announcement of an Appendix 5B or 4C;
2. the announcement of the half yearly financial results;
3. the announcement of the annual financial results;
4. the holding of Icon Energy's Annual General Meeting;
5. after a cleansing statement; or
6. as the Board determines (collectively known as “Trading Windows”).

The provisions of the Corporations Act 2001 and the Listing Rules of the ASX require advice to the ASX of any transactions by the Directors in the securities of the Company.

Principles of Conduct

Further general principles or conduct under the Company's Code of Conduct and Ethics, include:

1. Ethical and responsible business practices.
2. Sustainable development considerations/principles integrated into Company decision making.
3. Foster economic growth and business development, generate government revenue, provide commercial returns to the industry and contribute to the wealth generated by Australia's natural resource base.
4. Health, safety, environmental and community risk management strategies that are based on sound science, transparency and effective communication.
5. Continuously seek opportunities to improve health, safety and environmental performance in addressing risks posed by our operations to employees, contractors, the public and the environment.
6. Contribute to the conservation of biodiversity and protection of the environment through responsible management of our operations and their impacts.
7. Foster economic and social development of the communities in which we operate.
8. Respect and protect human rights and dignity at our operations and deal fairly with employees and others.
9. Open and effective engagement and reporting with our communities.
10. The Directors and Executives of the Company shall notify the Chairman before trading in the Company's shares and shall not trade in the shares other than in accordance with the Company's Share Trading Policy.

Identification of Significant Business Risk

The Board meets at least every three months and receives monthly comprehensive management and financial reports which enables it to identify emerging risk factors and allows the Board to monitor management's response to these risks.

Management of Enterprise and Operational Risk

The Board has the overall responsibility for overseeing the Company's risk management framework and maintaining the Company's risks, including material business risks.

The Managing Director, in conjunction with senior executives, is required to develop, implement and manage Icon Energy's risk management and internal control framework. The Managing Director reports to the Board on the management of these functions, including as to whether the group's material and operational and business risks are being effectively managed and the Board has reviewed such reports from the Managing Director.

Under its charter, the Audit and Risk Management Committee is responsible for:

1. Overseeing the establishment and implementation by management of the Company's risk management system.
2. Endorsing a risk management policy which describes the manner in which both risk and the opportunity are identified, assessed, monitored and managed, including how:

1. significant decisions effecting and changes to, the business are subject to risk assessment.
2. operations incidents are to be analysed in order to learn from them and successes reviewed in order to repeat them;
3. all acquisitions and divestments of assets are subject to assessment and management;
4. risks and associated control systems are regularly reviewed; and
5. performance against risk management plans are monitored and reported upon to the Board.

The Company's risk management system is further underpinned by corporate risk management policies and procedures which are designed to ensure:

• Significant decisions affecting and changes to, the business are subject to risk assessment;
• Operational incidents be analysed in order to learn from them and successes reviewed in order to repeat them;
• All acquisitions and divestments of assets be subject to risk assessment and management;
• Risks and associated control systems be regularly reviewed;
• Risk management plans be maintained and regularly reviewed; and
• Performance against risk management plans be monitored and reported upon to the Board.

The Managing Director has regularly reported to the Board as to the effectiveness of the management of the Company's material operational and business risks.

The Board has also received assurance from the Managing Director and the Chief Financial Officer that:

• The declaration provided in accordance with section 259A of the Corporations Act is founded on a sound system of risk management and internal control; and
• The system is operating effectively in all material aspects in relation to financial reporting risks.

A summary of the Company's policies on risk oversight and management of material business risks can be found in the Corporate Governance section of the Company's website.

Disclosure

The Board has in place, policies and procedures to ensure that the obligations of Directors, officers and employees of the Company to comply with the ASX Listing Rules and to ensure the disclosure of such material that may have an effect on the price or value of the Company's securities are met.

The Company's Disclosure and Communications Policy sets out the requirements and processes put in place by Icon Energy to ensure that its obligation to disclose relevant information is met and to ensure accountability at senior executive level for that compliance. A copy of the policy can be found in the Corporate Governance Section on the Company's website.

Shareholders

The Board of Directors ensures that shareholders are fully informed as to any developments of the group which are communicated by:

• annual reports to shareholders;
• half-yearly accounts lodged with the ASX;
• quarterly reports;
• continuous disclosure to the ASX;
• notices of shareholder meetings and explanatory notes;
• complete information on all documents are on the Company's web-site: www.iconenergy.com;
• shareholders are encouraged to contact the Company's officers and participate in the Annual General Meeting by asking questions as to the performance of the Company; and
• regular newsletters.

The Company's Disclosure and Communications Policy sets out the manner in which Icon Energy promotes communication with shareholders in the Corporate Governance Section and other key stakeholders. A copy of the Policy can be found in the Corporate Governance Section on the Company's website.

ASX PRINCIPLES OF CORPORATE GOVERNANCE COUNCIL GUIDELINES

The ASX Corporate Governance Council has recognised that its principles and recommendations do not contain a “one size fits all” solution and Icon Energy is of the opinion that, where appropriate, the ASX Principles have been applied. The following table indicates the areas where Icon Energy complies with the ASX Principles.

ASX Corporate Governance Principles and Recommendations		Reference	Comply
Principle 1: Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the Board and those delegated to senior executives and disclose those functions.	Page 24	√
1.2	Companies should disclose the process for evaluating the performance of senior executives.	Page 25 and Remuneration Report	√
1.3	Companies should provide the information indicated in the Guide to reporting on Principle 1.	Page 24-26	√
Principle 2: Structure the Board to add value
2.1	A majority of the Board should be independent Directors.	Page 25	√
2.2	The chair should be an independent Director.	Page 25	√
2.3	The roles of chair and chief executive officer should not be exercised by the same individual.	Page 25	√
2.4	The Board should establish a nomination committee.	Page 25	√
2.5	Companies should disclose the process for evaluating the performance of the Board, its committees and individual Directors.	Pages 24-26	√
2.6	Companies should provide the information indicated in the Guide to reporting on Principle 2.	Pages 24-26	√
Principle 3: Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the code as to:
	3.1.1 the practices necessary to maintain confidence in the Company's integrity. 3.1.2 the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders. 3.1.3 the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	Page 26 Page 26 Page 26	√ √ √
3.2	Companies should establish a policy concerning diversity and disclose the policy or summary of that policy. The policy should include requirements for the Board to establish measurable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them.	Page 26	X
3.3	Companies should disclose in each annual report the measurable objectives for achieving gender diversity set by the Board in accordance with the diversity policy and progress towards achieving them.	Page 26	X
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the Board.	Page 26	√
3.5	Companies should provide the information indicated in the Guide to reporting on Principle 3.	Page 26	√
Principle 4: Safeguard integrity in financial reporting
4.1	The Board should establish an audit committee.	Page 25	√
4.2	The audit committee should be structured so that it consists of: - only non-executive Directors - a majority of independent Directors - an independent chair, who is not chair of the Board - at least three members.	Page 25	√ √ √ √ √
4.3	The audit committee should have a formal charter.	Page 25	√
4.4	Companies should provide the information indicated in the Guide to reporting on Principle 4.	Page 25	√
Principle 5: Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	Pages 25-26	√
5.2	Companies should provide the information indicated in the Guide to reporting on Principle 5.	Page 26	√
Principle 6: Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.	Page 26-27	√
6.2	Companies should provide the information indicated in the Guide to reporting on Principle 6.	Page 26-27	√
Principle 7: Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	Page 26	√
7.2	The Board should require management to design and implement the risk management and internal control system to manage the Company's material business risks and report to it on whether those risks are being managed effectively. The Board should disclose that management has reported to it as to the effectiveness of the Company's management of its material business risks.	Page 26	√
7.3	The Board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	Page 27	√
7.4	Companies should provide the information indicated in the Guide to reporting on Principle 7.	Page 26	√
Principle 8: Remunerate fairly and responsibly
8.1	The Board should establish a remuneration committee.
8.2	The remuneration committee should be structured so that it: - consists of a majority of independent directors; - is chaired by an independent director; - has at least three members.	Page 25 Page 25 Page 25 Page 25	√ √ √ X
8.3	Companies should clearly distinguish the structure of non-executive directors' remuneration from that of executive directors and senior executives.	Pages 25- 26 and the Remuneration Report	√
8.4	Companies should provide the information indicated in the Guide to reporting on Principle 8.	Page 25-26 and the Remuneration Report	√