MANAGING
DIRECTOR'S ADDRESS

China LNG Sales Agreement

On 29 March 2011, the Company signed a landmark LNG Sales Agreement with Shantou SinoEnergy in Shantou City, Guangdong Province, China. The signing of the agreement was a significant achievement for the Company and paves the way for the commercialisation of expected gas reserves out of ATP855P, where Icon Energy holds a strategic 40% participating interest in a promising shale gas resource expected to be drilled in the second half of 2012.

The strategy of securing the commercialisation opportunity ahead of operations in ATP855P means the Company's resources can be focussed to a critical commercial objective - one that will potentially, and ultimately, lead to a significant revenue stream.

Unlike other companies which seek to source commercial opportunities after undertaking costly operations, Icon Energy's purpose has been to tailor its efforts to a known outcome.

Why Shale Gas?

The shale gas potential of ATP855P is simply far too significant to ignore.

Reports to date have indicated that there is potentially 200+ trillion cubic feet (TCF) of gas in the Nappamerri Trough, with a large portion recoverable from ATP855P alone.

The Company, of course, needs to undertake expansive exploration operations, which are scheduled to commence in the second half of 2012 but, as a 40% tenement holder, Icon Energy's LNG China contract requires 2P reserves of 2TCF to be proven.

Successful operations in ATP855P will then lay the foundation stone for the Company's future operations.

The Development Focus

Icon is currently involved in discussions with an engineering group to examine options for gas processing for conversion to LNG through Gladstone or Port Bonython in South Australia.

The Commencement of Exploration Operations in ATP855PP

Following resolution of the Company's dispute with Beach Energy Ltd (Beach) in July, in the second half of 2012, the potential for ATP855P to supply the China LNG Sales Agreement (as well as other gas sales arrangements currently in place and otherwise being pursued by Icon Energy), will be tested with the drilling of a horizontal pilot production well into one of the strata comprising the Roseneath, Epsilon & Murteree shale sequence. On the advice of Netherland Sewell & Associates Inc, this will facilitate the ability to certify the necessary reserves under the LNG Sales Agreement.

Moving Forward with Beach Energy

Icon Energy has identified a strategic advantage in coming to an acceptable arrangement with Beach, namely Beach's experience in drilling the shale sequence in the Nappamerri Trough through its operations in PEL218 just over the border in South Australia.

This was achieved with the execution of a Farmin Agreement between the companies on 15 July 2011, which provided for the drilling of the first well to be expedited to the first available rig slot.

The agreement with Beach enables Icon Energy to deploy its operational staff to the conduct of other operations in the Surat Basin in Queensland, as well as in the Gippsland Basin in Victoria where the Company holds two tenements - PEP170 and is the preferred tenderer for PEP172.

Icon Energy's Joint Venture with Stanwell Corporation Ltd

Another key area of focus remains in ATP626P in the Surat Basin, where consideration is being given to further testing of the coal seam potential of the tenement - through innovative drilling techniques (including the horizontal drilling of thinner coal seams) - and exploring prospective leads outside of the Lydia Block.

Both Icon Energy and Stanwell Corporation Ltd are committed to undertaking a further assessment of the tenement and expect to commence further drilling operations in late 2011.

To date, the Company has extended the joint venture area to the entire tenement to facilitate this further collaborative exploration initiative.

Operations elsewhere in the Surat and Gippsland Basins

Other key focus areas for the company are in ATP849P located near the town of Mitchell, (in the Surat Basin), as well as in PEP170 and PEP 172 (located respectively to the south and north of the Wombat discovery in the Gippsland Basin).

ATP849P is considered prospective for coal seam gas exploration and further 2D seismic is planned for acquisition in the first half of 2012.

In terms of the Gippsland Basin, two promising prospects (targeting tight sands) have already been identified from re-interpreted seismic data. An Operations Plan has already been prepared and submitted to the Victorian Department of Primary Industries with an Indigenous Land Use Agreement and a Landowner's Compensation Agreement are to be undertaken ahead of drilling operations, which are expected to commence in mid 2012.

Otherwise, PEP172 was only recently offered to the Company as preferred tenderer on 10 August 2011. Work has since commenced to determine the best seismic programme to implement so as to test the resource potential of the tenement.

Looking Ahead

Icon Energy remains committed to working with strategic partners to optimise its exploration focus within the Cooper-Eromanga, Surat and Gippsland Basins, so as to source the necessary reserves to meet the commercialisation opportunities which have already been realised by the Company.

I would like to thank you, the shareholders, for your continuing support of the Company, as well as its executive and staff, during what has been an extended period of volatility. I would also like to thank our former Chief Operating Officer Larry Brown for his contribution to the Company over the last three years.

The Board of Directors and I are committed to the various forward programmes identified above, with the aim of realising what is expected to be a promising suite of future initiatives for the Company.

Ray James

Managing Director