THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF.  NO SUCH SALE OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN
OPINION OF COUNSEL IN A FORM SATISFACTORY TONATION
ENERGY INC.THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES
ACT OF 1933. PROMISSORY NOTE AUD$24,322,501.00 Dated: May 31, 2016
                                                                                                                        
Denver, Colorado For value received, NATION ENERGY (AUSTRALIA)
PTY LTD, an Australian limited company (the “Company”), promises to pay
to PALTAR PETROLEUM LIMITED, an Australian limited company (the “Holder”),
the principal sum of Twenty-Four Million Three Hundred Twenty-Two Thousand Five
Hundred One and no/100 Australian Dollars (AUD$24,322,501.00). Interest shall
accrue from the date of this Promissory Note (this “Note”) on the unpaid
principal amount hereunder at a rate equal to 5.00% per annum;provided,
that on and after the Maturity Date (as defined below) or an Event of Default
(as defined below), interest shall accrue from and after such date on the
unpaid principal and all accrued but unpaid interest of this Note at a rate
equal to 10.00% per annum.  This note is the promissory note referenced in
those certain Earning Agreements dated effective May 31 ,2016 between the
Company and the Holder and between the Company and Officer Petroleum Pty Ltd.
(the “Earning Agreements”).  This Note is subject to the following terms
and conditions: 1.Maturity.Subject to
prepayment as set forth in Section 2, all principal and any accrued but unpaid
interest under this Note shall be due and payable on May 31, 2019 (the “Maturity
Date”).  Interest shall accrue on this Note and shall be due and payable in
full on the Maturity Date.  Notwithstanding the foregoing, the entire unpaid
principal sum of this Note, together with accrued and unpaid interest thereon,
shall become immediately due and payable upon a material breach by the Company
of this Note that is not cured within thirty (30) days of such breach (an “Event
of Default”). 2.Payment.All payments
hereunder shall be made in lawful money of the Commonwealth of Australia at the
Holder’s address on the signature page attached hereto or at such other place
as the Holder hereof may from time to time designate in writing to the Company. 3.Prepayment.The Company may
prepay this Note at any time. In the event that Paltar Nation Limited
Partnership receives financing in 2016 of at least USD$80,000,000 (the “LP
Financing”), the Company must make payments of principal on this Note, to
the extent of outstanding principal at such applicable time(s), in the amounts
and at the times as follows:  (a) in the event that Parent (defined below),
and/or Nation SLP, LLC receive payments in 2016 totaling at least
USD$15,000,000 related to the funds received in the LP Financing, the Company
shall pay to the Holder a principal payment of the Australian dollar equivalent
of USD$10,000,000 within 10 business days of receiving such funds, and (b) in
the event that Parent and/or Nation SLP, LLC receive payments in 2017 totaling
at least USD$10,000,000 related to the funds received in the LP Financing or a
similar subsequent financing, the Company shall pay to the Holder a principal
payment of the Australian dollar equivalent of USD$5,000,000 within 10 business
days of receiving such funds.


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4.Guaranty.The Company’s
obligations under this Note are hereby guaranteed as to prompt payment and performance
by Nation Energy, Inc., a Wyoming corporation (“Parent”). Parent is currently
the sole shareholder of the Company. 5.Holder
Covenant.Holder
hereby covenants that, when Holder receives any payment under this Note, to the
extent Holder has outstanding payment obligations to third parties for services
performed or goods provided in the exploration blocks that are the subject of
the Earning Agreements, Holder shall use the funds received as payment under
this Note to pay, to the fullest extent possible, such outstanding payment
obligations. 6.Transfer;
Successors and Assigns.The terms and conditions of this Note shall
inure to the benefit of and be binding upon the respective successors and
assigns of the Company and the Holder.  Notwithstanding the foregoing, the
Holder may not assign, pledge, or otherwise transfer this Note without the
prior written consent of the Company.  Subject to the preceding sentence, this
Note may be transferred only upon surrender of the original Note (or an
indemnity agreement if the Note is lost, stolen or destroyed) for registration
of transfer, duly endorsed, or accompanied by a duly executed written
instrument of transfer in form satisfactory to the Company.  Thereupon, a new
note for the same principal amount and interest will be issued to, and
registered in the name of, the transferee.  Interest and principal are payable
only to the registered holder of this Note.  The Company cannot assign this
Note or its obligations or rights hereunder without the approval of the Holder. 7.Governing
Law.This Note and all
acts and transactions pursuant hereto and the rights and obligations of the Company
and the Holder shall be governed, construed and interpreted in accordance with
the laws of the State of Delaware, without giving effect to principles of
conflicts of law. 8.Notices.All notices and other communications given or made
pursuant to this Note shall be in writing and shall be deemed effectively given
upon: (a) personal delivery to the party to be notified, (b) when sent, if received
by electronic mail or facsimile during normal business hours of the recipient,
and if not received during normal business hours, then on the recipient’s next
business day, (c) five (5) business days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) three (3)
business days after deposit with a nationally recognized overnight courier,
freight prepaid, specifying next business day delivery, with written
verification of receipt.  All communications shall be sent to the respective
parties at their address as set forth on the signature pages to the
Purchase Agreement, or as subsequently modified by written notice. 9.Amendments
and Waivers.Any term of this
Note may be amended only with the written consent of the Company and the Holder. 10.Entire
Agreement.This Note, and the
documents referred to herein and therein, constitute the entire agreement
between the Company and the Holder pertaining to the subject matter hereof and
thereof, and any and all other written or oral agreements existing between the Company
and the Holder are expressly canceled. 11.Interest
Rate Limitation.Notwithstanding anything to the contrary contained in
this Note, the interest paid or agreed to be paid under the Earning Agreements shall
not exceed the maximum rate of non-usurious interest permitted by applicable
law (the “Maximum Rate”).  If the Holder shall receive interest in an
amount that exceeds the Maximum Rate, the excess interest shall be applied to
the principal remaining owed under this Note or, if it exceeds such unpaid
principal, refunded to the Company.  In determining whether the interest
contracted for, charged, or received by the Holder exceeds the Maximum Rate,
the Holder may, to the extent permitted by applicable law, (a) characterize any
payment that is not principal as an expense, fee, or premium rather thaninterest, (b) exclude voluntary prepayments and the
effects thereof, and (c) amortize, prorate, allocate, and spread in equal or
unequal parts the total amount of interest throughout the contemplated term of
this Note.


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12.Loss
of Note.Upon receipt by the
Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of this Note and, in the case of loss, theft or
destruction, delivery of an indemnity agreement reasonably satisfactory in form
and substance to the Company or, in the case of mutilation, on surrender and
cancellation of this Note, the Company shall execute and deliver, in lieu of
this Note, a new Note executed in the same manner as this Note, in the same
principal amount as the unpaid principal amount of this Note and dated the date
to which interest shall have been paid on this Note or, if no interest shall
have yet been so paid, dated the date of this Note. [Signature Pages
Follow]


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IN WITNESS WHEREOF, the parties have executed this Promissory Note as of the date first set forth above. ExecutedbyNation Energy (Australia) Pty Ltd (ACN 606 533 046)in accordance with section 127 of the Corporations Act by authority of its directors:

   

   

   /s/ John R. Hislop

   

   /s/ Darrel CausbrookDirector

   

   John R. Hislop

   

   Director

   

   Darrel CausbrookPrint name

   

   Print nameExecutedbyPaltar Petroleum Limited (ACN 149 987 459)in accordance with section 127 of the Corporations Act by authority of its directors:

   

   

   /s/ Nick Tropea

   

   /s/ Marc A. BrunerSecretary

   

   Nick Tropea

   

   Director

   

   Marc A. BrunerPrint name

   

   Print name
    GUARANTOR: nation ENERGY INC.  By:/s/ Carmen J. Lotito (Signature) Name:  Carmen J. Lotito Title:     Vice President HOLDER’S ADDRESS:  Paltar Petroleum Limited Level 10, 32 Martin Place Sydney, New South Wales 2000   [Signature Page to Promissory Note]