Tor McCaul - Comet Ridge - Comet Ridge’s Galilee Basin extended production test project

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Comet Ridge’s Galilee Basin Extended Production Test Project Galilee Basin Coal & Energy Conference 2013

Tor McCaul, Managing Director 25 November 2013

www.cometridge.com.au ASX Code : COI

Introduction – Comet Ridge Limited

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Strategic CSG assets

§  Large resource and equity positions

§  Multi-basin exposure

§  Significant 3C Resource base

§  Domestic and export market opportunities

§  Tightening east Australian gas market

Quality team

§  Highly experienced board and management team

§  Combines technical and commercial; CSG and conventional; upstream and downstream capability

§  Combines experience with majors and successful independents

Focus on reserve certification

§  Initially at Mahalo Block in Bowen Basin with two pilot schemes operating

§  Galilee Basin has significant gas resources over large area

§  NSW blocks also with significant resource base and large upside


Contents

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Galilee Basin Gas Assets

Extended Production Test

Commercial Options


Section 1

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Galilee Basin Gas Assets


§  Large area (~250,000km2) covering a big part of central western Queensland

§  Overlain by Eromanga Basin and underlain by Drummond Basin

§  Land use is grazing – cattle and sheep

§  Oil recoveries and conventional gas flows over a number of years

§  One working pilot in the basin

§  Significant coal mine province evolving in the shallow coals in the east

Galilee Basin – Background

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Eastern Basin Geology

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§  Betts Creek coals – Permian in age

§  Up to 6 individual seams

§  Thick, continuous coals deposited over very large area

§  Coals shown as gas bearing and permeable

§  Coal sub-crops in the east and dips to the west

§  Net Coal thickness in eastern basin generally 15 to 40m

§  Very large gas volumes in place


Systematic Path to Reserves


§  Galilee Basin Significant Independent Resource Booking

Resources Independently Certified

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Gunn Project Area 3C Gas Resources are material in size (1,870 PJ) and 100% COI


§  Large position – almost 13,000km2 (0.7% of QLD)

§  ATP743

§  100% equity

§  12 year term effective September 2009

§  ~6476km2

§  ATP744

§  100% equity §  12 year term effective

October 2009

§  ~6515km2

Galilee Exploration History

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2009 Petroleum Exploration Original Tenure Award


§  Drilling Program Objectives

§  Confirm coal thickness, depth and continuity

§  Quantify gas content at various depths

§  Quantify coal permeability at various depths

§  Obtain water samples from the Betts Creek coals

§  Better understand Galilee depositional architecture


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2009-10 Exploration Program


§  5 well exploration program

§  Total drilled section 5010m

§  Coal thickness ranged from 16m to 24m with up to 22m of shale

§  Over 1000m core cut & 10 drillstem (flow) tests

§  Significant laboratory coal analysis

§  Gunn Project Area average gas content 4.3 m3/t (high 7.3 m3/t)


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Outcome: focus on south-west region – Gunn Project Area


§  Seismic Program Objectives

§  Confirm coal continuity

§  Improve understanding of structural features

§  Define project area

§  252km 2D seismic survey

§  First modern 2D seismic in these blocks

§  Excellent image quality in Betts Creek Beds

§  Improved understanding of the structural nose controlling gas content and permeability


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2011 Gunn 2D Seismic Survey

Top Permian

Gunn 2011-03


§  2012 farm-in to southern part of ATP1015P held by QER

§  Access to additional 825km2

§  Creates continuous acreage area, extending Gunn Project area to the east

§  Three stages to allow equity up to 75%

§  Stage 1 completed- two appraisal wells in Farm-in Area earning 20% equity


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1015P Farm-in Area


§  3 well exploration and appraisal program

§  Gunn 2 drilled in ATP744 Gunn Project Area

§  16.2m net coal

§  Four coal intervals tested – demonstrated good to excellent productivity

§  2 wells – ATP1015 Farm-in area

§  20 to 23 m net coal

§  Good gas content and permeability


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Confirmed extension of Gunn Project Area to the east


§  5 coal seams intersected

§  depth to coal 700-1000m

§  >16m net coal §  gas contents >4m3/t

§  good permeability within target coals

Gunn Project Area

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Gunn Project Area

Gunn Project area and Farm-in area coals contain recoverable gas over an estimated area of 1865km2


§  3 historic petroleum wells within ATP 743 and ATP 744 recovered oil and/or gas from Lake Galilee Sandstone at base of Galilee Basin

§  Carmichael 1 well flowed gas to surface from deeper sandstone intervals

§  Evidence of active petroleum system over the Koburra Trough

§  Potential for additional oil and gas resources

Additional Gas Potential

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Conventional and Unconventional Potential

•  GTS – recovered gas to surface •  OTS – recovered oil to surface

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Section 2

Gunn 2 Extended Production Test


§  Nov 2012 -Gunn 2 completed for production

§  Nov to Jan 2013 - Surface facilities installed - water storage tanks, flowlines, metering facilities and power generation

§  Jan 2013 –commissioned for operation

EPT Objectives

§  Establish connectivity with coals (i.e. completion methodology)

§  Obtain water samples

Gunn 2 Extended Production Test (EPT)

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Gunn 2 - EPT


Gunn 2 – Production Well Design

Betts Creek Coals sit well below Great Artesian Basin units

§  Steel casing run and cemented in place with cement returns all the way back to surface

§  This allows flow into

the well of only the selected zone(s)

§  For Gunn 2, only 4 metres of coal perforated and flowed into the well for pumping to surface


§  Perforated over four metre interval - C1 coal seam only

§  Seam isolated above and below by impermeable mudstone

§  Designed to ensure water only produced from Betts Creek reservoir coal

Gunn 2 – Extended Production Test

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Gunn 2 - EPT


§  Water rate progressively increased over several weeks

§  Stabilized water production rate of 400 bwpd

§  Reached limit of pumping equipment

§  Pressure analysis indicate four meter coal interval has greater flow capacity

§  Formation water samples taken for analysis

§  Water found to be good quality

§  Evaluating methods of formation water treatment

§  Well set up for long term production

Gunn 2 – production test

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Gunn 2 – EPT results

Success •  Effective completion style

•  Connecting wellbore to fractures in coal •  Isolating coal seam from permeable

sandstones •  Formation water samples collected


Gunn 2 – Extended Production Test

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§  Agricultural Groundwater predominantly sourced from

§  Clematis Group

§  Moolayember Formation

§  Alluvium and colluvium

§  Nil sourced from Betts Creek beds

§  Clematis Group and Moolayember Formation are intake beds for GAB

§  Betts Creek beds sit hundreds of metres below GAB

Groundwater

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Groundwater over ATP’s

>300m separation between GAB and Betts Creek beds

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Section 3

Commercial Options


Tightening Eastern Australia Gas Market

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§  4 large LNG consortia control almost 90% of 2P CSG reserves in Eastern Australia

§  Intensifying competition for future gas reserves, driven by LNG growth

§  Increasing pressure on domestic gas supply and pricing

§  Gas producers writing new contracts at the higher end of a A$6-9/GJ range and prices are forecast to continue to rise

§  Qld Gas Market Advisor forecasts a domestic supply constraint 2015-2020 if supply situation does not improve

Qld domestic gas demand and projected gas demand for LNG exports

CSG 2P Reserves, February 2013

42,776 PJ LNG proponents AGL Other

88%

5% 7%

Source: RLMS

Source: 2012 Gas Market Review Queensland (Queensland Government)


§  Different market segments emerging for commercial development: coal, power, LNG

§  Development option 1: Power for coal mines / local generation

Galilee Basin – Commercial Options

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Galilee Basin market opportunities


§  Development option 2: Gas supply to LNG projects at Gladstone

§  Development option 3: Domestic gas supply via Barcaldine

Galilee Basin – Commercial Options

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Galilee Basin market opportunities


§  Comet Ridge has built significant eastern basin experience and understanding, positioned within reach of markets

§  Large CSG resources independently certified and deeper sandstone gas present

§  Pilot scheme is the key next step with the aim of conversion of resources to reserves

§  Gas could be directed to power generation, LNG manufacture or domestic gas markets

To Summarise……..

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Disclaimer This presentation (Presentation) has been prepared by Comet Ridge Limited (ABN 47 106 092 577) (Comet Ridge). The Presentation and information contained in it is being provided to shareholders and investors for information purposes only. Shareholders and investors should undertake their own evaluation of this information and otherwise contact their professional advisers in the event they wish to buy or sell shares. To the extent the information contains any projections, Comet Ridge has provided these projections based upon the information that has been provided to Comet Ridge. None of Comet Ridge or its directors, officers or employees make any representations (express or implied) as to the accuracy or otherwise of any information or opinions in the Presentation and (to the maximum extent permitted by law) no liability or responsibility is accepted by such persons. Summary information This Presentation contains summary information about Comet Ridge and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. It should be read in conjunction with Comet Ridge’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au. ASX Releases Investors are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Resource statements can be found in Comet Ridge’s ASX releases. Resource statements are provided to comply with ASX guidelines but investors are urged to read supporting information in full on the website. Past performance Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Future performance This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance. Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains such statements that are subject to known and unknown risks and uncertainties and other factors, many of which are beyond the control of Comet Ridge, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Such forward-looking statements are relevant at the date of this Presentation and Comet Ridge assumes no obligation to update such information. Investment risk An investment in Comet Ridge shares is subject to investment and other known and unknown risks, some of which are beyond the control of Comet Ridge. Comet Ridge does not guarantee any particular rate of return or the performance of Comet Ridge. Persons should have regard to the risks outlined in this Presentation. Competent Person Statement The gas resource estimates for ATP 774P, ATP 337P, PMP 50100 and PMP 50279 provided in this statement were determined by Mr John Hattner of Netherland, Sewell and Associates Inc, Dallas, Texas, USA, in accordance with Petroleum Resource Management System guidelines. Mr Hattner is a full-time employee of NSAI, and is considered to be a qualified person as defined under the ASX Listing Rule 5.11 and has given his consent to the use of the resource figures in the form and context in which they appear in this presentation. The resource estimates for PEL 6, PEL 427 and PEL 428 referred to in this presentation were determined by Mr Timothy L. Hower of MHA Petroleum Consultants LLC in accordance with Petroleum Resource Management System guidelines. Mr Hower is a full-time employee of MHA, and is a qualified person as defined under the ASX Listing Rule 5.11. Mr Hower consented to the publication of certain resource figures which appeared in the announcement of 7 March 2011 made by Eastern Star Gas Limited (ASX:ESG) and any reference and reliance on the resource figures for PEL 6, PEL 427 & PEL 428 in this presentation is only a restatement of the information contained in the ESG announcement.

Important Notice and Disclaimer

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Comet Ridge Limited Contact Level 3 283 Elizabeth Street Brisbane 4000

www.cometridge.com.au

30

GPO Box 798 Brisbane 4001

Telephone: Facsimile: Email

+61 7 3221 3661 +61 7 3221 3668 [email protected]

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Tor McCaul - Comet Ridge - Comet Ridge’s Galilee Basin extended production test project