Ann: Notice of Annual General Meeting/Proxy Form, page-2

The board are asking shareholders to approve the issue of 4,750,000 performance shares to the directors, subject to the following performance condition;

"Subject to the employee or director remaining an employee or director of the Company, the Performance Rights issued will remain conditional upon and vesting on there being a Reserves booking of the first 500PJ or more of 2PReserves for Galilee Energy Limited or its wholly owned subsidiaries".

The value given to these performance shares at the date of the notice is $0.62 per share, but "Shareholders should be aware that there is a possibility that the market price of the Shares on the date of grant of the Performance Rights will be different to the assumed price of $0.62cents used for the valuation".