AGL invests in Galilee Basin coal seam gas production pilot and...

AGL invests in Galilee Basin coal seam gas production pilot and exploration

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11 July 2008

AGL Energy Limited (AGL) today announced a $37 million investment in a coal seam gas
production pilot and exploration and appraisal program with Galilee Energy Limited (Galilee
Energy) in Queensland’s Galilee Basin.

Galilee Energy’s majority owner is Eastern Corporation Limited (ASX:ECU). The Farm-in Agreement, between AGL and two of Galilee Energy’s wholly-owned subsidiaries, will see AGL investing up to $37 million over two stages to acquire a 50 per cent interest in exploration tenement ATP 529P.

Stage 1 of the program will involve the Rodney Creek production pilot in ATP 529P at a cost to AGL of $20 million. Work on Stage 1 is expected to commence by November 2008. Stage 2 will involve an exploration and appraisal work program during FY10 and FY11 at a cost to AGL of $17 million. The parties have also entered into a 10-year gas marketing agreement. Under the terms of the farm-in, AGL will assume operatorship of the joint venture under a Joint Operating Agreement.

AGL Managing Director Michael Fraser said “This Farm-in Agreement is a further step in growing AGL’s gas reserves through targeted exploration and appraisal drilling, utilising the skills AGL has developed as operator of the Camden Gas Project joint venture.

“AGL is pleased to be working with Galilee Energy in developing the Galilee Basin. This transaction provides Galilee Energy certainty for the next stage of development to prove up reserves, and provides a joint venture partner in AGL who has the capabilities to develop and commercialise gas discovered in the Galilee Basin.”

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http://www.agl.com.au/about/ASXReleases/Pages/AGLinvestsinGalileeBasincoalseamgasproduction.aspx