Ann: Glenaras Gas Project - First Gas, page-58

The ASX equity research scheme have just emailed weekly broker reports, including the update from canaccord on Galilee since first gas;


"First gas at Glenaras

GLL's Glenaras pilot has reached critical desorption pressure more quickly than
anticipated and is already seeing small amounts of gas flow from the G10L well.
This represents a major milestone. We upgrade our price target to A$1.11ps after
revising our risking of the project (Stage 1 and 2) to 50%.

Gas breakthrough at G10L...

Flowing downhole pressure is now ~300psi at G10L and water flow rates are starting
to level off as gas desorption begins. The well is now being directed into a separator
with small gas flows being observed. As fluid levels in the wells are reduced further and
more coal area is drawn down below the critical desorption pressure, we expect to see
increasing gas rates.

Importantly, the monitoring well (G11L) is continuing to see pressure drawdown which
suggests that 1) the shale barriers have not been compromised; 2) that the water
production is isolated to the R3 coal seam; and 3) the pilot is well on the way to regional
desorption (something the single lateral R1 pilot could never achieve).

...G12L needs more power

Of the 3,500bbl/d of water being produced, the majority is coming out of G12L which
has higher permeability/cleating. Consequently, GLL will install a larger transformer on
G12L in the coming days in order to increase pump capacity and aid in de-watering this
higher quality section of coal.

Improving confidence regarding 500PJ target

Given the huge data set and consistent interaction with reserve auditors, GLL is of
the view that a 500PJ 2P reserve booking is likely even if only modest gas flow rates
( 0.25mnscf/d) are sustained. With gas breakthrough having occurred and the water rate
rolling off, we are increasingly confident that this target is achievable.
Applying historic 2P transaction multiples (which are becoming increasingly relevant, in
our view) to a 500PJ booking yields $925mn or $4.80ps."