MORE ON GAZONOR ... . CMM current production is only 25% of...

MORE ON GAZONOR ...

. CMM current production is only 25% of current 2P reserves and, depending on a few factors, a 5-fold increase in production is possible. Scoping study by end 2008.

. One third of unmined coal to 1500m depth at Gazonor has been destressed by mining activities and represents a deorbable gas resource (CBM) of about 380 PJ ... a further 500+ PJ of potential CBM is associated the balance of coal. A GiP to be issued in 3rd Quarter 2008 and initial CBM drilling by early 2009.

. With pending extension applications, Gazonor couls quite feasibly be a bigger resource than Lorraine.

NOW FOR LORRAINE ...

. GiP of 1056 PJ from just 5% of permit area. A 100% upgrade is apparently imminent and typically 50% will translate to reserves.

. Est P2 reserves on production at Saint Avold (Folschviller?) is about 207 PJ (prior to an imminent 100% upgrade?).

. Est P3 reserves on production at Alsting (Diebling?) is about 238PJ (prior to an imminent 100% upgrade?).

. Folschviller 2 Appraisal Well (F2AW) with five x 250m lateral completions is scheduled for a mid Aug 2008 completion and will then be placed "on test" and produced methane flared.

. Significant effort went into siting, analysis and design of F2AW and (my interpretation is that) thus success has been derisked, moreso with completion of the first lateral already.

. The coal seams intersected by F2AW are DRY (!) and require no significant drainage to prior to gas flow development (imo, this is a huge advantage over most Australian CBM fields in which wells may require 2 to 6 months of drainage to enable development of gas flows) and hence well performance should be evident soon after (my interpretation would be no more than about a month).

. Depending on the outcome from the current pilot production test F2AW, up to 5 producing test wells will be installed at Saint Avold commencing late 2008 to early 2009 for a budget of 7.5 mill euro ... with each well targeting three coal seams and flows of 1-2 mill ft3 per seam per day (thats 3 to 6 mill ft3 for each well).

. Under existing regulations, production from the five test wells can be sold whilst application for a production license is being considered and once granted, Saint Avold should support a further 25 wells.

. Due to a known lead in to gain access to distribution pipework (for which relationships with Transcor and hence Total, Suez/Gaz da France), the production rollout from 5 to 30 wells at Saint Avold wont commence until very early 2010 and will continue to the end of 2011.

. Interesting asides are that Diebling north east includes an oil target and the entire Lorraine permit includes significant "tight gas" within the interseam sediments.

. Alsting (Diebling) can also support about 30 wells and the entire Lorraine project should support up to about 200 wells.

I WILL LEAVE UPDATES ON OTHER EPG PROJECTS TO THE PENDING ASX ANNOUNCEMENT.

Cheers
Dex