Comet Ridge’s ATP 337P Mahalo asset is located in the Denison Trough area of Queensland’s Bowen Basin near Rolleston, and covers an area of 989 sq km. Comet Ridge has a 35% interest in ATP 337P Mahalo.

In July 2012, Comet Ridge commenced a 12-well drilling programme at ATP 337P Mahalo, including two pilot projects. The first four wells of this programme have been completed, with positive results. Progress is being made to have these wells production tested with the commissioning of the first production pilot expected towards the end of 2012. The intention of this programme is to achieve an initial reserves certification in early 2013. Comet Ridge’s expenditure commitments under this programme are to be carried by Stanwell up to A$8 million.

The 2012 programme has targeted the Permian Bandanna coals, which are encountered in a depth range between 200m and 400m in the north of the ATP 337P Mahalo area. These coals have been shown to have a moderate to high gas content, consistent coal thickness of approximately 7 – 9 metres and high saturation levels.

ATP 337P Mahalo is well placed with respect to existing infrastructure, with the gas pipeline linking the Northern Denison Trough gas fields to the existing Wallumbilla to Gladstone (Jemena) pipeline located along the western boundary of the permit. The gas pipeline linking the GLNG project’s Fairview CSG field to the LNG precinct in Gladstone is also expected to follow a similar route to the Jemena pipeline in this area.

Initial Pilot Production Project at Mahalo:

On 1 August 2012, Comet Ridge announced that a successful four well drilling programme had been concluded at its Mahalo pilot project in ATP 337P. All four pilot wells exhibited good continuity and thickness of coal across the main reservoir section. Formation flow testing has shown very good to excellent permeability in most of the wells.

The first four wells of the 2012 programme included the Mahalo 3, Mahalo 4, Mahalo 5 and Mahalo 6 pilot wells.

The ATP 337P Mahalo Joint Venture is extremely pleased with the drilling results, particularly the coal permeability. Facilities will be constructed to develop the first production pilot in the Mahalo area, with commissioning expected by late 2012.

Pilot well drilling in the Joint Venture’s second pilot, Mira, will be conducted later in 2012, followed by a further four core holes to extend the delineation of gas in the block.



The objective of both these pilot production projects is to demonstrate commercial gas flows in ATP 337P Mahalo, with the intention of achieving an early initial reserves certification in early 2013.

Under the terms of the Sale and Purchase Option Agreement with Stanwell, Comet Ridge could realise $1 million in cash for every 1 PJ of 2P Reserves it has booked at the end of 2013, in the event Stanwell elects to acquire the remaining 35% interest in this asset.

Sale of interest in ATP 337P Mahalo to Stanwell:

On 28 December 2011, Comet Ridge announced that it had completed a binding Sale and Purchase Option Agreement (SPOA) with Stanwell Corporation for its 40% interest in the ATP 337P Mahalo asset.

The key highlights of this transaction are as follows:

• The sale of an initial 5% interest in ATP 337P Mahalo for A$7 million;
• The grant of an option to acquire either an additional 15% (Option A) or 35% (Option B) interest in ATP 337P Mahalo;
• In exchange for these Options, Stanwell will fund up to A$8 million of expenditure commitments associated with the Comet Ridge 40% interest in the upcoming ATP 337P Mahalo pilot programmes;
• In order to exercise the Option, Stanwell will be required to pay Comet Ridge consideration based on the ATP 337P Mahalo certified 2P reserves as at 31 December 2013, but this reserves date may be extended to as late as 31 December 2014;
• In order to exercise Option A, Stanwell will pay A$0.80 per GJ multiplied by 15% of the 2P Reserves;
• In order to exercise purchase Option B, Stanwell will pay A$0.80 per GJ multiplied by 15% of the 2P Reserves plus A$1.15 per GJ multiplied by 20% of the 2P Reserves (a weighted average of A$1.00 per GJ for the 35% interest);
• The minimum payments for exercise of the options are A$5 million for Option A and A$10 million for Option B.

If Stanwell elects to exercise Option A, Comet Ridge will retain a 20% interest in ATP 337P Mahalo and continue to be exposed to further upside re-rating potential. The exercising of either option is subject to Stanwell’s shareholders’ approval.

Comet Ridge’s focus will be on maximising 2P Reserves certification by the end of 2013, and we are pleased that the Joint Venture is also focussed on proving gas reserves in this block.

Contingent Resource Certification:

On 25 October 2010, Comet Ridge announced a Contingent Resource Certification by NSAI, the first certification for Comet Ridge in any of its Australian or New Zealand acreage. The following table represents Comet Ridge’s 35% interset of Joint Venture Contingent Resources:

Exploration History:

Eleven wells had been drilled in the ATP 337P Mahalo area prior to the 2012 drilling programme, with six of these drilled since Comet Ridge was assigned its interest in 2004.

The ATP 337P Mahalo Joint Venture drilled the Scrubber Gully 1 corehole in July 2009, which successfully demonstrated coal continuity from adjacent permits into the central-eastern portion of the joint venture area.

Mahalo 1 and Somerby 1 were drilled in 2004 as part of the Comet Ridge farm-in, followed by Mahalo 2, Humbolt 1 and Mira 1 in 2006.

Outside the ATP 337P Mahalo area, coal seam gas activities exploration activities have increased in the northern Denison area in recent years with the drilling of Katrina 1 in 2007, Luka 1 in 2009 and Bungawarra 1 and 2 in mid 2010. These wells were drilled outside the ATP 337P Mahalo area, but both Katrina 1 and Luka 1 were drilled near the permit boundary by Comet Ridge’s ATP 337P Mahalo Joint Venture Partners.

Prior to the drilling of Mahalo 1 there had been very few wells drilled within this part of ATP 337P since the Sunlight 1 conventional well was drilled in 1966 and Humboldt Creek 1 in 1970. Lowesby 1 was drilled in 1991 in the area excised from the centre of the ATP 337P farm-in area.

Permit History:

ATP 337P was awarded on 1 October 1983 for a period of 4 years to CSR Ltd (60%) and OCA (40%), and included 181 blocks. The ATP 337P permit is now in its seventh 4-year renewal period, covers 58 graticular blocks, and was due for renewal on 1 October 2011.

ATP 337P Mahalo is a subset of ATP 337P, and covers approximately 12.5 graticular blocks.

Comet Ridge farmed-in to a 40% interest in ATP 337P Mahalo in 2004, with Santos and APLNG retaining a 30% interest each. Santos and APLNG each hold a 50% interest in the remainder of ATP 337P. Comet Ridge reduced its interest to 35% in late 2011 through the divestment of a 5% interest in ATP 337P to Stanwell Corporation.

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