30 September 2004

Australian Stock Exchange Ltd Via Electronic Lodgement

Dear Sir,

2004 FINANCIAL STATEMENTS AND AGM

Enclosed please find audited financial statements for the year ended 30 June 2004.

It is envisaged that the printed Annual Report will be available mid October 2004. The Annual General Meeting is scheduled to be held on 18 November, 2004.

andriand

ANDY LYDYARD Managing Director

Further information:

Comet Ridge Limited Andy Lydyard - Managing Director T: 08 9225 7108 E: [email protected]

Level 10, International House 26 St George's Terrace, Perth, Western Australia 6000

Phone: 61 8 9225 7108 Facsimile: 61.8.9225.6100

ACN 106 092 577

COMET RIDGE LIMITED

ANNUAL REPORT 2004

DIRECTORS

Mr Jeff Schneider (Non Executive Chairman) Mr Andy Lydyard (Managing Director) Mr Simon Ashton (Non Executive Director) Gillian Swaby (Non Executive Director)

Company Secretary

Ms Gillian Swaby

REGISTERED OFFICE

10^th Floor, International House 26 St. George's Terrace Perth WA 6000 Telephone:: 08 9225 7108 Facsimile: 08 9225 6100

Email: [email protected] Web Page: www.cometridge.com.au ABN: 47 106 092 577

AUDITORS

HLB Mann Judd 15 Rheola Street WEST PERTH WA 6005

SOLICITORS TO THE COMPANY

Blakiston & Crabb 1202 Hay Street WEST PERTH WA 6005

SHARE REGISTRY

Computershare Investor Services Pty Limited Level 2, 45 St George's Terrace PERTH WA 6000 Telephone: 1300 557 010 Facsimile: 08 9323 2033

LISTED ON AUSTRALIAN STOCK EXCHANGE LIMITED CODE: COI

Chairman's Letter to Shareholders
Overview of Operations
Background	6
Strategy	6
Review of Operations	6
Highlights	7
Future Outlook	8
Project Review	9
Introduction	9
Walloon Coal Measures	15
Tipton West	15
Meenawara	18
Mahalo Project	19
Shallow Gas	20
Galilee Basin	22
Environment and Occupational Heath and Safety	22
Corporate Governance Statement	23
Directors' Report	30
Statement of Financial Position	35
Statement of Financial Performance	36
Statement of Cash Flows	37
Notes to the Financial Statements
Directors' Declaration
Independent Audit Report	58
Shareholder Information	60

CHAIRMAN'S LETTER TO THE SHAREHOLDERS

Dear Shareholder

In the short time since Comet Ridge was listed, your Company has realised a number of significant achievements.

Key amongst these are:

Through the drilling of Mahalo 1 and Somerby 1 in ATP 337P the successful delineation of a substantial coal seam gas resource in which Comet Ridge is earning a 40% interest.
With the appraisal or development work on the Tipton West Project (including the establishment of ٠ a Pilot Well program) a coal seam gas resource in excess of 1 TCF has been delineated. This resource has been substantiated by an independent reserves consultant. Comet Ridge has a 20% interest in this project.
Three preliminary gas sales agreements have been executed which are intended to enable gas to ٠ be sold from an initial development on the Tipton West Project in late 2005 early 2006. Comet Ridge's share of these initial sales revenues is estimated to be \$4.5 million per annum.
Exploration immediately to the south of the Tipton West Project in the Dalby South farm-out block of ATP 683P has offered very encouraging results which support the potential for the coal seam gas resource in this region to be significantly increased.

To realise the value from these successes, much now needs to be done. Key amongst this is to ensure that the Tipton West Pilot development performs such that the commerciality of the production from the area can be confirmed. This important step will enable the coal seam gas resource to be upgraded to proven and probable reserves a necessary step to enable execution of binding gas sales contracts with our customers. The Management and Board of Comet Ridge have confidence that this can be achieved in the coming months. Once reserves are established the substantial task of full development can commence in early 2005. Our objective remains the realisation of cash flows from this development in late 2005.

Further drilling is also intended by year end 2004 on the Mahalo project area ATP 337P. This drilling is intended to further define the size of the coal seam gas resource and to better understand the geological properties of the coals in the area. If this is successful it will give the confidence necessary to progress to the pilot production stage in the area.

CHAIRMAN'S LETTER TO THE SHAREHOLDERS

Despite the successes to date by Comet Ridge, market sentiment toward the coal seam gas sector in general has resulted in a disappointing share price performance since listing. The share price of Comet Ridge has fallen from its issue price of 20 cents to be trading at around 13 cents at the time of writing this letter. It is evident, however, from the limited volumes of Company shares that have been traded that most investors see the medium term potential for the Company. This is a view that your Directors strongly support as we believe the building blocks for a strong future for your Company are progressively being put in place.

Yours Sincerely Jeffrey W. Schneider Chairman

OVERVIEW OF OPERATIONS

Background

Comet Ridge Limited (Comet Ridge or Company) was formed by Strike Oil Limited (Strike Oil) in August 2003 as part of an Eastern States gas strategy that included exposure to the newly developing coal seam gas industry in Queensland and New South Wales. Comet Ridge subsequently raised \$2 million in late 2003 - early 2004 enabling it to acquire the coal seam gas (CSG) assets of Anzoil NL (Anzoil), fund its ongoing farm-in obligations and to provide working capital leading up to the Company's successful Initial Public Offering in April, 2004 where it raised \$5 million though the issuance of 25 million shares.

Comet Ridge Limited (ASX code COI) commenced trading on the Australian Stock Exchange on 19 April 2004.

Strategy

The Company's strategy is to locate, develop and produce natural gas from coal seams for supply to energy markets in Queensland and New South Wales. We are focused on transitioning the Company from being an explorer to a producer with cash flow as quickly as possible. In the Company's Prospectus we set ourselves the target of "proving commerciality by the end of 2004 and achieving gas sales in 2006." We are on schedule to achieve this and will stay focused on that goal.

Review of Operations

2004 has proven to be a busy year for Comet Ridge. Even during the listing process Comet Ridge was involved in drilling wells on its Walloon Coal Measures and Mahalo Projects (referred to as the Comet Ridge Project in the Prospectus). Since formation in August 2003 the Company has been a participant in 13 holes comprising 8 core holes, 4 pilot producers and one conventional exploration hole (Table 1). All but one of the holes achieved its pre-drill objectives, whether it was a core hole looking for the presence and gas content of the target coals or a pilot producer designed to dewater the coals in preparation for gas production. The Company is already involved in a 4 hole production pilot at Tipton West south of Dalby in south eastern Queensland.

All of our activities have been consistent with objectives and strategies outlines in the Prospectus and we remain focused on demonstrating the commerciality of one of our projects by year-end 2004. The road ahead will no doubt hold many challenges but our compass is true, we know where we are going and have a clear plan to get us there.

OVERVIEW OF OPERATIONS

Well	Hole Type	Operator	End Date	Permit	Farm-out	Comet's	TD(m)	Status
					Block	Interest
Meenawarra-2	Core Hole	Arrow Energy	18/10/2003	ATP 683P	Dalbys	100%	460.4	TD
Tipton West 3	Core Hole	Arrow Energy	2/03/2004	ATP 683P	Dalby	20%	527.41	Monitor
Tipton West 4	Core Hole	Arrow Energy	9/03/2004	ATP 683P	Dalby	20%	443	Monitor
Tipton West Pilot -5	Pilot Producer	Arrow Energy	13/03/2004	ATP 683P	Dalby	20%	349.48	Prod
Tipton West Pilot -6	Pilot Producer	Arrow Energy	7/05/2004	ATP 683P	Dalby	20%	493.4	Prod
Tipton West Pilot -7	Pilot Producer	Arrow Energy	7/03/2004	ATP 683P	Dalby	20%	523	Prod
Tipton West Pilot- 8	Pilot Producer	Arrow Energy	25/03/2004	ATP 683P	Dalby	20%	341	Prod
Long Swamp 1	Core Hole	Arrow Energy	11/05/2004	ATP 683P	Dalby	20%	507.48	Monitor
Plainview 1	Core Hole	Arrow Energy	15/05/2004	ATP 683p	Dalby	20%	432.6	Monitor
Meenawarra 3	Core Hole	Arrow Energy	21/06/2004	ATP 683P	Dalby S.	100% (p)	460.4	P&A
Mahalo 1	Core Hole	Santos/Origin	26/04/2004	ATP 337P	Mahalo	$100\%$ (p)	550.81	P&A
Somerby 1	Core Hole	Santos/Origin	13/04/2004	ATP 337P	Mahalo	100% (p)	629	P&A.
Bellata 2	Exploration Hole	Comet Ridge	8/06/2004	PEL 427	N/A	100%	656	P&A

Table 1 Holes drilled since August 2003

(p) Comet Strike paying %

Highlights

Certified gross 1086 PJ (COI share 217 PJ) gas resource at Tipton West.
Confirmation of a potentially significant gas resource with a possible free gas cap over a structure within on our Mahalo Project in ATP 337P (Comet Ridge earning 40%) in the Bowen Basin, Queensland.
Dewatering and production testing has been initiated at the four well Tipton West Pilot located $\bullet$ on the Walloon Coal Measures Project in the Dalby Block of ATP 683P (Comet 20%), south of the town of Dalby in south eastern Queensland.
Comet Ridge earned additional interests in the Dalby South and Millmerran Blocks of ATP $\bullet$ 683P and in ATP 689P by funding \$1 million of expenditure on the Tipton West Pilot.

OVERVIEW OF OPERATIONS

Comet Ridge through the ATP 683P JV, is a participant in three gas sales memoranda of understanding (MOU) representing annual gas sales of 10.2 Petajoules per annum (2+ PJ p.a. net to Comet Ridge) commencing in early 2006.
Meenawarra 3 drilled in the Dalby South Block of ATP 683P, (Comet Ridge 36.67%) south of $\bullet$ the Tipton West Pilot, confirmed the presence of gassy coals in the lower Walloon Coal Measures sequence. Further drilling is planned to help locate a second Production Pilot on this block.
All operations, operated and non-operated, were conducted without Health, Safety and $\bullet$ Environmental incidents.

Future Outlook

In the coming year, Comet Ridge will be focused on enhancing shareholder value via the following:

Reserves certification at Tipton West. This entails drilling additional pilot holes $\bullet$ utilizing new drilling and completion techniques and achieving economically viable production rates from one or more holes
Development of Tipton West
Achieving first gas sales and cash flow from Tipton West
Establish the commercial significance of Mahalo and Meenawarra
Strengthen the Company's presence in Queensland
Elevate the Company's profile
Review and high grade the Company's opportunity base

Introduction

Comet Ridge has interests in a total of six petroleum tenements and is awaiting the award of two more in Queensland (see Table 2 and Figure 1). The Company's portfolio comprises of various farmin deals and permits acquired in two transactions, one with Strike Oil NL (Strike Oil), the second with Anzoil NL (Anzoil).

						Total
						Interest
Projects	Permit	Farm-out	Basin	State	Current	that can	Operator
		$\blacksquare$ Block $\blacksquare$			Interest	be b
						earned
Mahalo	ATP 337P	Mahalo	Bowen	QLD	20%	40%	Santos/Origin
Project
	ATP 683P	Dalby	Surat	QLD	20%	20%	Arrow
Walloon	PL 198A	Dalby	Surat	QLD	20%	20%	Arrow
Coal	ATP 683P	Dalby South	Surat	QLD	36.67%	50%	Arrow
Measures	ATP 683P	Millmerran	Surat	QLD	30%	50%	Arrow
Project	ATP 689P		Surat	QLD	30%	50%	Arrow
Galilee	ATP 743P		Galilee	QLD	100%		Comet
Basin	ATP 744P		Galilee	QLD	100%		$\overline{\mathrm{Comet}}$
Shallow	PEL 427		Surat/	NSW	100%		Comet
Gas			Gunnedah
Projecy	PEL 428		Surat/	NSW	80%		Comet
			Gunnedah
	PSPA 9		Surat	NSW	50%		ACM

Interests in Petroleum Tenements (as at 30 June 2004)

Table 2

The Strike Oil transaction involved Comet Ridge assuming the ongoing farm-in and permit work programme obligations associated with the Strike Oil coal seam gas properties plus the issuance of 6.25 million shares to Strike Oil on the successful listing of Comet Ridge. This transaction provided Comet Ridge with exposure to the WCM and Mahalo Projects in Queensland, interests in three permits in New South Wales (two operated) and two successful permit applications in the Galilee Basin of Queensland.

As part of the Walloon Coal Measures Project, Comet Ridge acquired all of Strike Oil's rights, titles, interests and obligations resulting from a Property Trade and Farmin Agreement with Arrow Energy NL (Arrow) and Australian CBM Pty Ltd (ACBM) dated 20th November 2002.

Figure 1 Comet Ridge Limited's Coal Seam Gas Permits in Eastern Australia

The farmin deal with Arrow and ACBM comprises three earning phases (Table 3).

TABLE 3

Earning Phases - Strike Oil/Arrow Energy/ACBM Property Trade & Farmin Agreement

	ATP 683P	ATP 683P	ATP 683P	ATP 689P	Comet Ridge
	Dalby	Dalby South	Millmerran		Work Commitments
Swap with Arrow for WA-261-P		5%	10%	10%	3 core holes \$250,000
					(Completed)
First Optional Phase		5%	10%	10%	3 core holes \$250,000
					(Completed)
Second Optional Phase
Tranche 1		6.67%	10%	10%	\$1,000,000 (completed)
Tranche 2		6.67%	10%	10%	\$1,000,000
Tranche 3		6.67%	10%	10%	\$1,000,000

The first phase involved an exchange of interests between the parties such that Arrow was assigned a 10% interest in WA-261-P in the Carnarvon Basin, Western Australia and Strike (now Comet Ridge) earned 5% in the Dalby South Block of ATP683P, 10% in the Millmerran Block of ATP683P and 10% in ATP689P (Figure 2). The first phase also required Strike to fund the drilling of three core holes at a capped total cost of \$250,000.

The second phase comprised of funding an additional \$250,000 of core hole drilling to bring Comet Ridge's interests to 10% in the Dalby South Block, 20% in the Millmerran Block and 20% in ATP689P.

Figure 2

Comet Ridge Limited's acreage position in the Walloon Coal Measures Project SE Queensland

The third and final earning phase (the Second Optional Phase) contemplated in the original farmin agreement has been varied to allow Comet Ridge to earn three equal tranches of additional interest in the two farmout blocks and ATP 689P by funding 100% of three agreed upon work programmes each costing \$1,000,000. The Company elected to earn the first tranche and has funded the first \$1.000.000. This money was used to accelerate development of the Tipton West Pilot in the Dalby Block (Comet Ridge 20%). Comet Ridge agreed to the capital being redirected to that Project but still earned the additional interests in the Dalby South and Millmerran farmout blocks and ATP 689P. The Company has elected not to earn the second and third tranches of the Second Optional Phase, preferring to focus its financial resources on further drilling at Tipton West and at Mahalo.

In late 2003, Comet Ridge acquired the right to earn a 20% interest in the Dalby and Dalby South farm-out blocks of ATP 683P from Anzoil. This interest was viewed as being strategic in that it provided Comet Ridge with the opportunity to immediately participate in a fast-track development (Tipton West) plus the Company already owned interests in the Dalby South and the adjacent Millmerran block to the south. The transaction comprised an upfront cash payment, assumption of Anzoil's farm-in obligations under the Anzoil NL - Arrow Energy NL Farm-in Agreement (approximately \$750,000) plus the issuance of 1.5 million fully paid shares in Comet Ridge. Total consideration for this transaction was \$1.1 million.

The second more advanced project acquired via the Strike Oil transaction is the Mahalo Project which involves a two phased farmin programme on part of ATP 337P in the northern part of the Denison Trough in Queensland (Figure 3). This project was referred to in the Prospectus as the Comet Ridge Project, the name has been changed to avoid confusion with Tipperary Oil & Gas Australia's Comet Ridge Project that lies to the south. Comet has fulfilled the obligations of the first phase and has earned the first 20% interest from Santos Limited and Origin Energy CSG Limited by funding the drilling of two core holes. The Company has elected to earn the second 20% by funding additional drilling.

Figure 3

Location of Mahalo Project Northern Denison Trough, Queensland

Walloon Coal Measure Project, Surat Basin, SE Queensland

Tipton West, ATP683P, Dalby Block Comet Ridge 20%, Arrow Energy (Operator) 80%

In January 2004, Arrow Energy and Comet Ridge engaged US based independent reserve engineering consultants, Netherland Sewell & Associates Inc. (NSAI), to review an initial phase of drilling aimed at establishing reserves to support the conditional gas sales contracts that the joint venture partners had secured.

NSAI recommended that a total of 4 core holes and 3 pressure monitoring/future producing wells be drilled on the Tipton West Project, and another two holes, Tipton West Pilot-1 and Tipton West-1 be also converted to monitoring wells. The locations of the wells are shown on (Figure 4).

The four core holes, Tipton West 3 & 4, Long Swamp -1 and Plainview -1 were designed to verify the extent and gas contents of the coals in the Walloon Coal Measures over a broad area covering approximately 110 sq km.

The three new monitoring wells (TPW 6, 7, 8) along with three of the core holes were equipped with pressure monitoring equipment to monitor water levels.

Tipton West pilot commenced in late March with 4 wells (TPW 2, 3, 4 & 5) placed on production. The objective of the pilot is to lower the pressure acting on the coals over a relatively small area to demonstrate that the gas can be liberated at a sufficient rate to be commercially viable. The time it takes to initiate gas production is governed by a number of geological parameters including the degree of gas saturation in the coals and how permeable and well connected they are. Operationally it's all about how efficiently the well bore is connected to the coal seams and whether the coals were damaged during drilling and completion.

Initial results of the pilot are encouraging in that measurable gas volumes were observed after only a short period of pumping, in fact the engines driving the pumps are all using produced gas as fuel. However, the pilot is not responding as quickly as anticipated - that is gas production rates have stayed fairly constant at relatively low rates. The reasons for this slower than expected response are many fold but are thought to include sub-optimal completions and possible coal fines migration.

To accelerate dewatering of the pilot, additional wells will be drilled and placed on production.

NSAI have taken all of the data gathered from the drilling and the production pilot and have conducted a detailed volumetric analysis of the gas resource in the Tipton West area and have confirmed the presence of a very substantial estimated gross possible reserve of 1,086 PJ (Comet Ridge's share 217 PJ).

NSAI determined that the estimated gas volume qualified as possible reserves using the 1997 definitions for oil and gas reserves adopted by the Society of Petroleum Engineers (SPE) and World Petroleum Congress (WPC) and the 2000 SPE, WPC, and American Association of Petroleum Geologists (AAPG) definitions for petroleum resources.

These estimates have been categorised as reserves instead of contingent resources due to the active work program planned by the operator, technical data obtained from the 11 existing pilot wells regarding gas content and pressure communication of coal members, and the likelihood of a gas sales market based on memoranda of understanding with gas purchasers for 124 PJ of gas over a 15year period. In addition, the classification of reserves was limited to only those locations that exceeded 750 million cubic feet of gas per location based on the operator's current development strategy.

No proven or probable reserves can be assigned until one or more wells can be demonstrated to be capable of producing at "economic rates" which is estimated to be around 250 mcfd.

To accelerate the dewatering (a prerequisite for economic gas production rates and hence reserves certification) a minimum of three additional wells will be drilled in the vicinity of the existing pilot holes in the near term. These wells will be drilled and completed using new techniques. Comet Ridge is confident in the ability of the Walloon Coal Measure coals to produce at economically viable rates based on announced flow rates from other pilots such as Arrow's Kogan North and Queensland Gas Corporation's Berwyndale South pilots.

Detailed operational planning is already underway to facilitate a major development in the Tipton West area. It is estimated that approximately 100 wells supported by gas gathering, water management and field compression systems will be required to supply the contracted 10.2 PJ pa.

The work created by a project of this size will bring new jobs and opportunities to the Darling Downs region.

Gas Sales Contracts

As mentioned previously the ATP 683P Joint Venture has secured three conditional gas contracts for the sale of coal seam gas from the Tipton West area. All three contemplate supply of full contract volumes commencing in early 2006 with agreement to take ramp up volumes that may become available from the ongoing development in mid to late 2005. Two of the contracts, the Ergon Energy and Wambo contracts, are for supply of gas for power generation in the vicinity of Dalby and Oakey in SE Queensland.

The three contracts are summarised below in Table 4:

Customer	Project	Scope	Term	Annual	Total	First
			(Years)	Volume	Volume	Sales
				(PJ)	(PJ)
Ergon Energy	Dalby	Power	15	1.0	15	Jan '06
	Oakey	Power	15	2.2	33	Jan '06
ERM Wambo	Braemar	Power	$15 + 5$	3.97	60	Jan '06
Power Ventures
BP Bulwer	Bulwer Is.	Plant	5	3.0	15	Late $05$
			TOTAL	10.2	123

Table 4- ATP 683P - Gas Sales Memoranda of Understanding
----------------------------------------------------------	--	--

Improved performance of the Tipton West pilot production area is necessary in the near future to maintain the confidence of these customers in our ability to deliver the necessary gas volumes in the time frame envisaged in the contract.

Meenawarra

ATP683P, Dalby S. Block, Comet Ridge 36.67%, Arrow Energy 62.33%

Meenawarra 3 drilled in the Dalby South Block of ATP 683P (Comet Ridge 36.67%), south of the Tipton West Pilot, encountered approximately 14 metres of gas bearing coals (6 to 7 m³ per tonne on a dry ash free basis) from 390 down to 435m in the lower Walloon Coal Measures sequence or Taroom coal section. The Meenawarra 3 well demonstrated the lateral extent of the gassy coals first encountered in the Meenawarra 1 hole. The Meenawarra 2 hole failed to intersect the Taroom coal package but subsequent work indicates that the hole may not have been drilled deep enough to penetrate the coals.

The JV is planning to drill additional delineation holes in late 2004 early 2005 to help locate another production pilot.

Mahalo Project - Bowen Basin, Queensland

ATP 337P, Comet Ridge earning 40%, Santos 30%, Origin CSG 30%

Comet Ridge funded the drilling of two core holes on the renamed Mahalo Project (previously referred to as the Comet Ridge Project) and by doing so has earned 20% equity in the farmin area. The first two holes were encouraging and Comet Ridge has elected to increase its interests to 40% in the project. The final form of the Second Phase work programme is under discussion with joint venture partners but it will likely take the form of two additional wells to further delineate the extent and permeability of the gas bearing coals and to evaluate the potential for early gas production at Mahalo. Timing of these new holes is dependent on the availability of a suitable drilling rig, which is, due to high levels of coal and coal seam gas exploration and development activity in Queensland, becoming an issue for all operators. The JV is optimistic that they will be able to secure a rig for drilling in the fourth quarter of 2004.

Somerby 1

Somerby 1, was the first of two core holes funded 100% by Comet Ridge as part of its earning commitment on part of ATP 337P (Figure 5). It was drilled in April 2004 to a total depth of 628.8m, to assess the opportunity for coal seam gas production from two coal sections in the Permian aged Bandanna and Mantuan Formations. As expected, the well encountered 7.1 m of gassy coal in the Bandanna Formation. The coals were fully cored and were submitted for gas content measurements. Gas contents were found to be around 5 $m^3$ per tonne on a dry ash free basis (DAF).

A drill stem test was conducted over the coal interval from 257 to 274.12m. Engineering analysis of the pressures recorded during the test reveals that the coals were damaged during drilling and that they have sufficient permeability (2 to 10 md) to warrant further investigation. (Coals are particularly susceptible to drilling fluids entering their pore and fracture systems creating a blockage around the well bore).

The coals of the deeper objective Mantuan Formation were found to be poorly developed and did not warrant testing in this well. The well was plugged and abandoned as planned.

Mahalo 1

Mahalo 1 is located 5km to the northwest of Somerby 1 (Figure 5). The hole was drilled to a total depth of 551 m as a second test of the Bandanna and Mantuan Formations. Over 7m of net coal was intersected between 198.24 to 205.4m in the Bandanna Formation. The coals were fully cored and submitted for gas content analysis. Measured gas contents were relatively low at around 4 $m³$ per tonne (DAF), however, following the coring operation, strong gas shows were observed in the drilling mud requiring the mud density to be increased. This indicates that the coals are saturated with gas and that free gas, i.e. gas that is not bound to the coals exists in the fracture/cleat system.

Due to the probable presence of free gas a planned drill stem test of the interval could not be conducted safely with the equipment on location (core rig) and was cancelled. This interval will be evaluated in later drilling.

The coals of the deeper objective Mantuan Formation were again found to be poorly developed and did not warrant testing in this well. The well was plugged and abandoned as planned.

Shallow Gas Play - Surat Basin, New South Wales

PEL 427, Comet Ridge 100%

Comet Ridge drilled its first operated well, Bellata 2, in PEL 427 in New South Wales. This well was drilled as a commitment well to follow up gas shows encountered in shallow sandstone reservoirs in a core hole drilled by the New South Wales Dept of Mineral Resources. Only minor gas shows were observed and the well was plugged and abandoned at 656 metres. The well was drilled on budget and with no safety, health or environmental incidents.

Comet Ridge has applied for the renewal of this permit which expires in June as it still believes there to be potential for both shallow gas and deeper coal seam gas in the southern part of the permit.

Figure 5

Mahalo Project - ATP 337P Location of Comet Ridge Earning Wells Mahalo 1 and Somerby 1 on Top Bandanna Formation Structure Map

PEL 428, Comet Ridge 80%, Davidson Prospecting 20%

No operational activity occurred during the year. Comet Ridge has recently applied to renew the permit that expires in September, 2004.

PSPA 9, Comet Ridge 50%, ACM 50%

Comet Ridge and partner Australian Coalbed Methane (ACM) applied for PSPA 9, a Special Prospecting Licence which provides a 12 month period in which to studies prior to applying for a full exploration licence, to evaluate the potential for shallow biogenic gas to occur in the Eromanga/Surat Basin sequence in the northern part of New South Wales. A review of the sparse well and seismic control plus some water bore sampling has been conducted to date. A further 6 or so wells are programmed to be sampled in the near term.

Galilee Basin Play - Galilee Basin, Queensland

ATP's 743P and 744P, Comet Ridge 100%

In March 2003, Strike Oil was advised by the Queensland Department of Natural Resources that it was the successful applicant for two large permits in the Galilee Basin in Central Queensland, namely ATP's 743P and ATP 744P. As of 30 June 2004 these permits have still not been awarded due to native title issues.

As the permits have yet to be offered and awarded, Comet Ridge does not have any expenditure commitments associated with these permits.

Environment and Occupational Health and Safety

All operations conducted during the year, whether operated or non-operated, were incident free.

The Company is in the process of retaining health and safety and environmental consultants to review and update its Health, Safety and Environment Management System to ensure that the system is workable, up-to-date with new regulations and consistent with the Company's business strategy and policies.

INTRODUCTION

The Board of Directors of Comet Ridge Limited is responsible for the corporate governance of the Company. The Board guides and monitors the business of Comet Ridge on behalf of shareholders, by whom they are elected and to whom they are accountable. The Board is responsible for setting corporate direction, defining policies and monitoring the business of the Company, to ensure it is conducted appropriately and in the best interests of shareholders.

Comet has adopted systems of control and accountability as the basis for the administration of corporate governance.

The following additional information about the Company's corporate governance practices is set out on the Company's website at www.cometridge.com.au :

$(a)$ Board Charter, including details of materiality threshold;
$(b)$ summary of policy and procedure for selection and appointment of new directors;
$(c)$ summary of code of conduct for directors and key executives;
$(d)$ code of conduct for the Company;
$(e)$ summary of policy on securities trading;
$(f)$ policy and procedure for selection of external auditor and rotation of audit engagement partners;
summary of policy and procedures for compliance with continuous disclosure requirements; $(g)$
$(h)$ summary of arrangements regarding communication with and participation of shareholders;
$(i)$ summary of Company's risk management policy and internal compliance and control system; and
$(i)$ summary of process for performance evaluation of the Board, Board committees, individual directors and key executives.

CORPORATE GOVERNANCE DISCLOSURES

During the period ended 30 June 2004 (the Reporting Period) the ASX Corporate Governance Council developed a set of guidelines, Principles of Good Corporate Governance and Best Practice Recommendations. This document articulates 10 core principles that the ASX Corporate Governance Council believes underlie good corporate governance, together with best practice recommendations. The Company has complied with each of the Ten Essential Corporate Governance Principles and the corresponding Best Practice Recommendations as published by the Australian Stock Exchange Corporate Governance Council, other than in relation to the matters specified below.

INDEPENDENCE OF BOARD

The recommendations state a majority of the Board should be independent directors. The Board considers two out of four directors to be independent (Jeffrey Schneider and Gillian Swaby).

The Board notes that Mr Schneider and Ms Swaby do not strictly satisfy the test of independence as set out in the recommendations, however, the Board's reasons for considering the two directors to be independent are set out below under the heading "Identification of Independent Directors". The Board considers that its current structure is appropriate to efficiently and independently carry out its functions, given the size and level of its current activities. Its independent directors form the Audit Committee and the Remuneration Committee.

NOMINATION COMMITTEE

There is no formal Nomination Committee. The full Board considers those matters and issues arising that would usually fall to a Nomination Committee. The Board considers that no efficiencies or other benefits would be gained by establishing a separate Nomination Committee.

WRITTEN CODE OF CONDUCT AND SECURITIES TRADING POLICY

There was no written Code of Conduct or Securities Trading Policy prior to 20^th May 2004. Although there was no written policy on these areas prior to the final quarter of the 2003/2004 financial year, the Board considers its business practices, as led by the example of Board and key executives, were the equivalent of a Code of Conduct. The Company documented these practices and principles into a written code which was adopted by the Board during the final quarter of the 2003/2004 financial year. The Company is therefore now in compliance and expects to continue to be in compliance in the 2004/2005 financial year.

AUDIT COMMITTEE

There was no Audit Committee prior to 20^th May 2004. The Company was registered in August 2003 and its main activities were focussed on preparing for listing on ASX. Subsequent to the listing on ASX an audit committee was created. As this occurred prior to the end of the Company's first financial year the Audit Committee was available to review activities since incorporation.

The Audit Committee does not meet the requirements for composition in that there are only two members (rather than three) of the Audit Committee. The Board considers it a priority to restrict membership of the Audit Committee to independent directors. Accordingly, due to the current structure of the Board, only Ms Swaby and Mr Schneider are eligible to be members of the Audit Committee. The Board considers the composition of the Audit Committee satisfactory to properly discharge the duties of the Audit Committee.

Mr Schneider has over 30 years of experience in various management and executive roles in the resource industry, and is therefore well qualified by his industry knowledge to form the Audit Committee. In addition, Mr Schneider has acquired financial literacy through his relevant academic qualifications.

Ms Swaby has over 20 years experience in the Australian mining and exploration industry. Further, she has gained financial expertise through her academic qualifications and practical experience in management accounting and corporate financial management.

Prior to the establishment of the Audit Committee in the last quarter of the Reporting Period, the full Board carried out the function of the Audit Committee. Accordingly, there were no formal meetings of the Audit Committee during the Reporting Period.

The Board intends to appoint another member to the Audit Committee once another non-executive director is appointed to the Board.

WRITTEN POLICIES AND PROCEDURES DESIGNED TO ENSURE ASX LISTING RULE DISCLOSURE REQUESTS

There were no written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements prior to 20^th May 2004. The Company was registered in August 2003 and its main activities were focussed on preparing for listing on ASX. Subsequent to the listing on ASX policies and procedures were documented and formally approved and adopted by the Board. The Company is therefore now in compliance and will continue to be in compliance in the 2004/2005 financial year.

SHAREHOLDER COMMUNICATION STRATEGY

The Company's shareholders communication strategy was designed and disclosed in a formal way on 20^th May 2004. The Company has a positive strategy to communicate with and actively promote shareholder involvement in the Company by maintaining and disclosing information on its website. The strategy was documented and disclosed in the last quarter of 2003/2004 financial year. The Company is therefore in compliance and will continue to be in compliance in the 2004/2005 financial vear.

WRITTEN POLICIES ON RISK OVERSIGHT AND MANAGEMENT

There were no written policies on risk oversight and management prior to 20^th May 2004. The Company has adopted a written strategy for risk management, which it will continue to develop and apply as the Company's business activities grow.

REMUNERATION COMMITTEE

There was no Remuneration Committee prior to 20^th May 2004. The structure of the Board during the majority of the 2003/2004 reporting period did not facilitate the creation of a remuneration committee. All matters of remuneration were determined by the Board in accordance with Corporations Act requirements, especially in respect of related party transactions. That is, no director participated in any deliberation regarding his or her own remuneration or related issues. The Remuneration Committee was formed in the last quarter of the 2003/2004 financial year and associated documentation prepared.

CODE OF CONDUCT

There was no disclosed code of conduct prior to 20^th May 2004. Although there was no disclosed Code of Conduct during the majority of the 2003/2004 financial year the Board considers its business practices, as led by the example of the Board and key executives, were the equivalent of a Code of Conduct. The Company documented these practices and principles into a written Code of Conduct which was adopted by the Board during the last quarter of the 2003/2004 financial year and disclosed. The Company is therefore now in compliance and will continue to be in compliance in the 2004/2005 financial year.

SKILLS, EXPERIENCE, EXPERTISE AND TERM OF OFFICE OF EACH DIRECTOR

A profile of each director containing the applicable information is set out in the Directors' Report.

IDENTIFICATION OF INDEPENDENT DIRECTORS

Mr Schneider is on the Board of Directors of Strike Oil Ltd, a major shareholder of the Company. As a result he does not fall within the criteria of independence as set out in paragraph 2.1 of the Principles of Good Corporate Governance and Best Practice Recommendations as published by the ASX Corporate Governance Council ("Independence Criteria"). However, he fulfils the other Independence Criteria. The Board of Comet Ridge (in the absence of Mr Schneider) considers he is capable of making decisions and taking actions which are designed to be in the best interests of the Company, and therefore considers him to be independent. The Board notes the potential for conflict in matters where Strike Oil Limited is involved and recognises that in such circumstances Mr Schneider would declare such interest and not participate in the decision making process unless otherwise sanctioned by the Board, as is required under the Corporations Act.

Through her consultancy company, Strategic Consultants Pty Ltd, Ms Swaby provides company secretarial services and has been involved in the preparation of financial statements for the Company. In this regard, Ms Swaby fulfils a quasi-executive role, and does not meet paragraphs 2 and 3 of the Independence Criteria. Ms Swaby is not a shareholder of the Company and meets all of the other Independence Criteria. Having regard to issues of materiality, the Board, in the absence of Ms Swaby, considers that Ms Swaby's consultancy relationship with the Company does not impede her ability to act in the best interests of the Company. Furthermore, Ms Swaby no longer has a significant role in the preparation of the Company's financial accounts as this function is now fulfilled by an executive in a dedicated finance and administration role. For these reasons the Board considers Ms Swaby to be independent.

STATEMENT CONCERNING AVAILABILITY OF INDEPENDENT PROFESSIONAL ADVICE

If a director considers it necessary to obtain independent professional advice to properly discharge the responsibility of his/her office as a director then, provided the director first obtains approval for incurring such expense from the chairman, the Company will pay the reasonable expenses associated with obtaining such advice.

CONFIRMATION WHETHER PERFORMANCE EVALUATION OF THE BOARD AND ITS MEMBERS HAVE TAKEN PLACE AND HOW CONDUCTED

Given the recent registration and listing of the Company, a formal evaluation of the Board and its members was not considered necessary. To the extent that an informal evaluation took place, the Board identified the need to appoint a fifth (independent non-executive) director, which appointment the Company anticipates will occur in the Company's 2004/2005 financial year. In the Company's 2004/2005 financial year, the Chairman intends to conduct an evaluation process by undertaking an informal review of the operation of the Board.

COMPANY'S REMUNERATION POLICIES

Mr Lydyard receives a salary for services he provides to the Company in an executive capacity. The salary comprises cash and statutory superannuation contributions, and reimbursement of expenses. Mr Lydyard was allocated a one-off issue of options upon entering into the contract for his employment as Managing Director. He is also eligible to be allocated share issues upon the Company attaining specific performance-related milestones. He does not receive separate remuneration for his role as a Company director.

Mr Ashton, Ms Swaby and Mr Schneider each receive a fixed fee for their services as directors. The Company constitution provides that directors may collectively be paid a fixed sum not exceeding the aggregate maximum per annum from time to time as determined by the Company. A director may be paid fees or other amounts as the directors determine where a director performs special duties or otherwise performs services outside the scope of the ordinary duties of a director.

Other than the remuneration payable to Mr Lydyard as detailed above, there is no direct link between remuneration paid to directors and corporate performance such as bonus payments for achievement of certain key performance indicators. However corporate performance is one of a number of factors considered by directors when reviews of remuneration are carried out.

NAMES OF REMUNERATION COMMITTEE MEMBERS AND THEIR ATTENDANCE AT COMMITTEE MEETINGS.

Jeffrey Schneider and Gillian Swaby are the members of the Remuneration Committee. Mr Schneider is the Chairperson. Given the recent formation of the Company, formal meetings of the Remuneration Committee have not been considered necessary. It is expected that the Remuneration Committee will formally convene during the Company's 2004/2005 financial year.

EXISTENCE AND TERMS OF ANY SCHEMES FOR RETIREMENT BENEFITS FOR NON-EXECUTIVE DIRECTORS

There are no termination and retirement benefits for non-executive directors.

The Directors present their report on Comet Ridge Limited for the period ended 30 June 2004. The Company was incorporated on 23 August 2003 and listed on the Australian Stock Exchange on 19 April 2004.

The names of Directors in office at any time during or since the end of the financial period are as follows:-

Jeff Schneider (Chairman and Non-Executive)

B.Com

Appointed Director 23 August 2003

Jeff Schneider has over 30 years experience in the resource industry in Australia having graduated from the University of Western Australia with a Bachelor of Commerce in 1972.

Jeff worked for Woodside Petroleum Limited (Woodside) in a number of roles from 1978 to 2002 culminating in the role of Director Australian Gas. He was responsible for the Sunrise gas project and Woodside's developing natural gas business in eastern Australia. Jeff was also involved in the Woodside response to the Shell takeover offer.

In November 2002 Jeff left Woodside to pursue other interests. This included appointment as an Executive Director of Strike Oil Limited (Strike). Jeff's responsibilities at Strike included commercialisation of the Casino gas discovery in the Otway Basin. Jeff was appointed Chairman of Strike Oil Limited in July 2003.

Andrew Lydyard (Managing Director)

B.App Sc (Applied Geology)

Appointed Director 1 October 2003

The Company's Managing Director, Andy Lydyard has 23 years technical and managerial experience in the oil and gas business with 13 years spent in North America. He has a broad range of technical and managerial experience in the oil and gas industry.

Andy has extensive experience in the development and production of coal seam gas operations in the San Juan and Powder River Basins in the USA where he was previously Vice President, Coal Seam Gas Business Unit for J.M. Huber Corporation. He was instrumental in building a substantial coal seam gas business for J.M. Huber Corporation.

Andy was specifically recruited in early 2001 to build an Australian coal seam gas business for Strike Oil Limited and was appointed Managing Director of Comet on 17^th October 2003.

Simon Ashton (Non Executive Director)

B.Sc (Hons), M.Sc. MBA

Appointed Director 23 August 2003

Simon Ashton has over 30 years experience in the Australian and international petroleum industry. Simon worked for WMC Limited (WMC) from 1974 where he held various positions in WMC's nickel, coal and petroleum businesses. From 1987 to 1991, Simon was responsible for establishing WMC's USA petroleum subsidiary, Greenhill Petroleum Corporate, where he served as Senior Vice President in Houston, Texas. In 1991 he returned to Australia with WMC and was Manager, International New Business-Petroleum Division, when he left the company in 1996. In 1997 he co-founded Strike Oil Limited where he is currently Managing Director.

Gillian Swaby (Non Executive Director, Company Secretary)

B.Bus, FCSA, FAICD

Appointed Director 9 January 2004

Gill Swaby has been involved in the Australian mining and exploration industry for over 20 years. Gill is experienced in areas of corporate secretarial practice, corporate law, management accounting and corporate and financial management and is a fellow of the Chartered Institute of Company Secretaries and a fellow of the Australian Institute of Company Directors. She is the principal of Strategic Consultants Pty Ltd, corporate advisers, and is a regular course presenter on corporate secretarial matters.

PRINCIPAL ACTIVITY

The Principal activity of Comet Ridge Limited during the financial period was coal seam gas exploration.

RESULTS OF OPERATIONS

The operating loss of the Company after income tax was \$382,345.

DIVIDENDS

No dividend has been paid during the financial period and no dividend is recommended for the current year.

REVIEW OF OPERATIONS

A review of the Company's activities is set out in the accompanying review of operations.

SIGNIFICANT CHANGES TO THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Company during the financial period not otherwise disclosed in this report.

MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL PERIOD

There has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect substantially the operations of the Company, the results of these operations or the state of affairs of the Company in subsequent financial periods with the exception of those matters disclosed in Note 19 to the financial statements.

ENVIRONMENTAL REGULATIONS

The Company is subject to significant environmental regulation in respect to its exploration.

The Company aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and is in compliance with all environmental legislation. The Directors of the Company are not aware of any breach of environmental legislation for the financial period under review.

DIRECTORS' INTERESTS

At the date of this report, the interests of the Directors in the shares and options of the Company were as follows:-

	Fully Paid	Options*
	Shares
Mr J Schneider	419,563	200,000
Mr A Lydyard	900,000	3,000,000
Mr S Ashton	2,000,000	200,000
Ms G Swaby	$\overline{a}$	100,000

* exercisable at 20c on or before 1 December 2006.

OPTIONS OVER UNISSUED SHARES

The total number of options issued during the financial period and remaining on issue at the date of this report is as follows:-

Number of Options	Exercise Price	Expiry Date
5.350.000	\$0.20	1 December 2006

LIKELY DEVELOPMENTS

Likely future developments in the operations of the Company are referred to in the accompanying Review of Operations.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors held during the period ended 30 June 2004 and the number of meetings attended by each Director.

	Number of Meetings	Number of Meetings
	Entitled to Attend	Attended
Mr J Schneider	14	14
Mr A Lydyard	14	14
Mr S Ashton	14	13
Ms G Swaby	8	8

DIRECTORS' AND EXECUTIVE OFFICERS' EMOLUMENTS

Disclosure in relation to Directors' and Executive Officers' emoluments have been included in Note 17 of the financial statements.

INDEMNITIES AND INSURANCE

During the period the company paid an insurance premium of \$33,547 to insure certain officers of the Company and related bodies corporate. The officers of the Company covered by the insurance policy include the Directors named in this report.

The Directors' and Officers' Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Company or a related body corporate. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover is subject to a confidentiality clause under the insurance policy.

INDEMNITIES AND INSURANCE cont.

The Company has entered into an agreement with the Directors and certain officers to indemnity these individuals against claims and related expenses, which arise as a result of work completed in their respective capacities.

Neither the Company nor any of its related bodies corporate have provided any insurance for an auditor of the Company or a related body corporate.

DATED at Perth this 28^th day of September 2004.

Signed in accordance with a resolution of Directors

rdy and

A Lydyard Managing Director

Comet Ridge Limited STATEMENT OF FINANCIAL POSITION

as at 30 June 2004

	Notes	2004
		\$
CURRENT ASSETS
Cash	4	3,139,558
Receivables	5	77,995
Other	6	12,260
TOTAL CURRENT ASSETS		3,229,813

NON CURRENT ASSETS
Exploration and Evaluation Expenditure	$\overline{7}$	4,594,580
Property, Plant and Equipment	8	9,474
TOTAL NON CURRENTS ASSETS		4,604,054

TOTAL ASSETS		7,833,867

CURRENT LIABILITIES
Payables	9	218,609
Provisions	10	13,799
TOTAL LIABILITIES		232,408
NET ASSETS		7,601,459

EQUITY
Contributed Equity	11	7,983,804
Accumulated Losses	12	(382, 345)
TOTAL EQUITY	15	7,601,459

The above Statement of Financial Position should be read in conjunction with the accompanying notes

Comet Ridge Limited STATEMENT OF FINANCIAL PERFORMANCE

for the period ended 30 June 2004

	Notes	2004
		\$
Revenue from ordinary activities	$\overline{2}$	66,240
Depreciation expense	3	(1,672)
Other expenses	3	(446, 913)
Loss from ordinary activities before income tax	3	(382, 345)
Income tax expense	14
Net loss attributable to the members of Comet Ridge
Limited	15	(382, 345)
Total changes in equity other than those resulting from
transactions with owners as owners	15	(382, 345)

		Cents
Basic earnings per share	18	(1.429)
Diluted earnings per share	18	(1.429)

The above Statement of Financial Performance should be read in conjunction with the accompanying notes.

Comet Ridge Limited STATEMENT OF CASH FLOWS for the period ended 30 June 2004

	Notes	2004
		\$
Cash flows from operating activities
Payments to suppliers and employees		(454, 345)
Interest received		66,240
Net cash used in operating activities	20	(388, 105)
Cash flows from investing activities
Exploration and evaluation expenditure		(2,894,995)
Payments for property, plant and equipment		(11, 146)
Net cash used in investing activities		(2,906,141)
Cash flows from financing activities
Proceeds from issue of ordinary shares		7,003,671
Payment of share issue costs		(569, 867)
Net cash provided by financing activities		6,433,804
Net increase in cash held		3,139,558
Cash at the beginning of the financial period
Cash at the end of the financial period	4	3,139,558

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

1. STATEMENT OF ACCOUNTING POLICIES

(A) Basis of Accounting

This general purpose financial report has been prepared in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act 2001.

It is prepared on an accruals basis and is based on historical costs and does not take into account changing money values or, except where stated, current valuations of non current assets. Cost is based on the fair values of the consideration given in exchange for assets.

Comet Ridge Limited is a public company registered and domiciled in Australia. The Company listed on Australian Stock Exchange Limited on 19th April 2004. As the Company is in its first year of operation, comparatives have not been presented.

The following is a summary of the material accounting policies adopted by the Company in the preparation of the financial report. The accounting policies have been consistently applied unless otherwise stated.

(B) Exploration, Evaluation and Development Expenditure

Costs incurred during the exploration, evaluation and development stages of specific areas of interest are accumulated. Such costs are written off unless the Directors consider that the costs are expected to be fully recouped through the successful development of the project, or where activities to date have not reached a stage to allow reasonable assessment regarding the existence of economically recoverable reserves. Costs are written off as soon as a project has been abandoned or is considered to be non-commercial.

A regular review is undertaken of each areas of interest to determine the appropriateness of continuing to carry forward costs in relation to that areas of interest.

Expenditure is not carried forward in respect of any area of interest unless the Company's rights of tenure to that area of interest are current. Once production commences, expenditure accumulated in respect of areas of interest will be amortised on a unit of production basis against the economically recoverable resources.

1. STATEMENT OF ACCOUNTING POLICIES cont

For the purposes of the Statements of Cash Flows, cash includes deposits, which are readily convertible to cash on hand and which are used in the cash management function on a dayto-day basis, net of outstanding bank overdrafts.

(D) Valuation of Non-Current Assets

The carrying amounts of non-current assets are reviewed to determine whether they are in excess of their recoverable amounts at balance date. If the carrying amount of a non-current asset exceeds the recoverable amount, the asset is written down to the lower amount. Unless otherwise stated, in assessing recoverable amounts, the relevant cash flows have not been discounted to their present value.

(E) Farm-out Arrangements

Where part of an interest is farmed out in consideration of the farminee(s) undertaking to incur further expenditure on behalf of both the farminee(s) and the entity in the area of interest, exploration expenditure incurred and carried forward prior to farmout continues to be carried.

(F) Employee Benefits

Liabilities for wages and salaries and annual leave are recognised and are measured as the amounts expected to be paid when the liabilities are settled.

(G) Income Tax

Tax effect accounting procedures are followed whereby the income tax expense in the statement of financial performance is matched with the accounting profit/(loss) after allowing for permanent differences. The future tax benefit relating to tax losses is not carried forward as an asset unless the benefit is virtually certain of realisation. Income tax on cumulative timing differences is set aside to the deferred income tax or the future income tax benefit accounts at the rates which are expected to apply when those timing differences reverse.

(H) Joint Ventures

(i) Joint Venture Operations

The proportionate interests in the assets, liabilities and expenses of a joint venture operation have been incorporated in the financial statements under the appropriate headings. Details of the joint ventures are set out in Note 22.

1. STATEMENT OF ACCOUNTING POLICIES cont

(H) Joint Ventures cont
(ii) Where part of a joint venture interest is farmed out in consideration of the farminee undertaking to incur further expenditure on behalf of both the farminee and the entity in the joint venture area of interest, exploration expenditure incurred and carried forward prior to farmout continues to be carried forward without adjustment, unless the terms of the farmout are excessive based on the diluted interest retained. Any cash received in consideration for farming out part of a joint venture interest is treated as a reduction in the carrying value of the related mineral property.
(I) Revenue Recognition

Interest revenue is recognised on a proportionate basis taking into account the interest rates applicable to the financial assets.

(J) Receivables

All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 30 days. Collectibility of trade debtors is reviewed on an ongoing basis. Receivables which are known to be uncollectible, are written off. A provision for doubtful debts is raised when some doubt as to collection exists.

(K) Trade and Other Creditors

These amounts represent liabilities for goods and services provided to the Company prior to the end of the financial year and which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition.

(L) Depreciation of Property Plant and Equipment

Depreciation is calculated on a straight line basis to write off the net costs or re-valued amount of each item of property plant and equipment over its expected useful life. The expected useful lives are as follows:

Furniture and Fittings	$7 - 8$ years
Plant and Equipment	$3 - 4$ vears
Computer and Equipment	$3 - 4$ years

1. STATEMENT OF ACCOUNTING POLICIES cont

$(M)$ Acquisition of Assets

The purchase method of accounting is used for all acquisitions of assets regardless of whether equity instruments or other assets are acquired. Cost is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their market price as at the acquisition date, unless the notional price at which they could be placed in the market is a better indicator of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

$(N)$ Earnings Per Share

Basic earnings per share i).

Basic earnings per share is determined by dividing net profit or loss after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial period, adjusted for bonus elements in ordinary shares issued during the period.

ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

1. STATEMENT OF ACCOUNTING POLICIES cont

$(O)$ Adoption of Australian Equivalents to International Financial Reporting Standards

Australia is currently preparing for the introduction of International Financing Reporting Standards (IRFS) effective for financial periods commencing 1 January 2005. This requires the production of accounting data for future comparative purposes at the beginning of the next financial year.

The Company's management is assessing the significance of these changes and preparing for their implementation. An IFRS committee has been established to oversee and manage the Company's transition to IFRS. We will seek to keep stakeholders informed as to the impact of these new standards as they are finalised. The directors are of the opinion that they key difference in the Company's accounting policies which will arise from the adoption of IFRS are:

Impairment of Assets

The Company currently determines the recoverable amount of an asset on the basis of undiscounted net cash flows that will be received from the assets use and subsequent disposal. In terms of AASB 136: Impairment of Assets, the recoverable amount of an asset will be determined as the higher of fair value less costs to sell and value in use. It is likely that this change in accounting policy will lead to impairment being recognised more often than under the existing policy.

Income Tax

Currently, the Company adopts the liability method of tax-effect accounting whereby the income tax expense is based on the accounting profit/loss adjusted for any permanent differences. Timing differences are currently brought to account as either a provision for deferred income tax or future income tax benefit. Under AASB 112: Income Taxes, the Company will be required to adopt a balance sheet approach under which temporary differences are identified for each asset and liability rather than the effects of the timing and permanent differences between taxable income and accounting profit.

1. STATEMENT OF ACCOUNTING POLICIES cont

The Company also has carried forward income tax losses which have not been recognised as deferred tax assets as they do not satisfy the 'virtually certain' test under current Australian Accounting Standards. Under AASB 112, it will be easier to recognise these tax losses as deferred tax assets due to the recognition test being based on whether it is 'probable' that the loses will be recovered.

Share-based Payment

Share based compensation forms part of the remuneration of employees of the Company as disclosed in the notes to the financial statements. The Company currently does not recognise an expense for any share-based compensation granted. Under AASB 2: Share-Based Payment, the Company will be required to recognise an expense for such share-based compensation. Share-based compensation is measured at the fair value of the share options determined at grant date and recognised over the expected vesting period of the options. A reversal of the expense will be permitted to the extent that non-market based vesting conditions such as service, are not met.

Extractive Industries

The International Accounting Standards Board is yet to release an IFRS based on Exposure Draft 6 "Exploration for and Evaluation of Mineral Resources". There remains uncertainty whether or not deferred exploration expenditure can continue to be capitalised.

Comet Ridge Limited

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2004

		2004
		\$
2.	REVENUE
	Interest received - other persons	66,240
3.	LOSS FROM ORDINARY ACTIVITIES
	Loss from ordinary activities before income tax expense
	includes the following specific expenses:-
	Depreciation
	-Property, plant and equipment	1,672
	Other Expenses:-
	- Employee expenses (including Directors' fees)	230,502
	- Insurance	38,400
	- Corporate advisory	25,000
	- Administration costs	22,500
	- Travel and accommodation	10,598
	- Corporate and compliance costs	63,334
	- Advertising and communications	12,327
	- Other	44,252
		446,913
4.	CASH
	Cash at bank and on hand	3,139,558
5.	CURRENT RECEIVABLES
	Sundry debtors	77,995
6.	OTHER CURRENT ASSETS
	Prepayments	12,260

Comet Ridge Limited

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2004

		2004
		S
7.	EXPLORATION AND EVALUATION EXPENDITURE
	Costs carried forward in respect of areas of interest in:-
	- exploration and evaluation phase	4,594,580
	The ultimate recoupment of costs carried forward for exploration and
	evaluation phases is dependent on the successful development and
	commercial exploitation or sale of the respective areas.

8.	PROPERTY, PLANT AND EQUIPMENT
	Office furniture and equipment at cost	11,146
	Less provision for depreciation	(1,672)
		9,474
	Movements:-
	Balance at the beginning of the period
	Additions	11,146
	Depreciation expense (Note 3)	(1,672)
	Balance at the end of the period	9,474

9.	CURRENT PAYABLES
	Trade creditors and accruals	218,609

	10. PROVISIONS
	Employee entitlements (Note 24)	13,799

CONTRIBUTED EQUITY 11.				2004
			Number	\$
Share Capital a)
Fully Paid Ordinary Shares			61,158,240	7,983,804
Movements b)	Date	Number of Shares	Issue Price	Total \$
Subscriber Shares	Aug 2003	100	\$1.00	100
Share Reconstruction	Oct 2003	12,500,000
Share Issue	Dec 2003	500,000	\$0.001	500
Placements	Dec 2003	15,408,240	\$0.13	2,003,071
Vendor Shares	April 2004	7,750,000	\$0.20	1,550,000
Public Float	April 2004	25,000,000	\$0.20	5000,000
Less share issue costs				(569, 867)
Total issued capital at
end of financial period		61,158,240		7,983,804

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. At shareholders' meetings each ordinary share is entitled to one vote.

(c) Options

The total number of options issued during the financial period and remaining on issue as at 30 June 2004 is as follows:

Number of Options	Exercise Price	Expiry Date
5.350.000	\$0.20	1 December 2006

For information relating to share options issued to Executive Directors during the financial year, refer to Note 17.

Comet Ridge Limited

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2004

	2004
12. ACCUMULATED LOSSES	S
Accumulated losses at the beginning of the financial period	$\blacksquare$
Net loss attributable to members of Comet Ridge Limited	382.345
Accumulated losses at the end of the financial period	382.345

13. COMMITMENTS AND CONTINGENT LIABILITIES

The outstanding commitments as at 30 June 2004 are:

Exploration Permits – in order to maintain the permits in which the Company and other parties are involved, all parties are committed to meet the conditions under which the permits were granted in accordance with the relevant legislation in Australia. These commitments relate to permit rentals and the minimum expenditure requirements of the State Mines Departments attaching to the permits and are subject to re-negotiation upon expiry of the exploration permits or when application for a production licence is made. In 2004/2005, estimated outlays by the Company are \$731,675. Commitments beyond 2004/2005 are dependent upon whether existing rights of tenure are renewed, new rights of tenure are acquired and the level of farmouts negotiated.

14. INCOME TAX

a) The prima facie income tax benefit on the operating loss is reconciled to the income tax expense as follows:-

	2004
	\$
Operating loss before income tax	(382, 345)
Income tax benefit calculated at 30% of operating loss	(114, 704)
Add/(less) tax effect of permanent differences;
Non-deductible expenditure	635
Tax benefit not recognised	114.069

Income tax attributed to operating loss

14. INCOME TAX cont

		2004 s
	The Directors estimate that the potential future income tax benefit in b)
	respect of tax losses not brought to account calculated at 30% is:-	114,069
	The benefits of these income tax losses will only be obtained if:- assessable income is derived of a nature and of an (i) amount sufficient to enable the benefit from the deductions to be realised; (ii) conditions for deductibility imposed by the law are complied with; and (iii) no change to legislation adversely affects the Company in realising the benefit from the deductions for the losses.
15.	EQUITY
	Total equity at the beginning of the period
	Total changes in equity recognised in the statement of financial performance	(382, 345)
	Transactions with owners as owners:
	Contribution of equity, net of transaction costs	7,983,804

	Total equity at the end of the financial period	7,601,459

16. AUDITORS' REMUNERATION

	2004
	\$
Audit Services:
Fees paid to HLB Mann Judd
Remuneration for audit and review of the financial reports and other audit
work under the Corporations Act 2001	5,000

Advisory Services:
Fees paid to HLB Mann Judd
Preparation of Investigating Accountant's Report	8.500

It is the Company's policy to employ HLB Mann Judd on assignments additional to their statutory audit duties where HLB Mann Judd's expertise and experience with the Company is important. These assignments are principally tax compliance and, in the 2004 financial year, preparation of the Investigating Accountant's Report for the Company's Initial Public Offering.

17. DIRECTOR AND EXECUTIVE DISCLOSURES

a) Names and positions held of directors and specific executives in office at any time during the financial year are:

Directors

Mr Jeffrey Schneider	Chairman	Non Executive
Mr Andy Lydyard	Managing Director	Executive
Mr Simon Ashton	Director	Non Executive
Ms Gillian Swaby	Director	Non Executive

Specific Executives

Due to the size of the Company and its current level of operations, there are no executives other than the Managing Director, Mr A Lydyard, whose details are included under 'Directors'.

17. DIRECTOR AND EXECUTIVE DISCLOSURES cont

b) Directors' Remuneration

	Primary	Post-employment	Total
2004	Salary and Fees	Superannuation

Mr Jeffrey Schneider	17,500	1,575	19.075
Mr Andrew Lydyard	128,750	11,587	140,337
Mr Simon Ashton	17,500	1,575	19,075
Ms Gillian Swaby	42,500*	1,575	44,095

* The fees relate to the role performed by Ms Swaby in her capacity both as a Director and Company Secretary

Amounts disclosed for remuneration of Directors exclude insurance premiums of \$33,547 paid by the Company in respect of directors' and officers' liability insurance contracts as the contracts do not specify premiums paid in respect of individual directors and officers. Information relating to the insurance contracts is set out in the Directors' Report.

c) Remuneration Options

Options granted as remuneration

	Number	Number	Grant	Value per	Exercise	Expiry
	Granted	Vested	Date	Option at	Price	Date
				Grant Date
Mr A Lydyard	3,000,000	$\sim$	15/01/04	5 cents	20 cents	1/12/06

The assessed fair value at grant date of options was independently determined using a Black-Scholes option pricing model and was approved by shareholders in accordance with the Corporations Act 2001. The options vest in four equal tranches on 19/10/04, 19/04/05, 19/10/05 and 19/04/06.

17. DIRECTOR AND EXECUTIVE DISCLOSURES cont

d) Directors' Optionholdings

Number of options held by Specified Directors

	Opening	Granted	Other	Balance	Total Vested
	Balance	as Remuneration	Changes	at	& Exercisable
				30/6/04	at Year End
Mr Jeffrey Schneider	$\tilde{a}$	$\tilde{\phantom{a}}$	200,000	200,000	200,000
Mr Andrew Lydyard	$\overline{\phantom{a}}$	3,000,000	$\mathcal{M}$	3,000,000
Mr Simon Ashton	$\overline{a}$	$\overline{\phantom{a}}$	200,000	200,000	200,000
Ms Gillian Swaby	$\overline{\phantom{a}}$	w.	100,000	100,000	100,000

e) Directors' Shareholdings

Number of fully paid shares held by Specified Directors'

	Opening Balance	Other Changes	Balance at
			30/6/04
Mr Jeffrey Schneider	$\overline{\phantom{a}}$	419,563	419,563
Mr Andrew Lydyard	$\overline{\phantom{a}}$	900,000	900,000
Mr Simon Ashton	$\overline{\phantom{a}}$	2,000,000	2,000,000
Ms Gillian Swaby	$\mathbf{r}$	$\blacksquare$

The particulars of Directors' interests in shares and options are as at 30 June 2004.

f) Remuneration Practices

The Company's policy for determining the nature and amount of emoluments of board members and senior executives of the Company is as follows:

Remuneration levels are competitively set to attract the most qualified and experienced directors and senior executive officers.

The Non-Executive Directors receive fees in cash. The fees are fixed and approved by shareholders and are not related to the performance of the Company. The Company's Constitution provides that directors may collectively be paid a fixed sum not exceeding the aggregate maximum per annum from time to time as determined by the Company. A director may be paid fees or other amounts as the directors determine where a director performs special duties or otherwise performs services outside the scope of the ordinary duties of a director.

17. DIRECTOR AND EXECUTIVE DISCLOSURES cont

f) Remuneration Practices cont

Mr A Lydyard has an employment contract with the Company for a two year period commencing 31 March 2004, pursuant to which he receives a salary and an entitlement to equity compensation based on corporate performance. The equity compensation will be subject to approval by shareholders. Therefore, enhanced Company performance will return a financial benefit to Mr A Lydyard.

If the employment contract is terminated by the Company for any reason other than A. Lydyard's bankruptcy, death, misconduct or breach of the employment contract, A. Lydyard is entitled to be paid his salary and entitlements for the balance of the term of the employment contract.

During the term of the employment contract and subject to the Corporations Act and the Listing Rules of Australian Stock Exchange Limited, the Company has also agreed to issue A Lydyard or nominee with fully paid shares on achievement of the milestones as set out in the schedule below:-

	Milestone	Bonus	Bonus Pricing Basis
$1_{-}$	The shares trade at 40	Shares to the value of \$200,000	Average share price for
	cents or more for 28		28 business days prior to
	consecutive business days.		issue of shares.
2.	Successful subsequent	Shares to the value of \$200,000	20 cents
	equity capital raising or
	raisings in excess of
	\$5,000,000 after the closing
	of the IPO.
3.	The shares trade at 60	Shares to the value of \$200,000	Average share price for
	cents or more for 28		28 business days prior to
	consecutive business days.		issue of shares.

18. EARNINGS PER SHARE

	2004
	Cents
Basic loss per share	(1.429)
	Number
Weighted average number of ordinary shares on issue during the period used in
calculation of basic earnings per share	26,754,238
	S
Numerator used in calculating basic earnings per share	(382, 345)

a) Options

Options as disclosed in Note 11 (c) are considered to be potential ordinary shares, however, they are not considered to be dilutive in nature as their exercise will not result in a diluted earnings per share that shows an inferior view of earnings performance of the Company than is shown by basic earnings per share.

19. EVENTS SUBSEQUENT TO BALANCE DATE

Comet Ridge Limited

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

for the period ended 30 June 2004

20. RECONCILIATION OF NET CASH USED IN OPERATING ACTIVITES TO LOSS FROM ORDINARY ACTIVITIES AFTER INCOME TAX

	2004
	\$
Loss from operating activities after income tax	(382, 345)
Depreciation	1,672
(Increase) in other debtors	(77, 995)
Increase in trade creditors	69,024
Increase in provisions	13,799
(Increase) in prepayments	(12,260)

Net cash used in operating activities	388,105

21. FINANCIAL INSTRUMENTS

The net fair values of financial assets and financial liabilities of the Company approximate their carrying values. The credit risk on financial assets of the Company, which have been recognised in the Statement of Financial Position, is the carrying amount, net of any provision for doubtful debts. The Company's exposure to interest rate risk is limited to that earned on cash which is deposited at a weighted average interest rate of 3%. All other financial assets and liabilities are non-interest bearing.

22. JOINT VENTURE INTERESTS

Interests in joint venture operations are as follows:-

Area	Working Interest 2004
Bowen Basin, QLD ATP 337P	40% (earning)
Surat Basin, QLD ATP 683P
- Dalby - Dalby South	20% 36.67%
- Millmerran	30%
ATP 689P	30%
Galilee Basin, QLD ATPA 743P ATPA 744P	Application Application
Surat-Gunnedah Basin, NSW PEL 427 PEL 428	100% 80%

* Denotes Comet is operator

The Company's aggregate interest in the assets and liabilities of each of these Joint Ventures is reflected in the following category in the financial statements:

	2004
	S
Non-current Assets
Exploration and evaluation expenditure capitalised	4.571.448

23. SEGMENT REPORTING

The Company operates in the coal seam gas industry in Australia.

24. EMPLOYEE ENTITLEMENTS

	2004 \$
Provision for Annual Leave
Aggregate employment entitlements liability	13,799

Employee numbers	Number

Average number of employees during the financial period	2

25 RELATED PARTY TRANSACTIONS

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties, unless otherwise stated.

Transactions with Related Parties:

During the financial period, an amount of \$14,500 was paid to an entity controlled by Ms G Swaby for consulting services in relation to the Company's IPO.

DIRECTORS' DECLARATION

The Directors declare that the financial statements and notes as set out on pages 35 to 56.

a) comply with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
b) give a true and fair view of the Company's financial position as at 30 June 2004 and of its performance, as represented by the results of its operations and its cash flows, for the financial period ended on that date.

In the Directors' opinion:

a) the financial statements and notes are in accordance with the Corporations Act 2001; and
b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Directors.

Signed at Perth this 28^th day of September 2004.

Shingday and

A Lydyard Managing Director

INDEPENDENT AUDIT REPORT

li)
Mann Judd

Chartered Accountants

INDEPENDENT AUDIT REPORT

To the members of COMET RIDGE LIMITED

Scope

The Financial Report and Directors' Responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration of Comet Ridge Limited ("the company") for the period ended 30 June 2004.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit Approach

We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing and Assurance Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects, the financial report presents fairly, in accordance with the Corporations Act 2001, Accounting Standards and other mandatory professional reporting requirements in Australia, a view which is consistent with our understanding of the company's financial position, and of its performance as represented by the results of its operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
assessing the appropriateness of the accounting policies and disclosures used and the Ŷ. reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

ats that we have an interventing the second of all interview and the HB Macs Lan tabland transform at the property that the

HEB Mann Judd (WA Partnership)

¹⁵ Macca Street West Peth SOCS, PC Bax 263 West Peth 6872 Western Australia, CK 238 Werth: Telephone +61 (08) 9481 0977, Pax +62 (08) 9481 3096. Email: [email protected]. Website: http://www.his.com.au

^.<br>Partent ut i Burten, Ang N Gorbosm, Loui Chondric, Unge W Curi, Lune V (Islansk, Cd & O Croth, New & Geoby Norma C. Gob, Ame ) Henrich

INDEPENDENT AUDIT REPORT

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit Opinion

In our opinion, the financial report of Comet Ridge Limited is in accordance with:

(a) the Corporations Act 2001, including:

giving a true and fair view of the financial position of Comet Ridge Limited as at 30 $(i)$ June 2004 and of its performance for the period then ended; and
complying with Accounting Standards in Australia and the Corporations Regulations ${ii}$ 2001; and

(b) other mandatory financial reporting requirements in Australia.

HLG Hamm Junde.

HLB MANN JUDD Chartered Accountants gratt omme

L di giallonardo Partner

Perth, Western Australia 28 September 2004

Comet Ridge Limited SHAREHOLDER INFORMATION

The shareholder information set out below was applicable at 21 September 2004.

1. NUMBER OF EQUITY HOLDERS

Ordinary Share Capital 61,158,240 fully paid ordinary shares are held by 499 Individual shareholders.

2. VOTING RIGHTS

In accordance with Company's Constitution, on a show of hands every shareholder present in person or by a proxy, attorney or representative of a shareholder has one vote and on a poll every shareholder present in person or by a proxy, attorney or representative has in respect of fully paid shares, one vote for every share held. No class of option holder has a right to vote, however the shares issued upon exercise of options will rank pari passu with the then existing issued fully paid ordinary shares.

3. DISTRIBUTION OF SHAREHOLDINGS

Holdings	No of
	Shareholders
$1 - 1,000$	0
1,001-5,000	5
5,001-10,000	99
10,001-100,000	315
100,001-Over	80

5 shareholders hold less than a marketable parcel.

SUBSTANTIAL SHAREHOLDERS 4.

The following information is extracted from the Company's Register of Substantial Shareholders:

Name	Number of Share Held	Percentage Interest
Strike Oil Limited	6.250.000	-10.2%

The above shareholdings are disclosed pursuant to Section 671B(3) of the Corporate Act 2001 but the relevant interests shown do not necessarily represent the beneficial interest in the share capital of the Company of parties concerned.

Comet Ridge Limited SHAREHOLDER INFORMATION

5. THE 20 LARGEST HOLDERS OF ORDINARY SHARES

Rank	Name	Number of	% Held
		Shares
1	Kolmar Ltd	8,993,779	14.71
2	Strike Oil Ltd	6,250,000	10.22
3	Perpetual Trustees Australia Ltd	2,526,154	4.13
4	Pontia Pty Ltd	2,000,000	3.27
5	S & Y Ashton Nominees Pty Ltd	2,000,000	3.27
6	Permanent Trustee Australia Ltd	1,852,377	3.03
7	Anzoil NL	1,500,000	2.45
8	ANZ Nominees Limited	1,322,400	2.16
9	Westpac Custodian Nominees Ltd	1,270,000	2.08
10	Nefco Nominees Pty Ltd	1,250,000	2.04
11	CF Smart Pty Ltd	1,000,000	1.64
12	Suparell Pty Ltd	1,000,000	1.64
13	Strike Energy Pty Ltd	927,773	1.52
14	Andrew and Cheryl Lydyard	900,000	1.47
15	Calm Holdings Pty Ltd	600,000	0.98
16	Invia Custodian Pty Ltd	557,797	0.91
17	CEP Holdings Ltd	520,299	0.85
18	Mark and Michelle Davies	500,000	0.82
19	Mr Guy Francois Le Clezio	500,000	0.82
20	Nike Holdings Pty Ltd	500,000	0.82
	Total	35,370,579	58.82

6. ESCROW PROVISIONS

9,864,020 fully paid shares and 1,250,000 unlisted options are restricted from trading until 19 April 2005.

16,278,864 fully paid shares and 4,100,000 unlisted options are restricted from trading until 19 April 2006.

AI assistant

COMET RIDGE LIMITED — Annual Report 2004

64686_rns_2004-09-29_7bdca717-b19b-4da1-b430-7c8c561a763f.pdf

2004 FINANCIAL STATEMENTS AND AGM

COMET RIDGE LIMITED

ANNUAL REPORT 2004

DIRECTORS

Company Secretary

REGISTERED OFFICE

AUDITORS

SOLICITORS TO THE COMPANY

SHARE REGISTRY

CONTENTS

CHAIRMAN'S LETTER TO THE SHAREHOLDERS

Dear Shareholder

CHAIRMAN'S LETTER TO THE SHAREHOLDERS

OVERVIEW OF OPERATIONS

Background

Strategy

Review of Operations

OVERVIEW OF OPERATIONS

Table 1 Holes drilled since August 2003

Highlights

OVERVIEW OF OPERATIONS

Future Outlook

Introduction

TABLE 3

Figure 2

Walloon Coal Measure Project, Surat Basin, SE Queensland

Tipton West, ATP683P, Dalby Block Comet Ridge 20%, Arrow Energy (Operator) 80%

Gas Sales Contracts

Meenawarra

ATP683P, Dalby S. Block, Comet Ridge 36.67%, Arrow Energy 62.33%

Mahalo Project - Bowen Basin, Queensland

ATP 337P, Comet Ridge earning 40%, Santos 30%, Origin CSG 30%

Somerby 1

Mahalo 1

Shallow Gas Play - Surat Basin, New South Wales

PEL 427, Comet Ridge 100%

Figure 5

Mahalo Project - ATP 337P Location of Comet Ridge Earning Wells Mahalo 1 and Somerby 1 on Top Bandanna Formation Structure Map

PEL 428, Comet Ridge 80%, Davidson Prospecting 20%

PSPA 9, Comet Ridge 50%, ACM 50%

Galilee Basin Play - Galilee Basin, Queensland

ATP's 743P and 744P, Comet Ridge 100%

Environment and Occupational Health and Safety

INTRODUCTION

CORPORATE GOVERNANCE DISCLOSURES

INDEPENDENCE OF BOARD

NOMINATION COMMITTEE

WRITTEN CODE OF CONDUCT AND SECURITIES TRADING POLICY

AUDIT COMMITTEE

WRITTEN POLICIES AND PROCEDURES DESIGNED TO ENSURE ASX LISTING RULE DISCLOSURE REQUESTS

SHAREHOLDER COMMUNICATION STRATEGY

WRITTEN POLICIES ON RISK OVERSIGHT AND MANAGEMENT

REMUNERATION COMMITTEE

CODE OF CONDUCT

SKILLS, EXPERIENCE, EXPERTISE AND TERM OF OFFICE OF EACH DIRECTOR

IDENTIFICATION OF INDEPENDENT DIRECTORS

STATEMENT CONCERNING AVAILABILITY OF INDEPENDENT PROFESSIONAL ADVICE

CONFIRMATION WHETHER PERFORMANCE EVALUATION OF THE BOARD AND ITS MEMBERS HAVE TAKEN PLACE AND HOW CONDUCTED

COMPANY'S REMUNERATION POLICIES

NAMES OF REMUNERATION COMMITTEE MEMBERS AND THEIR ATTENDANCE AT COMMITTEE MEETINGS.

EXISTENCE AND TERMS OF ANY SCHEMES FOR RETIREMENT BENEFITS FOR NON-EXECUTIVE DIRECTORS

Jeff Schneider (Chairman and Non-Executive)

B.Com

Appointed Director 23 August 2003

Andrew Lydyard (Managing Director)

B.App Sc (Applied Geology)

Appointed Director 1 October 2003

Simon Ashton (Non Executive Director)

B.Sc (Hons), M.Sc. MBA

Appointed Director 23 August 2003

Gillian Swaby (Non Executive Director, Company Secretary)

B.Bus, FCSA, FAICD

Appointed Director 9 January 2004

PRINCIPAL ACTIVITY

RESULTS OF OPERATIONS

DIVIDENDS

REVIEW OF OPERATIONS

COMET RIDGE LIMITED Annual Report 2004

li)
Mann Judd