COMET RIDGE LIMITED — Capital/Financing Update 2004

Dec 2, 2004

ASX ANNOUNCEMENT - 3 December, 2004

ARROW COAL SEAM GAS OPERATIONS UPDATE

The Directors of Arrow Energy are pleased to announce the following update on operations:

ATP 689P (Arrow 70%, Comet Ridge 30%)

The drilling rig has now completed operations and moved off exploration well Trapyard $-1$ . The well, located 30 km south-west of Millmerran power station, in SE Oueensland, was drilled to test the extent of the Walloon Coal sequence is this area. The well reached a total depth of 254 metres, Electric logs are still being evaluated but initial review confirms the presence of coals.

The rig has now moved on to the Glenhaven $-1$ location, 50 km to the south-east of Millmerran. This well will be drilled to approx 450m and is also targeting the Walloon Coal measures.

ATP 644P (Arrow 100%)

Arrow is finalising plans to drill a follow up well to Mt Lindesay-1 Coal Seam Gas discovery made earlier this year. The well is planned to be drilled either this month or in January, depending on rigavailability.

ATP 683P (Arrow 80%, Comet Ridge 20%)

Arrow is planning to add two production wells to the Tipton West Pilot. These wells are designed to test completion designs and to accelerate water production from the eastern side of the pilot. The completion design of these two wells will be similar to the TWP-13 well, which is currently producing around 140 mefd and 700 BWPD. Overall the pilot is producing approximately 250 mefd and 1800 BWPD.

For and on behalf of the Board

JPK Marshall Company Secretary

For further information contact:

Stephen Bizzell or Nick Davies Phone: (07) 3303 0650 Fax: $(07)$ 3303 0651 E-Mail: info@arrowenergy.com.au Website: www.arrowenergy.com.au

Arrow Energy NL