COMET RIDGE LIMITED — Capital/Financing Update 2007

May 23, 2007

The Company Announcements Officer Australian Stock Exchange Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2000 By Electronic Lodgement

FLORENCE 3D SEISMIC

MAIN POINTS

• Lockhart Geophysical seismic crew on location
• Acquisition of 8 sq mile 3D survey to commence tomorrow

The directors of Comet Ridge Limited (ASX Code: COI) are pleased to advise that the Lockhart Geophysical seismic acquisition crew is on location at the Florence project in Fremont County. Colorado and will commence the acquisition of an 8 square mile 3D seismic survey in the next day or so once setup and testing are complete.

The survey will cover a significant part of the old Florence oil field and overlaps a smaller survey shot by the Company's US partners in 2004. The seismic data is expected to provide a critical sub-surface view of fracture patterns that control oil production in the Pierre and Niobrara Formations.

Background

The Florence oil field was the second oil field discovered in the United States of America with the discovery well drilled in 1862. The field is located approximately 87 miles (140 km) south of Denver and 25 miles (40 km) west of Pueblo (Figure 1). The oil field has produced approximately 15 MMBO in its 144 year history. As is typical of many fractured reservoir oil fields, there are a modest number of excellent producers with per well recoveries ranging from 100,000 barrels to in excess of 550,000 barrels of oil and a lot of lower recovery wells and dry holes where few or no fractures were penetrated.

Over 15 million barrels of oil have been produced from the fractured shales in the Pierre Formation at depths of less than 3,000 feet. The slightly deeper fractured shales of the Niobrara Formation, the same objective the Company is pursuing at its Tow Creek/Bear River project, have been very lightly tested but have proven productive. Further untested potential exists in deeper conventional targets such as the Muddy Formation. This reservoir is the primary objective of the West Florence 1 well, currently being drilled by US based Mountain Petroleum Corporation, some 2 miles west of Comet Ridge's acreage (figure 2). The well is currently drilling ahead towards a total depth of 7,000 feet (2,134 metres) and is aimed at testing a potentially significant gas accumulation (quoted as 100 to 200 BCF) in the Muddy J Sandstone. A further 15 million barrels of oil potential is quoted for the shallower Pierre, Niobrara and Codell Formation reservoirs, the main targets for Comet Ridge's program.

AUSTRALIA Level 9, Wesfarmers House 40 The Esplanade, Perth WA 6000 Phone: 61 8 6464 0499 Fax: 61 8 6464 0498

USA 600 17^th Street, Suite 600-S Denver, Colorado 80202 Phone: +1 (303) 226 1300 $Fax$ +1 (303) 226 1301

Comet Ridge Limited ABN 47 106 092 577 Email: comet@cometridge.com.au Website: www.cometridge.com.au

All of the production achieved to date has been from shallow, vertical wells drilled almost exclusively without the benefit of modern seismic data. The underlying Niobrara Formation (the same formation the Company is pursuing at Tow Creek and Bear River in northern Colorado (Figure 1) has proven productive, but is very lightly explored and the deeper potential reservoir targets such as those being drilled by Mountain Petroleum are virtually untested.

The advent of 3D seismic, directional drilling techniques and modern petrophysical logging technologies provides companies like Comet Ridge with a set of tools to apply to the redevelopment of these prolific mature oil fields. Evidence that such opportunities exist is provided by a vertical well - The Royal Gorge #1 well - drilled on a lease immediately adjacent to Comet Ridge's position at Florence (Figure 2). The well (located using the small 3D seismic survey mentioned above) is consistently producing 100 barrels of oil per day from the Pierre Shale after producing 72,000 barrels over the past two years.

Comet Ridge expects to be in the position to commence drilling on the Florence project later this year.

Yours sincerely,

)
mydagamet

ANDREW LYDYARD Managing Director Comet Ridge Limited

Figure 1 - Location of Florence Project

Figure 2. Location Map showing Comet Ridge leasehold position over the Florence oil field, the planned 3D seismic survey, location of the Federal lease acquired in the May 10 BLM lease sale and the location of the Mountain Petroleum West Florence-1 well.