COMET RIDGE LIMITED — Capital/Financing Update 2007

May 17, 2007

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

FLORENCE PROJECT & ROCKY MOUNTAIN JOINT VENTURE

• Comet Ridge increases its interest in the Florence oil field redevelopment project
• Increases exposure to the prospective Rocky Mountain Joint Venture

COMET RIDGE LIMITED ASX ANNOUNCEMENT 18 MAY 2007

8 sq mile 3D survey to commence next week

The directors of Comet Ridge Limited (ASX Code: COI) are pleased to advise that the Company has increased its interest from 26% to 39% in the highly prospective Florence Oil field development in Fremont County, Colorado.

Rocky Mountain Joint Venture partner, ASX-listed Strike Oil Limited (ASX Code: STX), has also elected to increase its interest to 39%.

The opportunity to strengthen the Company's position in the project emerged following a decision by AJ Lucas Group Limited to withdraw from exploration and development activities in the USA.

Comet Ridge and Strike Oil will continue working together towards identifying and capturing oil and gas opportunities in a four state Rocky Mountain area of mutual interest.

As announced on 16 May, 2007 Comet Ridge Limited's wholly owned US subsidiary, Comet Ridge USA, Inc., expects to commence seismic acquisition operations on an eight square mile three dimensional (3D) seismic survey during the week of 21 May, 2006. Permitting of the survey is virtually complete and surveying by the Lockhart Geophysical seismic crew is expected to commence shortly.

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 (Figure 2). 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. 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. The well is currently at a depth of 4,285 feet (1,306 metres) drilling towards a total depth of 7,000 feet (2,134 metres) and is aimed at testing a potentially significant gas accumulation (guoted 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 61 8 6464 0498 Fax:

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

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

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 large number of lower recovery wells and dry holes where few or no fractures were penetrated.

The advent of 3D seismic, directional drilling techniques and modern down hole logging technologies provides companies like Comet Ridge with a set of tools to apply to the redevelopment and exploitation 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 adiacent 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. Internal estimates, based on production to this point, suggest the well may recover 200,000 barrels or more of oil.

Comet Ridge expects to be in the position to commence drilling on the Florence project late in the 3^rd quarter of this year.

Yours sincerely,

Shydynd

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.