COMET RIDGE LIMITED — Capital/Financing Update 2007

Jan 11, 2007

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

By Electronic Lodgement

OPERATIONS UPDATE TOW CREEK & BEAR RIVER PROJECTS. ROUTT COUNTY, COLORADO, USA

HIGHLIGHTS

• Completion rig on Coal View Unit 31-4
• Peltier 11-12 to spud 12 January

The directors of Comet Ridge Limited (ASX Code COI) are pleased to provide the following operational update for the Tow Creek and Bear River prospects in Routt County, Colorado, USA.

TOW CREEK (Comet Ridge 37.5% and Operator)

A Diamondback Energy Services workover rig is on the Coal View Unit 31-4 location and has commenced the completion operation. As of 6am WST or Perth time the rig was running in to condition the hole ahead of displacing the potassium chloride drilling fluid with Niobrara oil from Comet Ridge's nearby producing well. Perforated casing will then be run across the reservoir intervals and an electric submersible pump installed. The pipe will not be cemented. The completion is expected to be finalised over the weekend. The Company will provide a further update to shareholders early next week.

As indicated in a previous ASX announcement (27 December 2006) oil and gas shows were encountered over a 245 foot thick interval in the main objective of the well, namely the Tow Creek Bench of the Niobrara Formation (the term "bench" refers to an interval comprising of slightly harder and more brittle, calcareous (meaning calcium carbonate bearing) shales in an overall package of softer, more plastic, non calcareous shales. The calcareous shales tend to form more resistive outcrops or "benches").

Preliminary analysis of wire line logs run in the well (including a specialized log known as a borehole image log) indicates that the interval with the oil and gas shows is moderately to intensely fractured and that the fractures appear to be open. The degree of fracturing and the fact that the fractures appear open is encouraging as they provide the storage mechanism and flow paths for the oil and gas.

BEAR RIVER (Comet Ridge 33.75% and Operator)

The Peltier 11-12 is due to spud in the morning of 12 January (Denver time).

This well will be drilled to a measured depth of 6,540 feet and is designed to test three prospective reservoir intervals in the Niobrara Formation on trend with a well that produced initially at over 500 BOPD and has produced approximately 470,000 barrels of oil. This location sits on a mapped large scale north-west trending fracture trend (Figure 1).

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

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

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

The well will be drilled vertically to around 3.800 feet where 9 5/8ths inch casing will be set. As was the case with the Coal View Unit 31-4, this well will be directionally drilled to an angle of around 40 degrees to approximately 5,000 feet where a string of 7 inch casing will be set. The same under balanced drilling fluid (mud) system that was used on the CVU 31-4 will be used on this well. The idea of an under balanced mud system is to minimize the loss of mud into the fractures for two main reasons; mud lost into fractures is expensive from both lost time and lost material perspectives and the mud potentially plugs the fractures up.

Typically when a well is being drilled, the weight of the mud is kept such that the pressure in the well-bore is higher than that of the formation (or reservoir rock). In the case of fractured reservoirs and some low permeability reservoirs, it is preferable to keep the pressure lower in the well bore (hence the term under balanced). The Niobrara Formation is an unusually low pressure reservoir. We believe to successfully exploit the significant volumes of oil known to exist in the formation throughout the Rockies it is imperative that the mud pressures are kept as low as possible. To achieve this air is injected into the mud column higher in the well to lower the effective mud pressure acting on the reservoir rock.

The Peltier 11-12 is targeting up to 500,000 barrels of oil in its own right. As mentioned earlier it is the second of three "Proof of Concept" wells designed to prove up a much larger opportunity base.

Comet Ridge and partner Strike Oil Limited (ASX Code: STX) are funding the drilling of this well 50:50. Following completion of this well all earning requirements on the Tow Creek and Bear River prospects will have been completed.

The Company will continue to issue reqular operational updates every Friday unless otherwise warranted.

Yours sincerelv

ANDREW LYDYARD Managing Director Comet Ridge Limited

For further information contact: Andy Lydyard (USA) Managing Director Phone: +1 (303) 226 1303 Fax: +1 (303) 226 1301 Mobile: +1 (303) 547 4478 Email: andyl@cometridge.com.au

Joanne Ford (Australia) Public Relations Manager Mobile: 0410 633 370 Email: jo@resourcepr.com.au

Figure1 - Location of Peltier 11-12 in relation to mapped fracture trend and offset production