COMET RIDGE LIMITED — Capital/Financing Update 2008

Jan 17, 2008

Comet Ridge Limited | ABN 47 106 092 078

ASX Announcement

Comet Ridge

18 January 2008 ASX CODE: COI Operations Update

• I Comet Ridge to drill up to 5 wells at Florence late in the first quarter of 2008 - wells to test multiple objectives with gross recoverable reserve potential of 3.5 million barrels of oil

• I Work initiated to expand geological concepts derived from Florence 3D seismic to new area

• I Grays Harbor seismic permitting well advanced – acquisition to commence in second quarter

• I Two wells planned at Tow Creek – subject to farm-out

The Directors of Comet Ridge Limited (Comet Ridge or the Company) are pleased to provide the following operations update. Calendar year 2008 will be an active year for the company with drilling planned for all four US projects. Starting with a minimum of 3 wells on the Florence project towards the end of the first quarter, the Company expects to see at least 10 wells drilled this year. The wells at Florence are anticipated to establish production, reserves and cash flow for the Company and lead to an ongoing drilling program. Drilling of one or two wells is planned for Grays Harbor later in the year, following a seismic acquisition program due to commence in April and additional wells are planned for Tow Creek and Chehalis in the middle of the year.

The Company is also expecting to advance its Australian coal seam gas projects during 2008 and has secured technical and operational resources to facilitate field activities on its Queensland projects.

ROCKY MOUNTAIN PROJECTS Florence

The Florence project, located on Fremont County, some 115 miles south of Denver, Colorado (Figure 1) is being readied for drilling late in the first quarter of 2008. Comet Ridge and its partners acquired just over 8 sq miles (~21 sq km) of 3D seismic in 2007 and have since developed a significant inventory of drillable locations.

An initial nine wells have been staked and drilling permits will be submitted later this week. Comet Ridge, subject to partner approval, is planning an initial three well program with an additional two contingent wells to commence in late March. The location of the initial five wells (three firm (red) plus two contingent (orange) wells) and the remaining four are shown on Figure 2. The wells are relatively shallow with planned depths ranging between 3,500 ft (1065m) and 4,650 ft (1420m).

Comet Ridge is currently evaluating four available drilling rigs and expects to award the rig contract within the next 30 days. Once the rigs are on site each well is expected to take between 8 and 10 days to drill and complete.

The first three wells will evaluate the proven field pay zone namely the Pierre Formation, and a series of deeper objectives including the Niobrara Formation and various conventional sandstone targets including the Codell and Dakota sandstones.

Two of the wells, Golden 33-20 and Apache 33-20B will be drilled from the same pad. Both wells are targeting seismic anomalies associated with zones of fracturing in the shales of the Pierre Formation with one also testing anticipated fractures within the Niobrara. The fractures provide the storage and flow paths for the produced oil. Each well is targeting around 200,000 barrels of oil.

The third well, Bull 42-4, will test the geological section down to the Dakota Formation and is aimed at potential recoverable reserves of up to 2 MMBO in the Codell and 1.1 MMBO recoverable in the Dakota. The well is also expected to encounter oil in the Pierre Formation and Niobrara Formation. Although the Bull 42-4 well is not optimally located in the Pierre Formation it does fall within the established producing area for that formation

Comet Ridge continues to consolidate and expand its acreage position which now stands at approximately 8,500 acres (~35 sq km). Further 3D seismic data is being planned for later in the year to follow up on drilling success.

Based on key insights provided by the proprietary 3D seismic data, Comet Ridge has initiated technical studies aimed at quickly identifying additional areas where accumulations like Florence may exist. While the new target areas are lightly explored the Company is already seeing a number of the key indicators it is looking for.

Success at Florence will see Comet Ridge establish production and cash flow and will result in a substantial number of additional drilling locations. It will also provide further impetus to the play expansion efforts.

LOCATIONS

C/- Endeavor Corporate Suite 8, 7 The Esplanade Mt Pleasant, W. Australia 6153 Phone: +61 8 9316 9100 Fax: +61 8 9315 5475

600 17th Street, Suite 800-S Denver, Colorado 80202 USA Phone: +1 (303) 226.1300 Fax: +1 (303) 226.1301

	ABOUT COMET RIDGE	ASX CODE: COI	ASX CODE: COI
	Comet Ridge is an Australian-listed oil and gas explorer transitioning to	ASX Listed:	19 April 04
	producer with projects in Australia and USA.	Shares on Issue:	105 million
	The Company’s strategy is to control large acreage positions covering oiland gas opportunities in mature fields and in proven, but overlooked basins.	Unlisted Options:Top 20:Directors:	10.3 million44%12%
	USA Pacific NW	Grays Harbor (100%); Chehalis Basin (40%)
	USA Rocky Mtns	Florence (39%); Tow Creek (37.5%); Bear River (33.75%)
	AUSTRALIA Queensland	Mahalo (40%); Galilee Basin (100%)
	AUSTRALIA New South Wales	Gunnedah Basin (60-70%)

Tow Creek/Bear River

Comet Ridge, is actively seeking a partner to drill two wells on the Tow Creek and Bear River projects in Routt County, Colorado. A new well at the crest of the Tow Creek anticline and a second sidetrack of the CVU 31-4 well are being planned for drilling this summer. The new well is located immediately south of wells that produced significant volumes of oil (one well > 300,000 barrels). Both the initial CVU 31-4 well and the first CVU 31-4 sidetrack encountered significant oil and gas shows in fractures in the target Niobrara Formation. These shows warrant another attempt to drill and complete the well.

PACIFIC NORTHWEST PROJECTS

Grays Harbor

Preparations for the acquisition of 3D and 2D seismic on two prospects, Caldwell Creek (P50 reserve potential of 110 BCF) and Black Creek (P50 reserve potential of 100 BCF) in the Grays Harbor project in western Washington State are advancing quickly. All landowner permitting work associated with both surveys is complete and the permit applications have been submitted to the State regulatory agency for approval. State approval for both surveys is anticipated within a month, clearing the way for the acquisition program to commence in April as planned.

Comet Ridge’s wholly owned subsidiary, St. Helens Energy, LLC has secured a slot with a geophysical contractor.

The decision to delay the acquisition program until the second quarter of 2008 has proven fortuitous with the State of Washington having been subject to major flooding in December. The region is still recovering from the floods and wind damage.

Planning for a drilling program to follow the seismic acquisition later in the year is ongoing.

Efforts to secure an industry or financial partner for the project are advancing.

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Figure 1 – Location of Florence Project

Chehalis

St. Helens Energy is marketing its interests in the Chehalis Basin coal seam gas project in southern Washington to potential US partners. The Cascadia/St. Helens Energy joint venture recently relinquished the original 100,000 acre (~400 sq km) Cedar Creek lease option having focused its efforts on the western and northern parts of the basin where the target coals are shallower and better delineated by coal exploration drilling. The joint venture partners now control in excess of 75,000 acres (~300 sq km) with the majority being under oil and gas leases.

AUSTRALIAN PROJECTS

Comet Ridge retains a substantial Australian presence via its interests in the Mahalo coal seam gas project in the Bowen Basin of Queensland, two large permits in the Galilee Basin in central Queensland and two permits in the Gunnedah Basin of northern NSW. These projects are well located with respect to announced infrastructure developments including a number of potential LNG projects at Gladstone in Queensland. A large contingent gas resource has been delineated at Mahalo and further investment in this project is warranted. The two Galilee Basin permits are prospective for coal seam gas and also deeper conventional oil and gas.

The Company has secured technical and operational resources to enable it to further the evaluation of its two Queensland projects in particular and is developing plans for field activities, including potentially drilling activity, for later in the year. The Company’s view is that significant shareholder value can be created via further investment in these projects but at the same time continues to evaluate expressions of interest from other operators in the permit portfolio.

Andrew Lydyard Managing Director Comet Ridge Limited

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Figure 2 – Florence Drilling Program

Comet Ridge Limited | E-Mail: comet@cometridge.com.au Website: www.cometridge.com.au USA Phone: 1-303-226-1300