COMET RIDGE LIMITED — Capital/Financing Update 2014

Mar 18, 2014

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Comet Ridge buys back Mahalo interests from Stanwell

19 March 2014

ASX Code : COI

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Executive Summary

Comet Ridge buys back interests in Mahalo sold to Stanwell in 2011

• In September 2011 Stanwell purchased:

• a 5% interest in the Mahalo Gas Project ( MGP ); and

• an option to acquire up to a further 35% interest in MGP

• Stanwell has relinquished these interests in exchange for (at Stanwell’s election exercisable at Final Investment Decision) either:

• Stanwell and COI entering into a 20 to 40 PJ gas sales agreement; or

• Stanwell receiving a cash payment of $20m (escalated at CPI)

ASX Code : COI

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Summary of Key Benefits to COI

Restores COI interest in MGP to 40% with consideration in the form of a 1 GSA or cash payment deferred until Final Investment Decision for the MGP COI retains optionality to maximise value achieved for its equity gas (less 2 gas sold to Stanwell under a GSA if elected by Stanwell) Provides COI exposure to increased gas prices from production or gas 3 reserves from the MGP in a tightening East Australian gas market No cash consideration required prior to Final Investment Decision 4*

* Limited to a minimum of 20 PJ and a maximum of 40 PJ of gas, delivered via one third of Comet Ridge’s produced equity gas from the MGP over 10 years

ASX Code : COI

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Summary of 2011 Option Deed

Original Sale & Purchase Option Deed over the MGP executed with Stanwell in 2011

• Sale of 5% interest in ATP 337P Mahalo to Stanwell for $7m – completed December 2011

• Funding up to $8m by Stanwell of COI’s expenditure commitments (carrying COI through the 2012/13 Pilot Program) – completed September 2013

• Grant of option to Stanwell to acquire up to a further 35% interest in MGP at an average price of $1.00/GJ based on the level of 2P reserves achieved by 31 December 2014

ASX Code : COI

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Key Terms of 2014 Agreement

 Stanwell can elect either of the following at FID of MGP as consideration for the relinquishment of its interests in the MGP

• GSA OR

• GSA with COI for supply of 20 PJ to 40 PJ from the MGP over 10 years

• Limited to one third of COI gas produced each year for 10 years

• Key GSA terms: ― Pricing linked to LNG netback (with ceiling)

• ― Floor price protection based on fixed return

• ― Take or pay provisions apply

• ― Stanwell receive pricing discount over term of GSA to reflect $15m invested to date

• Cash payment

• Cash payment of $20m *

• Represents reimbursement for expenditure to date and uplift in value/funding costs

• If FID is not reached within 4 years Stanwell is deemed to have elected the cash payment

* Escalated quarterly from 1 August 2014

ASX Code : COI

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Mahalo Gas Project

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• Quality project located close to infrastructure linking to Gladstone LNG market with gas supply shortages and rising prices

• Initial drilling and testing exceeded expectations and confirmed a high quality asset:

• 7 to 9 metres of continuous net coal thickness achieved across both pilot locations

• Very good to excellent permeability measured (up to hundreds of millidarcies)

• COI view of asset potential unchanged

• Joint Venture currently working to optimise production potential consistent with initial drilling results

• Mahalo 3 & 5 wells now back on line for evaluation following January and February stimulation

ASX Code : COI

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Rationale and Benefits to COI

1. Restores COI interest in the MGP to 40% with consideration in the form of a GSA or cash payment deferred until FID

• COI interest in MGP increases from 35% to 40%

• Stanwell relinquishes its option to acquire COI’s interest in the MGP for an average price of $1.00/GJ of 2P reserves

• COI’s 40% equity share of Contingent Resources for the MGP, after completion of this transaction, is shown below

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Mahalo Gas Project Contingent Resources – COI 40% interest
1C 2C 3C
(PJ) (PJ) (PJ)
83 221 442
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Contingent Resources Estimates

The Contingent Resource estimates that have been referred to in this presentation were first announced by Comet Ridge on 25 October 2010. The gas Contingent Resource estimates provided were determined by Mr. John Hattner of Netherland, Sewell and Associates Inc, Dallas, Texas, USA, in accordance with Petroleum Resources Management System guidelines.

ASX Code : COI

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Rationale and Benefits to COI

2. COI retains optionality to maximise value achieved for its equity gas (less gas sold to Stanwell if a GSA is elected)

• GSA to Stanwell for supply of 20 PJ to 40 PJ over 10 years to be no more than one third of COI’s share of production each year

Indicative GSA Example Based on 35PJ/a Gross Project Field Development

• Introduces cornerstone gas customer with pricing linked to LNG netback with floor price protection based on return on field costs

• Remaining COI gas production remains uncontracted

Assumptions:

• 35 PJ/a gross project field development

• • 20+ year field life

• 40 PJ sold to Stanwell over 8.5 years

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Rationale and Benefits to COI

3. Provides COI exposure to increased gas prices from production or gas reserves from the MGP in a tightening East Australian gas market

• Gas prices have risen strongly since 2011:

• Gas traded on the Brisbane STTM at $3.25/GJ as at 31 December 2011*

Long-run LNG netbacks

• East Coast gas producers are now reporting gas sales of $8-10/GJ

• Dec 2013 JCC import price of US$102/bbl equates to ~$10.50/GJ delivered to Gladstone

• EnergyQuest is forecasting LNG demand to increase Qld gas prices to average $12/GJ from 2015 to 2017 and to force spikes of up to $18/GJ

• Strength of gas market evidenced by Stanwell’s recent decision to shutdown Swanbank E in favour of trading gas

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Source: EnergyQuest, November 2013
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• LNG project proponents currently seeking third party gas with long production ramp-ups expected on second trains leaving significant unused LNG manufacturing capacity

• Mahalo is uniquely located with infrastructure connection to Gladstone

* Represents delivered price of gas to Short Term Trading Market Hub (AEMO website)

ASX Code : COI

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East Australian Gas Shortage Widely Reported

Queensland LNG to be slowed by gas shortage: Citi

The Australian Financial Review, 17 March 2014

LNG demand to force spike in gas price The Australian, 7 March 2014

Gas prices to soar on LNG supply dramas

The Australian, 17 February 2014

Concern as Qld LNG export projects eye local gas supplies

The Australian Financial Review, 5 February 2014

Gas shortfall closer

The Australian Financial Review, 29 November 2013

Australian LNG boom could cause domestic gas shortages Platts, 29 November 2013

NSW gas shortage will hit business first The Sydney Morning Herald, 2 December 2013

LNG export boom to cause domestic gas shortages

macrobusiness.com.au, 27 September 2013

CSG, joint-venture sales key to gas crisis: Grattan

The Australian Financial Review, 17 June 2013

Minister warns of looming gas shortage in NSW

ABC Newcastle, 22 August 2012

ASX Code : COI

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Summary

• Buying back Stanwell’s interests in the MGP provides considerable benefits to COI:

• Restores COI interest in the MGP to 40%

• Provides a potential cornerstone gas customer to underwrite future development

• Provides COI with optionality to maximise value achieved for its equity gas (less gas sold to Stanwell if a GSA is elected)

• Provides COI exposure to increased gas prices from production or gas reserves from the MGP in a tightening East Australian gas market

• No cash consideration required prior to Final Investment Decision

• Agreement completes upon standard requirements that other JV partners consent to assignment of MGP equity interest (same process as was required in 2011)

ASX Code : COI

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Important Notice and Disclaimer

Disclaimer

This presentation (Presentation) has been prepared by Comet Ridge Limited (ABN 47 106 092 577) (Comet Ridge). The Presentation and information contained in it is being provided to shareholders and investors for information purposes only. Shareholders and investors should undertake their own evaluation of this information and otherwise contact their professional advisers in the event they wish to buy or sell shares. To the extent the information contains any projections, Comet Ridge has provided these projections based upon the information that has been provided to Comet Ridge. None of Comet Ridge or its directors, officers or employees make any representations (express or implied) as to the accuracy or otherwise of any information or opinions in the Presentation and (to the maximum extent permitted by law) no liability or responsibility is accepted by such persons.

Summary information

This Presentation contains summary information about Comet Ridge and its subsidiaries and their activities current as at the date of this Presentation. The information in this Presentation is of general background and does not purport to be complete. It should be read in conjunction with Comet Ridge’s other periodic and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), which are available at www.asx.com.au.

ASX Releases

Investors are advised that by their nature as visual aids, presentations provide information in a summary form. The key information on detailed Resource statements can be found in Comet Ridge’s ASX releases. Resource statements are provided to comply with ASX guidelines but investors are urged to read supporting information in full on the website.

Past performance

Past performance information given in this Presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Future performance

This Presentation contains certain “forward-looking statements”. Forward looking words such as, “expect”, “should”, “could ”, “may”, “plan”, “will”, “forecast”, “estimate”, “target” and other similar expressions are intended to identify forward-looking statements within the meaning of securities laws of applicable jurisdictions. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Forward-looking statements, opinions and estimates provided in this Presentation are based on assumptions and contingencies which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. Such forward-looking statements, opinions and estimates are not guarantees of future performance.

Forward-looking statements including projections, guidance on future earnings and estimates are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance. This presentation contains such statements that are subject to known and unknown risks and uncertainties and other factors, many of which are beyond the control of Comet Ridge, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a range of variables which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Such forward-looking statements are relevant at the date of this Presentation and Comet Ridge assumes no obligation to update such information.

Investment risk

An investment in Comet Ridge shares is subject to investment and other known and unknown risks, some of which are beyond the control of Comet Ridge. Comet Ridge does not guarantee any particular rate of return or the performance of Comet Ridge. Persons should have regard to the risks outlined in this Presentation.

Competent Person Statement

The gas resource estimates provided in this statement were determined by Mr John Hattner of Netherland, Sewell and Associates Inc, Dallas, Texas, USA, in accordance with Petroleum Resource Management System guidelines. Mr Hattner is a full-time employee of NSAI, and is considered to be a qualified person as defined under the ASX Listing Rule 5.11 and has given his consent to the use of the resource figures in the form and context in which they appear in this presentation.

ASX Code : COI

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