COMET RIDGE LIMITED — Interim / Quarterly Report 2007

Apr 25, 2007

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

By Electronic Lodgement

26 April 2007

QUARTERLY ACTIVITIES REPORT - PERIOD ENDED 31 MARCH 2007

Please find attached Comet Ridge Limited's Quarterly Activities Report for the period ended 31 March, 2007.

Yours faithfully,

dy and.

Andy Lydyard Managing Director

COMET RIDGE LIMITED ASX ANNOUNGEMENT 26 APRIL 2007

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

By Electronic Lodgement

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDING 31 MARCH 2007

HIGHLIGHTS

• Two wells drilled on Tow Creek/Bear River
• First well yet to be completed $\triangle$
• Oil production established from the second well $\circ$
• Permitting of Florence 3D seismic program under way
• Drilling to commence at Vader in southern Washington in April
• Strong lead inventory established at Grays Harbor 2D seismic planned
• Tipton West gas sales commenced, additional gas sales contract announced
• Galilee Basin permits farmed out

US ACTIVITIES

ROCKY MOUNTAINS

Comet Ridge operated the drilling and completion of two wells in northwest Colorado during the quarter. Operations were significantly impacted by severe winter conditions. The drilling of a planned third "proof of concept" well was postponed until the summer.

Tow Creek Prospect (Comet Ridge 37.5%)

Drilling operations on the Coal View unit 31-4 were completed 26 December, 2006. The well was drilled to a measured depth of 6,600 feet. Oil and gas shows were encountered over several intervals totalling 245 feet in the primary objective Niobrara Formation.

Completion operations commenced on 8 January, 2007. While preparing the well bore for running the production liner, part of the work string became stuck at 5,367 feet. Extended recovery attempts were unsuccessful. The well bore will be re-entered and sidetracked this summer.

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

Specialised borehole imaging tools confirmed moderately to heavily fractured intervals in the Niobrara Formation that correlate well with oil and gas shows encountered while drilling the well. This data and the presence of free oil in the mud during both drilling and completion operations are encouraging and justify perseverance.

The Company will drill one of several locations it is permitting, including one close to the crest of the Tow Creek structure, as the third "proof of concept" well in the coming summer months.

Bear River Prospect - Comet Ridge 33.75%

The Peltier 11-12 well was spudded on 12 January and reached a measured depth of 6,700 feet on 2 February. Oil and gas shows were encountered across three separate intervals in the target Niobrara Formation. A 5 1/2 inch liner with 700 feet of perforations was set to total depth and a down-hole electric submersible pump was installed.

Production testing commenced on 26 February,, 2007.

As of April 24^th the well was on production making approximately 15 barrels per day of clean oil after having been shut in for three weeks. The well will be shut in again for further reservoir pressure testing to determine whether productivity from the well can be improved. The current production rate is below expectation and may be the result of the productive fractures having been filled with drilling fluid. The additional pressure testing can help determine whether the well will continue to be a long lived, but relatively low rate producer, or if remedial work can enhance productivity.

Florence Project - Comet Ridge 26%

Permitting of an 8 sq mile 3D seismic survey commenced in late March and as of April 24^th was approximately 60% complete (400 plus permits). Seismic acquisition of the field data is expected to commence by mid-May. The Company anticipates operating the drilling of an initial well in the first quarter of 2007/08.

PACIFIC NORTHWEST

Grays Harbor Project - Comet Ridge 100%

Comet Ridge (through its 100% owned subsidiary St. Helens Energy LLC) has developed a portfolio of 39 mapped leads under its extensive acreage position (438,000 acres under lease or option) in the Grays Harbor Basin of south-western Washington State. Reprocessing of the 400 plus miles of 2D seismic the company has in this area resulted in impressive improvements in the interpretability of the data. Integration of all of the technical data available in the basin is nearing completion and planning of additional seismic acquisition for later in the year is underway. A program of between 100 and 200 plus miles of new seismic data is being planned to move the majority of the 39 currently mapped leads to prospect status ahead of drilling.

The lead inventory includes a number of seismically defined structures that are large enough to contain 50 to 250 billion cubic feet (BCF) of gas.

Economic modelling of a 100 BCF gas field (20 wells at 5 BCF per well and \$3 million capital cost per well at \$5/mcf gas price) suggests that a discovery of this size could represent a value of approximately US\$115 million before taxes to the Company.

A capital budget of between US\$12 and \$15 million (seismic, land, drilling of 2 wells and overhead) is envisaged for this project between now and the middle of 2008. The Company is finalizing the preparation of display materials for showing to potential industry partners in the US in the coming weeks. Strong interest is being shown by a number of companies.

Cedar Creek/Vader Prospect - Comet Ridge 40% (via St. Helens Energy)

Drilling of a four well gas resource assessment program is due to commence in the last week of April. The objective of these wells is to confirm the extent of the coal seam gas play and to establish a potential coal seam gas resource. Two of the locations will also test the potential for gas production from shallow sands.

The joint venture partners have encountered heavy competition from another US- based coal seam gas exploration company for leases in the Vader area. It is understood that the company intends to drill on acreage immediately adjacent to acreage held by Cascadia and St. Helens in the near future.

Cascadia and St. Helens continue to develop a better understanding of the Chehalis Basin and have identified additional prospective areas to pursue.

Preliminary discussions have been held with companies interested in farming in to the Cedar Creek/Vader area.

AUSTRALIAN ACTIVITIES

Mahalo, Northern ATP 337P, Queensland - Comet Ridge 40%

Comet Ridge has earned its 40% interest and is now assessing the data obtained in the five wells drilled under the farm-in arrangement. As reported last quarter, the last well in the program, Mahalo 2, encountered the primary objective Bandanna Formation coals low to prognosis and no gas shows were reported. While this result is disappointing, the Company believes this project can deliver shareholder value.

Tipton West Project - Comet Ridge 1.5% royalty

Comet Ridge retains a 1.5% gross royalty interest in the Arrow Energy NL operated permits in south-eastern Queensland where the target is the Jurassic aged Walloon Coal Measures.

Arrow announced first gas sales from Tipton West on 7 February, 2007 and recently reported the field as producing approximately 4.8 million cubic feet per day (Operations Update released to the ASX 16 March, 2007).

The Tipton West Joint Venture partners also announced the execution of a conditional heads of agreement with Braemar Power Partners (Braemar) to increase the firm supply

of gas under an existing contract from 6PJ per year to 10PJ per year for 15 years. At the same time the JV partners announced an option to supply an additional 7.3PJ per year to Braemar

Galilee Basin Permits - Comet Ridge 100%

The Company announced that is had executed farm-out agreements with Clark Oil and Gas on its two permit applications in the Galilee Basin of Queensland (ATPA's 743P and 744P). Subject to a successful listing in the fourth quarter of 2007, Clark will carry Comet Ridge through a staged earning program.

HEALTH, SAFETY AND ENVIRONMENT

No incidents.

PERSONNEL

With operations planned at Tow Creek, Florence and Grays Harbor later this year the Company expects to add operations, land and administrative personnel to the Denver team in the next quarter.

FINANCIAL

The Company raised a total of \$2.51 million before costs (AUD\$3.1 million) in early January via the placement of 11,477,258 million shortfall shares to private clients of Tolhurst Limited.

In late March the Company realised proceeds of \$643,000 (AUD\$800,000) from the exercise of four million unlisted options priced at AUD\$0.20.

As of 31 March, 2007 the Company had cash and receivables of US\$3.87 million (~AUD\$4.8 million). Overhead and capital spending totalling US\$2 million is forecast for the next quarter.

NEXT QUARTER ACTIVITIES

Tow Creek/Bear River

• Re-enter, sidetrack and complete Coal View Unit 31-4
• Continue production testing of Peltier 11-12 well
• Prepare to drill $3^{rd}$ "proof of concept" well
• Complete permitting of the CVU 36-15, CVU 18-8 and Kruse Trust 10-7 locations

Vader/Cedar Creek

$\bullet$ Drill 4 wells

Grays Harbor

• Secure funding for seismic and drilling program
• Acquire 2D seismic
• Prepare for drilling later in the year

Florence

• Finalise permitting and acquire, process and interpret 3D seismic
• Commence permitting process for well or wells in Q3

For further information contact:

Andy Lydyard Managing Director

Phone: +1 (303) 226 1303 Fax: $+1$ (303) 226 1301 Mobile: +1 (303) 547 4478 Email: andyl@cometridge.com.au