COMET RIDGE LIMITED — Interim / Quarterly Report 2007

Jan 28, 2008

Quarterly Activities Report

Comet Ridge Limited | ABN 47 106 092 078

Comet Ridge

Period Ending December 31, 2008 ASX: COI

• I Key leases acquired over main prospects in Grays Harbor

• I Permitting of multiple drilling locations at Florence well advanced I Seismic permitting nearing completion on Grays Harbor I Aggressive marketing of US exploration projects commenced I Significant contingent gas resource confirmed at Mahalo I Additional US based director appointed

INTRODUCTION

The Directors of Comet Ridge Limited (Comet Ridge or the Company) are pleased to provide the following quarterly activities report.

The quarter ending December 31, 2007 was focused on readying for an active 2008. Starting with a minimum of 3 wells on the Florence project towards the end of the first quarter, the Company expects to see more than 9 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. 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.

Efforts towards raising capital in the US through other oil and gas companies and prospective capital providers are starting to gain traction.

ROCKY MOUNTAIN PROJECTS

Florence, Fremont County, Colorado

(COI 39%, Operator)

The Florence project, located in 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 early in the New Year. 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 by mid February. Once the rig is on site each well is expected to take between 8 and 10 days to drill and complete. The first three wells will evaluate the Pierre Formation, the historically proven field pay in the field, as well as a series of deeper objectives including the Niobrara Formation and various conventional sandstone targets including the Codell and Dakota sandstones. The first two wells are targeting 200,000 barrels of oil each and the third well is aimed at testing multiple horizons on a 3.0 million barrel potential prospect.

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Figure 1. Location Map, Florence Project, Fremont County, CO

COMET RIDGE OPERATIONS & PROJECTS

Comet Ridge is an Australian-listed oil and gas explorer transitioning to producer with projects in Australia and USA.

The Company’s strategy is to control large acreage positions covering oil and gas opportunities in mature fields and in proven, but overlooked basins. As much as possible, it operates these projects in order to directly control desired outcomes.

USA Pacific NW | Grays Harbor (100%); Chehalis Basin (40%) USA Rocky Mountains | 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%)

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

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Figure 2. Florence Project Showing 3D Survey & Offset Wells

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.

Tow Creek/Bear River, Routt County, Colorado (COI 33.75 to 37.5%, Operator)

Following the unsuccessful attempt to drill the CVU 31-4 ST in the previous quarter the Company has mounted a concerted effort to secure a financial partner for the Tow Creek/Bear River project. Those efforts are gaining traction and the Company is anticipating being able to announce a transaction in the first quarter of 2008 with drilling to be conducted in the summer.

PACIFIC NORTHWEST, USA

Grays Harbor, Grays Harbor & Pacific Counties, Washington (COI via St Helens 100%, Operator)

St. Helens was successful bidder on four leases in the Grays Harbor County oil and gas lease auction held on November 16, 2007. The four leases cover a total of 17,225 acres and provide critical lease coverage over a number of the Company’s prospects including two that are to be drilled in 2008. The leases have ten year terms and were acquired at an average cost of US$7.13 per acre. A large percentage of the proceeds from the sale go towards supporting the public schools in the area.

This important lease acquisition, when added to leases the Company has acquired from private mineral owners, the State of Washington (two separate lease sales) and the original 420,000 acre lease option, brings the controlled acreage to in excess of 475,000 acres (1,922 sq km) and provides Comet Ridge with complete control of the prospects and leads the Company has developed.

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 early in the New Year, clearing the way for the acquisition program to commence in April as planned.

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.

Vader/Cedar Creek, Chehalis Basin, Washington (COI via St Helens 40%, Non Operator)

St. Helens is actively seeking ways of leveraging its position in the Chehalis Basin project towards further drilling activity. Those efforts are progressing well and the Company expects to be able to announce a transaction in the early part of the New Year.

AUSTRALIAN ACTIVITIES

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.

Mahalo, Northern ATP 337P, QLD

(COI 40%, Non Operator)

A third party technical review of the Mahalo project incorporating the results of the five holes that Comet Ridge funded is complete and confirms the presence of a significant volume of gas in place. Further drilling is warranted and Comet Ridge is working with its partners to achieve that.

ATP’s 743 and 744P, Galilee Basin

(COI 100%, Operator)

Comet Ridge re-assumed control of these two large permits during the quarter and is advancing them through the Native Title process. Meetings have been held with claimants and negotiations are ongoing.

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

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The two permits are underlain by coals of similar age to those that produce at the major coal seam gas producing fields in Queensland namely Moranbah, Fairview, Spring Gully and Scotia. Encouraging gas shows across the coals have been observed in previous oil and gas drilling. The Company is keen to have these permits awarded so that work can begin on delineating a significant potential gas resource.

PEL 427 & PEL 428 Gunnedah Basin, NSW (COI 70 and 60% respectively, Non Operator)

Eastern Star Gas Limited transferred its rights and obligations under the PEL 427 & 428 farm-out agreements to Orion Petroleum Limited. Orion now has a 30% interest in PEL 427 and can earn a further 45%, and a 20% interest in PEL 428 with the right to earn another 40%.

FUTURE PROGRAM

The Company is planning for a high level of operational activity in the next twelve months with as many as 15 wells planned for the year.

Table 1 - Indicative 2008	Drilling Programme
US PROJECTS	WELLS	TIMING	COMMENT
Grays Harbor	1 to 2	Q3/Q4	Dependent on seismic results
Florence	3 to 5	Q1/Q2	Q1 - subect to permits
Tow Creek/Bear River	2 to 3	Q2/Q3	Subject to farmout
Chehalis	3	Q1/Q2	Subject to farmout
AUSTRALIAN PROJECTS	WELLS	TIMING	COMMENT
Mahalo	1	Q4	Assumes COI sole risk
Galilee	2	Q4	Assumes native title concluded
Total 2008	12 to 16

To help fund this higher level of activity the Company has mounted a concerted effort to secure US industry and financial partners and announced a 1:4 non-transferable rights issue to raise approximately AUD$4.3 million before costs early in the New Year.

FINANCE

As of December 31 the Company had cash on hand of US$1.92 million (AUD$2.2 million).

At the end of the report period the Company had issued capital of 104.9 million ordinary fully paid shares and 10.25 million unlisted options having varying exercise prices and dates.

As mentioned previously the Company announced a 1:4 rights issue early in the New Year to raise $4.3 million before costs. Fully subscribed (the board has reserved the right to place any shortfall in take-up of the entitlement issue) the capital raising will result in a further 26.2 million fully paid ordinary shares being issued increasing the number of fully paid shares to just over 131 million shares.

CORPORATE

Early in the quarter, the Company announced the appointment of Mr. David Bradshaw to the Board of Directors.

Mr. Bradshaw, who is a resident of Denver, Colorado, has an accomplished 30 year career that includes his being CEO and Chairman of the Board of US based Tipperary Corporation, a public energy company listed on AMEX, from 1996 through 2005. Tipperary was majority owner of the very significant Fairview coal seam gas field in eastern Queensland. During his tenure as CEO and Chairman of Tipperary, the Company’s proved gas reserves grew from 37 BCF to 581 BCF. In 2005, when the company was sold to Santos Limited in a transaction valued at approximately AUD$600 million, the Company

had proved plus probable gas reserves in excess of 1.3 TCF. Beginning in early 2002, Tipperary served as operator of the Australian coal seam gas property and had also owned numerous operated and nonoperated properties throughout the midcontinent of the US.

Prior to joining Tipperary in 1986, Mr. Bradshaw was a partial owner and officer of a private oil and gas company that specialized in structuring drilling partnerships. Mr. Bradshaw received his CPA in 1978, an MBA from Texas A&M University in 1977 and a BBA, Accounting from Texas A&M University in 1976 and worked for three major accounting firms including Price Waterhouse.

Mr. Bradshaw brings a unique experience base to the board with a wealth of hands-on US public company experience as well as extensive knowledge of the energy business in North America and Eastern Australia. He brings with him an extensive network of industry contacts and is expected to be able to broaden the Company’s reach as far as the capital markets and deal flow are concerned.

Mr. Bradshaw currently serves on the board of Triangle Petroleum Corporation, a US public energy company with properties in the US and Canada. He has also provides management consulting services to the industry in the US and Canada.

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Andrew Lydyard, Managing Director Comet Ridge Limited

AUSTRALIA

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

UNITED STATES

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

ASX CODE: COI

ASX Listed: 19 April 04 Shares on Issue: 105 million Unlisted Options: 10.25 million Top 20: 44% Directors: 12%

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