COMET RIDGE LIMITED — Interim / Quarterly Report 2012

Oct 29, 2012

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30 October 2012

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September 2012 Quarterly Report

Highlights:

• Capital Raising of $9.4 million successfully completed

• Mahalo JV participants extremely pleased with drilling and testing results and moving to implement pilot production scheme

• Comet Ridge farmed-in to additional Galilee Basin area adjacent to Gunn Project Area

• Galilee Basin three-well drilling campaign commenced

During the quarter, Brisbane based Comet Ridge (ASX:COI) completed a $9.4 million capital raising, participated in four pilot wells at Mahalo in ATP 337P, executed a farm-in agreement into another Galilee Basin block and geared up to commence a three-well drilling campaign in the Galilee Basin in early October.

Capital Raising Successfully Completed

In early August, the Company announced that it was undertaking a 1 for 4 accelerated non-renounceable entitlement offer to raise up to $7.7 million with the funds primarily to be used for ongoing exploration and appraisal in key coal seam gas basins. The offer price was $0.10 per share, a 16.7 per cent discount to the Theoretical Ex-Rights Price at the time of the announcement of the capital raising. Due to strong demand from investors, a placement of $2.5 million was also undertaken.

The institutional component of the Entitlement Offer and Placement was completed on 16 August, raising $6.3 million.

In early September, the Company announced that the retail component of the Entitlement Offer had been completed with strong shareholder support, raising a further $3.1 million.

In total, the Company raised gross proceeds of approximately $9.4 million from the Entitlement Offer and Placement which will be used to fund the Company’s exploration and appraisal activities for 2012/13 and provide for additional working capital.

The Company was very pleased with the strong shareholder support received and also welcomed several new institutional investors to its register.

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

Australian Permits

ATP 337P Mahalo – Bowen Basin, QLD (Comet Ridge 35%)

Implementation of the first four-well pilot scheme commenced in mid-July with the drilling of the Mahalo 3, 4, 5 and 6 wells, north of Rolleston in the Bowen Basin, in central Queensland. Drilling was completed at the end of July. Each of the wells intersected approximately seven metres of net coal in the main Castor-Pollux seam as anticipated. The Castor-Pollux is the target of the reserves booking plan that is currently being executed by the Joint Venture. This area of the block has shown good continuity and thickness of coal with very good to excellent permeability across the main reservoir section.

The Joint Venture will commence the construction and operation of the Mahalo pilot this quarter, which is a key step in the reserves booking plan. These Mahalo pilot wells are expected to be completed for production (with tubing and pumps installed) in December with tanks, power generation and flowlines for the gathering system being installed concurrently. This will lead to the scheduled commissioning and start-up of the Mahalo production facilities in January 2013.

A second four-well pilot is scheduled to be drilled in 4Q 2012 at Mira, followed by an additional four core holes. The two pilot projects at Mahalo and Mira and four core holes are targeting an initial reserves booking in the ATP 337P Mahalo area in the next six months.

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A drilling rig has been contracted to drill the four Mira pilot wells, with the current Joint Venture schedule anticipating the rig will arrive in late November. Preparation of drilling pads in the Mira area is nearing completion. The rig is then expected to drill a further four core holes across the ATP 337P Mahalo block, with access agreements already in place for three of those wells.

Figure 1 – ATP 337P Mahalo

ATP 743P and ATP 744P – Galilee Basin, QLD (Comet Ridge 100%) ATP 1015P Farm-in Area – Galilee Basin, Qld (Comet Ridge 0%, earning 20% in Phase 1)

ATP 1015P Farm-in

In July, Comet Ridge announced that it had signed a three-Stage farm-in agreement with Queensland Energy Resources Pty Limited (QER) to earn up to 75 per cent of a farm-in area, located in the south east of permit ATP 1015P, adjacent to the Company’s 100% owned Gunn Project Area in ATP 744P.

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

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Figure 2 – ATP 744P Gunn Project Area and Farm-in Area

The Farm-in Area consists of two separate areas totalling approximately 825 km[2] . These areas represent 21 per cent of QER’s total permit area in ATP 1015P. QER will retain a 100 per cent interest in the remaining area of ATP 1015P, while Comet Ridge will become Operator of the Farm-in Area.

This transaction creates a continuous acreage position across a key area in the Galilee Basin, expanding the Gunn Project Area to the east and allowing it to be appraised as a single project.

The keys terms of the three-Stage Farm-in Agreement are:

Step	Interest Acquired	Work Program
Stage 1	20%	Drill two wells by30 Nov 2012
Stage 2	30%	Drill additional three wells by30 Nov 2013
Stage 3	25%	Drill additional four wells and develop pilot by30 Nov 2014
Total	75%	9 wells including pilot

On completion of each Stage of the farm-in, Comet Ridge has the option to proceed with the subsequent Stage.

Galilee Basin Drilling Campaign

Comet Ridge commenced a three-well exploration and appraisal drilling programme in the Galilee Basin just after the end of the September quarter. The first well, Gunn 2 in the Company’s 100% held ATP 744P, reached a total depth of 1,050 metres and intersected 16.2 metres of net coal in the Betts Creek Beds. Wireline conveyed testing tools were used to flow test four separate coal intervals in the

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

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Betts Creek Beds, including two coal intervals in the base of the section that had previously not been tested in the Gunn Project Area. All four coal intervals demonstrated good to excellent productivity.

The rig has now moved 17km SE to the Schmitt 1 well location in the Farm-in Area in ATP 1015P. Schmitt 1 will be fully cored through the Betts Creek Beds to determine key coal properties and is expected to reach a total depth of approximately 955 metres before moving to Cernan 1, the final well in the current programme. The Schmitt 1 and Cernan 1 wells will meet the first phase requirements for the farm-in and will earn Comet Ridge a 20 per cent equity interest in the Farm-in Area.

Gunn 2 will be completed for production in early November, with tubing and a pump installed, and the well will then have an Extended Production Test (EPT) conducted to obtain water quality data and to enable critical assessment of the completion methodology. These will be key design inputs for a subsequent pilot production scheme.

Gunnedah Basin, NSW (Comet Ridge increasing equity to: PEL 427: 50%, PEL 428: 60%, PEL 6: 22.5%)

In mid-September, after many months of detailed consultation with the industry and the community, the NSW Government released its Strategic Regional Land Use Policy (SRLUP). This includes 27 new measures designed to provide greater protection for farmers and to better balance competing land uses. The Policy followed an extensive period of consultation during which over 2,000 submissions were received and over 1,100 people attended public forums and information sessions.

NSW is a major importer of gas from other states, and there appears now to be a general recognition in NSW that continuing gas imports are not certain and that NSW needs to develop its own gas industry. There is also a recognition that the Queensland economy is benefiting from CSG production. This has occurred over the past 16 years without the aquifer and environmental degradation that is claimed by a range of green-based alarmist groups. To date approximately 3000 compensation and access agreements have been signed with landowners in Queensland and many of these are enjoying compensation payments which help to supplement other income.

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With the SRLUP released the NSW Government is now renewing exploration licences. Comet Ridge is working with JV partner Santos, to renew its Gunnedah Basin permits and plan the work programme for 2013. Whilst seismic surveys and drilling are planned, Comet Ridge does not anticipate field work commencing until 2013.

Just before the start of the September quarter, Comet Ridge announced that it had signed an Asset Sale Agreement to acquire Petrel Energy Limited’s interests in PEL 6, PEL 427 and PEL 428 in the Gunnedah Basin in northern New South Wales for $750,000 cash.

Figure 3 – Gunnedah Basin position after acquisition is finalised

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

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Comet Ridge Limited

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This transaction further consolidates Comet Ridge’s position in the northern Gunnedah Basin.

These three contiguous licences are located in the northern Gunnedah Basin, immediately north and west of Santos’ Narrabri CSG Project, and cover a total area of approximately 18,000 km[2] .

Comet Ridge currently holds a 25 per cent interest in PEL 427 and a 40 per cent interest in PEL 428, having acquired Davidson Prospecting Pty Limited in October 2010, which doubled Comet Ridge’s interest in PEL 428 from 20 to 40 per cent.

The transaction is subject to joint venture and NSW Government consents which were progressed during the quarter.

USA Interest

Comet Ridge Resources LLC (Comet Ridge 15.2%)

Late in the quarter, Denver-based Comet Ridge Resources LLC (CRR) issued a cash call. Under the shareholders agreement, Comet Ridge Limited can elect to pay cash calls or have its interest in CRR diluted. Given the strong focus that Comet Ridge Limited has on booking gas reserves for the eastern Australian market, Comet Ridge Limited elected not to pay the US cash call and consequently its interest in CRR has been reduced by approximately 2%. Formal documentation on this change in equity is yet to be finalised.

During the quarter, CRR (through its subsidiary Pine Ridge Oil and Gas, LLC) completed the sale of the Florence oil field for US$12.25 million. CRR has commenced its de-risking program on its large acreage positions in the Rockies including the acquisition of 3D seismic and preparations to drill exploratory wells in both project areas by year end.

In the Pacific Northwest, the Yeti 1 well at Grays Harbor was drilled to a total depth of 1381 metres in September and was plugged and abandoned following logging. CRR is now evaluating the technical data from this well and assessing the merits of further drilling on its large acreage position in the Grays Harbor area.

New Zealand Permits

PMP 50100 Greymouth Block – West Coast (Comet Ridge 100%) PEP 50279 Buller Block – West Coast (Comet Ridge 100%) PEP 50280 North Waikato – Waikato (Comet Ridge 100%)

Earlier in the year, Comet Ridge made an application to NZP&M (NZ Petroleum and Minerals) to extend the five year licence term for a further five years on both exploration blocks and is anticipating formal feedback shortly.

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

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Stephen Rodgers Company Secretary Comet Ridge Limited For further information please contact:

Media: Tor McCaul Dianne Monopoli Managing Director Principal Consultant Comet Ridge Limited Three Plus tor.mccaul@cometridge.com.au dianne@threeplus.com.au +61 7 3221 3661 +61 7 3503 5700

COMET RIDGE LIMITED - OVERVIEW

Comet Ridge Limited has significant Coal Seam Gas (CSG) projects in key regions of Queensland, northern New South Wales and New Zealand, as well as oil and gas interests in the United States. Gas resources have been certified, by independent professional certifiers, at four projects. The company is listed on the Australian Securities Exchange (ASX Code: COI) and is based in Brisbane. The Board and Management are experienced in establishing and developing energy projects.

Corporate Strategy

Comet Ridge has gained early entry into well-located exploration areas, allowing shareholders to gain substantial leverage into the upside value potential associated with exploration success.

Comet Ridge conducts CSG exploration and appraisal, with the aim of maturing exploration acreage from Gas Resources into Proven and Probable Gas Reserves. This process initially involves drilling wells in order to certify Prospective and Contingent Resources and then through further appraisal via Pilot Projects, with the intention of progressing into certified Reserves.

Where possible, Comet Ridge takes high equity positions in its large exploration permits, including a 100% interest in both its Galilee Basin and New Zealand assets. Comet Ridge has 35% equity in the ATP 337P Mahalo block in the Bowen Basin, and announced on 21 June 2012 that it has signed an agreement to increase its equity to 22.5%, 50% and 60% respectively in PEL 6, PEL 427 and PEL 428 in the Gunnedah Basin in New South Wales. This transaction is subject to government and joint venture consent to transfer.

Work Programme

Comet Ridge has an active exploration and appraisal work program for CSG projects in Queensland, northern New South Wales and New Zealand. Drilling for the first Pilot Project for ATP 337P Mahalo was undertaken in July 2012, with additional exploration and appraisal work planned for the Galilee Basin and Mahalo in 2012 and 2013.

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Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au 283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.au GPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

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