COMET RIDGE LIMITED — Interim / Quarterly Report 2012

Jul 29, 2012

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30 July 2012

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JUNE QUARTERLY REPORT

• Drilling of pilot production wells commenced at Mahalo

• Comet Ridge farms-in to strategic Galilee Basin area adjacent to Gunn Project Area

• Comet Ridge acquires additional equity in Gunnedah Basin

Coal seam gas explorer Comet Ridge (ASX:COI) has entered a new phase in its operational and commercial development at the end of the June Quarter, the culmination of two years’ planning and technical work.

At Mahalo, the 2011 transaction with Stanwell Corporation has translated into the commencement of a 12-well drilling programme for 2012, including two pilot projects. Results to date have been positive. Comet Ridge’s expenditure commitments are to be carried by Stanwell up to A$8 million.

At the Gunn Project Area in the Galilee Basin, Comet Ridge plans to commence a three-well exploration and appraisal programme in September. This follows the announcement on 27 July that, Comet Ridge had concluded an agreement with Queensland Energy Resources Limited for a three-Stage farm-in to a large adjacent area, expanding Comet Ridge’s exposure to the Gunn Project Area. Two of the wells planned for 2012 will be drilled in the farm-in area.

The 2012 drilling programme is aimed at converting resources to reserves at Mahalo within the next six months, and preparing the way for further reserves certification across Mahalo and the Gunn Project Area in 2013.

Following a series of exploration studies in the northern Gunnedah Basin earlier this year, which indicated the CSG potential of the area, Comet Ridge announced the acquisition of Petrel Energy Limited’s interests in the Gunnedah Bain. This increases Comet Ridge’s equity in its Gunnedah Basin permits PEL 427 and PEL 428 to 50% and 60% respectively, as well as the acquisition of a 22.5% CSG interest in the adjacent PEL 6.

The next twelve months should see increased exploration and appraisal activities across all of Comet Ridge’s permit areas, as the focus shifts to realising the value created by the recent acquisitions and past exploration through drilling and pilot operations.

Australian Permits:

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

Planning and preparation for the ATP 337P Mahalo 2012 Drilling Programme continued during the quarter, securing relevant approvals and preparing drilling sites. The 12-well programme started in July

Comet Ridge Limited T: +61 7 3221 3661 E: info@cometridge.com.au283 Elizabeth St, Brisbane, Qld, 4000 Australia ABN 47 106 092 577 F: +61 7 3221 3668 W: www.cometridge.com.auGPO Box 798, Brisbane, Qld, 4001 Australia

ASX CODE: COI

Comet Ridge Limited

with the drilling of the first three pilot wells just south of the existing Mahalo 1 well location. A fourth pilot well (Mahalo 5) is currently being drilled. The first three wells have shown good continuity and thickness of coal and two of the wells have very good to excellent permeability across the main reservoir section.

A second four-well pilot is scheduled to be drilled later in the year at Mira, followed by an additional four core holes. The two pilot projects and four core holes are targeting an initial reserves booking in the ATP 337P Mahalo area in the next 6 months.

Comet Ridge has a 35% interest in ATP 337P Mahalo, having divested a 5% interest in the asset in late 2011. Under the terms of that divestment, Stanwell Corporation Limited will fund Comet Ridge’s future expenditure at ATP 337P Mahalo up to A$8 million. This is expected to carry Comet Ridge through the 2012 Drilling Programme expenditure commitments.

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Figure 1 – ATP 337P Mahalo

Under the terms of the Sale and Purchase Option Agreement concluded with Stanwell in December 2011, Comet Ridge could realise A$1 million in cash for every 1 PJ of 2P Reserves it has booked at the end of 2013, assuming Stanwell elects to acquire Comet Ridge’s remaining 35% interest in this asset.

ATP 743P and ATP 744P – Galilee Basin, QLD (Comet Ridge 100%)

Comet Ridge plans a three-well exploration and appraisal drilling programme in the Galilee Basin for 2012, which will further appraise the extent and characteristics of the coals in the Gunn Project Area. Considerable progress was made during the June Quarter on the preparation for this drilling programme, which will be operated by Comet Ridge.

Earlier in 2012, Comet Ridge completed a geophysical interpretation of a major Airborne Gravity survey over the eastern part of Galilee Basin. During the June Quarter, Comet Ridge integrated these gravity surveys with the seismic data acquired in late 2011, and updated its geological models. This new data was used to optimise the planned 2012 drilling programme well locations.

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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Post the June Quarter, 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% of the Lake Galilee Farm-in Area. The farm-in area is located in the south east of permit ATP 1015P, between the west and east parts of Comet Ridge’s ATP 744P, where Comet Ridge has a 100% interest.

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Figure 2 – ATP 744P Gun Project Area and the Lake Galilee Farm-in Area

The Lake Galilee Farm-in Area consists of two separate areas totalling approximately 825 km[2] . These areas represent 21% of QER’s total permit area in ATP 1015P. QER will retain a 100% interest in the remaining area of ATP 1015P, while Comet Ridge will become Operator of the Lake Galilee 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 Lake Galilee 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. Drilling locations have been finalised for the planned 2012 programme, with one well in ATP 744P and two wells in the Lake Galilee Farm-in Area. Two of these wells will further appraise the Gunn Project Area, while the third will test a new exploration play concept.

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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All permitting and approvals are progressing to schedule, with the first well expected to be spudded in September.

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

On 21 June 2012, 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 A$750,000 cash. 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% interest in PEL 427 and a 40% 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%.

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Figure 3 – Gunnedah Basin position after acquisition is finalised

The Petrel Energy permits contain both a Coal Seam Gas and Conventional Oil and Gas interests, detailed below:

Petroleum Licence	CSG Interest Acquired	Conventional Interest Acquired	CSG Interest After Transaction	Conventional Interest After Transaction
PEL 6	22.5%	20%	22.5%	20%
PEL 427	25%	75%	50%	100%
PEL 428	20%	60%	60%	100%

This latest consolidation has reduced the number of parties across this portion of the Gunnedah Basin. The company believes that the Gunnedah Basin will emerge as a major CSG province, and this latest acquisition is consistent with Comet Ridge’s strategy of building material interests in prospective CSG basins. Following completion, this acquisition will increase Comet Ridge’s resources base in eastern Australia, adding 243 PJ of contingent resource and 1079 PJ of prospective resource and taking the company to over 5400 PJ of total resources in Queensland and NSW.

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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The transaction is subject to joint venture and NSW Government consents which are currently being progressed.

Comet Ridge has recently completed an extensive review of the magnetic and gravity data sets available over the northern Gunnedah Basin. The subsequent geophysical modelling of this data has significantly advanced Comet Ridge’s view of the geology and prospectivity of the region. This work has identified some very promising new prospects, to be tested through a combination of seismic and exploration drilling.

USA

Comet Ridge Resources LLC (Comet Ridge 17.26%)

In June, Comet Ridge Limited announced that Comet Ridge Resources LLC (CRR), in which it has a 17.257% interest, has undertaken several transactions to strengthen its exploration portfolio.

The US company, based in Denver, Colorado, has recently undertaken a series of transactions that strengthens its cash position, divests a more mature producing asset and builds on its exploration potential.

CRR (through its subsidiary Pine Ridge Oil and Gas, LLC) entered into an agreement to sell the Florence oil field for US$12.25 million. This transaction was completed just after the end of the quarter. The company has had significant success in redeveloping the Florence oil field, having completed 22 wells and producing 630,000 bbl of oil. The sale of Florence allows CRR to focus on new exploration and development opportunities.

In Colorado, the company has assembled a position in excess of 100,000 net acres. Planning and permitting of a 3D seismic acquisition survey is well advanced.

In the Northern Rockies, CRR has acquired a 20% operating interest in excess of 110,000 gross acres offering significant oil potential. The company can increase its interest to 50% through a combination of work and a second cash payment. CRR has already commenced a seismic acquisition programme over one prospect, and is preparing another prospect for drilling.

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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 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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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 independently certified 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, 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 holds 25% and 40% equity respectively in PEL 427 and PEL 428 in NSW.

Certified Resources

In executing our strategy, Comet Ridge has successfully independently certified the following Prospective and Contingent Resources:

Comet Ridge Limited – Net Recoverable Resources	Comet Ridge Limited – Net Recoverable Resources	Comet Ridge Limited – Net Recoverable Resources
Project	Location	Contingent Resource(PJ)	Prospective Resource(PJ)
Gunn Project Area(ATP 744P)	Galilee Basin, Qld	1,870	597*
Mahalo Block(ATP 337P)	Bowen Basin, Qld	387	-
PEL 427 and PEL 428	Northern NSW	231	1,022
PMP 50100 and PEP 50279	West Coast,Sth Island,NZ	244	-
Total		2,732	1,619

*Where the auditor has detailed Prospective Resources in a range (low, middle and high) the mid-range case has been listed in the table.

Work Program

Comet Ridge has an active exploration and appraisal work program for CSG projects in Queensland, northern NSW and New Zealand. The first Pilot Project for ATP 337P Mahalo is planned for 2012, with additional exploration and appraisal work planned for the Galilee Basin and northern NSW.

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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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