COMET RIDGE LIMITED — Interim / Quarterly Report 2014

Oct 29, 2014

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30 October 2014

September 2014 Quarterly Report

Highlights:

• Maiden 2P and 3P gas reserves independently certified in Mahalo Block with substantial contingent resource upside

• Completion of the purchase of 5% Mahalo equity back from Stanwell Corporation

• Pilot gas production continues steady increase

• Institutional Placement successfully concluded, raising approximately $8 million, well supported by new investors and existing shareholders

• Retirement of long term non-executive director, Jeff Schneider at the November AGM

Australian Permits

ATP 337P Mahalo – Bowen Basin, Qld (Comet Ridge 40%)

Maiden Reserves

On 28 August 2014, the Company announced its first independently certified reserves at the Mahalo Block with a substantial increase in contingent resource also achieved. Commenting on that announcement in August, Managing Director Tor McCaul said “This initial reserve booking demonstrates the commerciality of the Mahalo Gas Project (“Project”) and is a major milestone for Comet Ridge.

The Project is located just 11 kilometres from an infrastructure connection to the Gladstone LNG market with significant gas supply requirements and rising prices (see Figure 1).

While we are pleased to have achieved this significant milestone, we view this as an important first step. Our plan is to continue to build reserves and upgrade the category of these reserves as further production data from Mahalo is collected and additional appraisal is undertaken.”

As part of the plan to build reserves and deliverability at the Project , Comet Ridge and its joint venturer’s have approved the drilling of the Project’s first horizontal well at the Mahalo Field Pilot (see Figure 2 below), with that well (Mahalo 7) expected to spud early in November 2014.

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 1 – Regional Location of Mahalo JV Area

The workover of the selected vertical well, Mahalo 6, to prepare that well for the intercept by the horizontal well, was completed earlier this week.

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Figure 2 - Mahalo and Mira pilot layout

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Completion of Purchase of 5% equity from Stanwell Corporation

After the end of the quarter, the joint venture signed off the final documentation recording the assignment of Stanwell Corporation Limited’s (“Stanwell”) 5% interest in the Project to Comet Ridge. Comet Ridge’s legal interest in the Project is now 40%.

The execution of the assignment documents was the last outstanding condition of the agreement that was announced on 19 March 2014, between Comet Ridge and Stanwell (2014 Agreement) which replaced the original Sale & Purchase Option Agreement signed in September 2011.

Operations

At the Mahalo Field pilot, the Mahalo 3, 4 and 5 wells continued to dewater during the quarter with Mahalo 6 being used as a pressure observation well. Refer to the photograph in Figure 3 (below) for the layout of the Mahalo Field Pilot. Gas production from the Mahalo Field Pilot has consistently increased since early March when the wells were brought back on line following the Mahalo stimulation.

At the Mira Pilot Scheme, approximately 13km southeast of the Mahalo Pilot, one well (Mira 2) is being used as a pressure observation well, whilst the Mira 3, 4 and 5 wells are being produced to dewater the reservoir and allow gas to flow (refer Figure 2 above which sets out the location of these and the Mahalo wells). Gas production continues to be measured on two of the three flowing Mira wells.

Figure 3 - Mahalo pilot scheme view

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All gas production from the pilots continued to be flared during the quarter.

ATP 743P and ATP 744P – Galilee Basin, Qld (Comet Ridge 100%) ATP 1015P – Galilee Basin, Qld (Comet Ridge 20%)

Harrington-1

As reported previously, drilling of the Harrington 1 appraisal well in the north of ATP 1015P was finished late in the June quarter. The well is located 115 km NE of Aramac and was a 24 km step out to the NE of the Gunn 1 and Gunn 2 wells in ATP 744P where a successful Extended Production Test was conducted in 2013 (See Figure 4).

The Harrington 1 well reached a total depth (TD) of 1042 m and was cored through the entire Betts Creek section, intersecting approximately 19 m of net coal across the targeted coal seams. Gas was observed bubbling from the core as it was brought to surface and detailed laboratory analysis designed to determine key coal parameters was undertaken during the quarter.

In particular, desorption testing of the coal cores was completed late in the quarter. Lab work is ongoing, with measurement of crushed gas, petrology and adsorption isotherms still to be completed. Comet Ridge is pleased with the raw gas results recorded to date which help prove that the coals in this area remain gas prone.

Net coal thicknesses from wells drilled by Comet Ridge in this area of the Galilee Basin have ranged between 16 m and 24 m, with Harrington 1 demonstrating that coals extend with some consistency over a wide part of the eastern Galilee Basin.

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Figure 4 – Regional location of Comet Ridge Galilee Basin blocks

Equity Partner for a Gunn Project Area Pilot or Pre-Sale of Gas

Comet Ridge continues to evaluate options for funding the ongoing development of the Gunn Project Area and is pleased that two of the Galilee Basin proposed large scale coal mines continue to receive regulatory sign-offs as they move through the project approval process. These coal mines will bring infrastructure and a large power market into the eastern part of the basin, very close to Comet Ridge’s contingent gas resource base. A number of commercial options exist for development of gas from the eastern part of the basin and these are currently being explored.

Conventional Petroleum Potential

Technical work continued during the quarter to evaluate conventional petroleum potential in the Company’s Galilee Basin blocks. Significant gas potential outside of coal seams exists within the deeper section yet to be drilled and tested. Three historic petroleum wells within ATP 743P and ATP 744P recovered oil and/or gas from Lake Galilee Sandstone at the base of the Galilee Basin.

Carmichael 1, drilled in 1995 flowed gas to surface on three tests from deeper sandstone intervals (2600m) using suboptimal drilling practices and an additional thick section was not tested (See Figure 5). This well is close to the area around the Gunn Project Area and demonstrates further prospectivity in the eastern part of the Galilee Basin.

Comet Ridge is currently assessing potential farm-in opportunities to drill and test the Carmichael structure with current drilling technology and practices.

Figure 5 – Carmichael – 1 near base Lake Galilee Sandstone time structure.

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Gunnedah Basin, NSW (Comet Ridge CSG equity: PEL 427: 50%, PEL 428: 60%, PEL 6: 22.5%) (Comet Ridge Conventional equity: PEL 427: 100%, PEL 428: 100%, PEL 6: 99.7%)

On 30 September, the NSW Chief Scientist released the long awaited report on the Coal Seam Gas Industry. While the report noted that there were some technical challenges and risks associated with the industry, it was also made clear that through the high standards of engineering and professionalism by industry participants, the risks can be safely managed. Comet Ridge, while still reviewing the report and it’s appendices in detail, is pleased that the report has finally been delivered and believes that the industry should now be able to move ahead with the implementation of the recommendations.

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Figure 6 – Comet Ridge’s Gunnedah Basin position

It is encouraging to see a growing level of support for the gas industry in the Narrabri area. A local support group has been formed by community members and local business to give a voice to the many people who welcome the development of a local gas industry, as indeed many people do in Queensland. Comet Ridge is very pleased to see this growing support of the industry and believes that the focus on science is helping to highlight the misinformation being spread by the anti-gas movement which in turn has provided confidence that the industry is not only safe but will provide jobs and economic prosperity to the region.

Comet Ridge continues to work with Joint Venture partner and CSG Operator Santos, to renew the Joint Venture’s Gunnedah Basin permits and plan the future work programme to evaluate a number of Permian-aged troughs that have been identified through the acreage position.

Several of these troughs may contain large volumes of recoverable gas, in similar fashion to the Bohena Trough just to the south of PEL 427. To date, PEL 427 has been extended through to May 2016 and extensions continue to be processed for PEL 428 and PEL 6.

Comet Ridge’s three contiguous licences are located in the northern Gunnedah Basin, immediately north and west of Santos’ Narrabri CSG Project in the Bohena Trough, and cover a total area of approximately 18,000 km[2] . Comet Ridge currently holds between 22.5% and 60% CSG interest across these licences and between 97.5% and 100% conventional oil and gas equity across these permits and is the conventional operator. Santos operates the CSG interest.

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New Zealand

In August 2014, Comet Ridge submitted an application to New Zealand Petroleum and Minerals (NZPM) to surrender PEP 50279. The company decided it was not practical or economically feasible to comply with the next stage of the work program which was the drilling of two coal seam gas wells. NZPM subsequently approved the relinquishment in early September 2014.

USA Interest

Comet Ridge Resources LLC (Comet Ridge 10.2%)

Drilling operations on the two to three re-entry opportunities in SE Colorado have been delayed until the fourth quarter due to protracted land negotiations. Comet Ridge Resources LLC (CRR) will have a carried 33% working interest through production testing of the first two wells. Targets include the Mississippian and Pennsylvanian sections.

CRR has completed mapping of its Falcon 3D survey and has mapped and leased a stratigraphic channel sand prospect that it will seek partners for in the fourth quarter.

In the northern Rockies, CRR’s wholly owned subsidiary, Comet Ridge Montana, LLC, has negotiated the sale of its interests in a joint exploration area to its partner for US$4 million. The transaction is expected to close in the fourth quarter. Comet Ridge Montana will retain its position in approximately 18,000 net acres that fall outside of the jointly held area.

Corporate

Institutional Placement Successfully Concluded

After the end of the quarter, the Company successfully completed a Placement to institutional and sophisticated investors for approximately $8 million in order to fund future appraisal and development work, predominately in the Mahalo block.

This institutional placement was well supported by new investors and existing shareholders. Funding is now in place for the upcoming Mahalo appraisal program to build reserves and gas deliverability, commencing with a horizontal well to spud in November.

In addition, eligible shareholders recorded on the share register as at 17 October 2014 have been invited to participate in a Share Purchase Plan (SPP) to raise up to an additional $2 million, which closes on 17 November 2014. Shares issued under the SPP will be at the same price that shares were offered to institutional and sophisticated investors under the Placement.

Retirement of Jeff Schneider

After the end of the reporting period, the Company announced that Jeff Schneider would not be seeking re-election at the upcoming AGM in order to reduce his business commitments. Mr Schneider has been a Director since the founding of the Company in August 2003, and served as Chairman from 2004 to 2009, steering the company through its original listing, the GFC and then the merger with Chartwell Energy in April 2009.

Mr Schneider will be missed, not just because of his determination, depth of industry experience and wise counsel, but also for his great company and humour. Mr Schneider’s retirement will become effective from the close of this year’s Annual General meeting on 27 November 2014.

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Stephen Rodgers Company Secretary Comet Ridge Limited

For further information please contact:

Tor McCaul Managing Director Comet Ridge Limited tor.mccaul@cometridge.com.au +61 7 3221 3661

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 and gas reserves were recently certified at the Mahalo project in Queensland. 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 two blocks in the Galilee Basin and a block in New Zealand. Comet Ridge has 40% equity in the ATP 337P Mahalo Block in the Bowen Basin, and CSG equity of 22.5%, 50% and 60% respectively in PEL 6, PEL 427 and PEL 428 in the Gunnedah Basin in New South Wales.

Work Programme

Comet Ridge has an active exploration and appraisal work plan for CSG projects in eastern Australia, focused on the conversion of contingent resources to reserves.

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

Comet Ridge Limited