EDEN INNOVATIONS LTD — Capital/Financing Update 2009

Feb 26, 2009

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ACN 109 200 900

ASX ANNOUNCEMENT 27 February 2009

EDEN ENERGY TO BE REQUOTED ON ASX TODAY WITH STRONG CASH POSITION TO ACCELERATE GLOBAL GREEN FUEL PROJECTS

The Directors of Eden Energy Limited (ASX code “EDE”) are pleased to advise that the Company will requote its securities on the Australian Securities Exchange (ASX) today, Friday 27 February, 2009 in a strong cash position and with an invigorated and restructured portfolio of green fuel assets.

The opportunity to requote follows the receipt from asset sales in the order of A$8.8 million ( in cash and plant) and the successful completion over the five month absence from the ASX, of the Company’s readjustment of its portfolio and project priorities.

As a result of the changes, Eden Energy has now completed the sale of 90% of its coal seam methane rights in four petroleum exploration and development licences in South Wales (raising A$5.8 million).

The Company is also part way through the receipt of proceeds from the sale last month of two of its US hydrogen subsidiaries, (HyRadix Inc and Eden Cryogenics LLC), for a total consideration of A$2 million, plus ownership of a completed and installed hydrogen reformer. To date, $300,000 of the $2 million cash terms from the hydrogen asset sale, has been received, with the balance to be received over the next five months. Similarly, the hydrogen reformer is scheduled for delivery by May this year.

Eden has therefore received approximately A$6.1 million in cash, and is scheduled to receive a further $1.7m in cash by mid-year.

As a result of this strong cash position, particularly in the current stressed equity environment, Directors are also now structuring Eden’s budget and project priorities so that funds on hand and due, together with any other inflow that may become available, will be sufficient to enable Eden to meet its projected expenses for the next 12- 18 months.

The Company is also actively seeking green fuel-related projects in the United States and India – its core target markets - which will generate revenue and assist Eden achieve its objective of a positive cash flow from its operations within the next 2-3 years.

Directors will continue exploring all options for the development of Eden’s assets and appropriate capital raisings as required.

In respect of the requotation on the ASX, a detailed summary of Eden Energy’s current assets and activity, follows.

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HIGHLIGHTS

Corporate

• Cash of A$7.8m (plus the supply of a hydrogen reformer wort approximately $1m) was raised from the sale of selected US hydrogen assets and portion of Eden’s UK coal seam methane assets.

• A$6.1m cash has been received to date, with balance of $1.7m cash plus receipt of the hydrogen reformer due over next five months.

Hydrogen / Hythane® Projects

INDIA

• First public Hythane® refuelling station, built by Hythane Co for Indian Oil Corporation, completed in January 2009.

• First Hythane® bus demonstration project scheduled for late 2009 / early 2010 in Gujarat. Letter of Intent received from Gujarat State Petroleum for this project which will utilise the hydrogen reformer to be received as part of the sale of HyRadix.

• Hythane Co’s OptiBlend low cost, low emissions diesel / Natural Gas dual fuel kit proposed to be trialled on a diesel generator in April / May 2009.

USA

• San Francisco Airport ( SFO) Hythane Project

• Funding approved for 27 Hythane® fuelled vehicles

• Applications have been lodged for additional funding to enable Eden to develop a Hythane® station at San Francisco Airport, but some additional funding is required.

• Hythane Engine Certification – Hythane Company, in conjunction with BAF Technologies, anticipates obtaining CARB and EPA certification in April 2009 for the 2009 Ford E-450, which will be used for the SFO Hythane project. This will allow Hythane Co to sell and market a Hythane-fuelled vehicle commercially, and not be limited to use for demonstration projects only.

• US Stimulus Package - will provide $300M for 20 to 30 grants for projects that expand the use of alternative fueled and advanced technology vehicles. Hythane is well positioned to take advantage of this funding.

• AB 118 – California Assembly Bill 118 authorizes the Energy Commission to provide approximately $120 million annually as incentives for alternative and renewable low-carbon fuels projects.

• Hythane is specifically identified in this Bill as a technology that is expected as part of this funding.

• Negotiations are underway with various parties to secure a suitable site to test Eden’s diesel / Natural Gas dual fuel kit on a generator in the United States.

AUSTRALIA

• Hydrogen/ Solid Carbon Production Project – University of Queensland

Eden has agreed, in principle, to take a licence from UQ over its 50% share in the patents and intellectual property developed under this project, and has commenced negotiation with a major overseas company for development and scaling-up of this

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technology to produce hydrogen and solid carbon (including highly sought after carbon nanotubes) which can be used in place of materials such as steel and aluminium, in lieu of producing carbon dioxide.

Energy Projects

SOUTH WALES / UNITED KINDGOM COAL BED METHANE / NATURAL GAS

• Eden has completed the sale of a 45% interest (out of its 50% interest) in coal seam methane rights in four licences in South Wales. Eden retains a 5% interest in the CSM rights in these four licences (which contain a estimated resource of between 380- 650 billion cubic feet (bcf) of methane) plus a 50% interest in 14 other such licences in South Wales and UK , and a 50% interest in all deeper conventional oil / Natural Gas rights to all 18 licences.

GEOTHERMAL ENERGY / AUSTRALIAN NATURAL GAS TARGET

• Eden is examining strategies for spinning the geothermal / Australian Natural Gas assets out as a separate entity.

DETAILS

Hydrogen / Hythane® Projects

Hythane® and Dual Fuel (Eden 100%)

Hythane® is a premium blend of 93% Natural Gas and 7% hydrogen by energy (80 Natural Gas / 20% Hydrogen by volume). It increases engine efficiency by up to 10% and reduces emissions of oxides of nitrogen (NOx) and carbon monoxide (CO) by up to 50% compared with pure Natural Gas. NOx is the primary cause of photochemical smog and is a major contributor to lung cancer and respiratory ailments. CO is a highly poisonous gas.

First Public Indian Hythane® Station

The first public Hythane® refuelling station comprising an electrolyser capable of producing 5Nm3 of hydrogen per hour, a compressor, blender, storage tanks and dispenser (see Figures 1- 4), built by Hythane Co at Dwarka, near Delhi, for Indian Oil Corporation (a largely Indian Government-owned oil company) was completed in January 2009.

Hythane Co was awarded the contract to build this station in a public tender process, ahead of major international competition. A Hythane® tuned car, developed by Indian Oil under the Indian government hydrogen programme was the first vehicle that was refuelled.

It is anticipated that at least one if not two further Hythane stations will be built in Delhi ahead of the Commonwealth Games which are scheduled to be held in October 2010 in Delhi. Hythane Co proposes to tender to supply these stations.

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Figure 1 First Public Indian Hythane® Station and First Hythane® Fuelled Car

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Figure 2 The electrolyser and compressor at the Dwarka Hythane® Station

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Figure 3 Signboard at the Dwarka Hythane® Station showing HCNG (Hythane®)

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Figure 4 First Refuelling at Dwarka Hythane® Station, by Hythane Co personnel

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First Indian Hythane® bus demonstration project

This project, which is intended to be a full commercial scale demonstration is scheduled to be operating by late 2009 / early 2010 in Gujarat. The project is intended to involve the following:

• Installation of a hydrogen reformer capable of producing 100nm3/ hour of hydrogen

• Compression, storage, blending and dispensing equipment for production and delivery of Hythane®

• Approximately 50 buses operating on Hythane®.

In January 2009, Gujarat State petroleum, Eden’s proposed partner in this project and with whom a preliminary agreement was signed in 2007, issued to Eden a Letter of Intent to proceed with this project. Work is now underway preparing the engineering drawings in anticipation of the completion in the next month or so of the first Indian manufactured HyRadix reformer which will be supplied to Eden as part of the consideration for the sale of HyRadix, and be used to supply the required hydrogen.

OptiBlend Diesel / Natural Gas/ Hythane® Dual Fuel Project

Eden continues to progress its Diesel Dual Fuel Project. A dual fuel kit has been developed to enable the Indian manufactured 400kW Cummins diesel generator, which was earlier sent to the Hythane® Company’s test facility in Colorado, in the United States, to run on a combination of diesel and Hythane® or diesel and natural gas.

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Highly encouraging preliminary results, set out below, have been obtained which open up a large market for dual fuel applications in India, particularly in the power generation sector and also in the locomotive industry.

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The Potential Market for Dual Fuel Application in India

Hundreds of thousands of diesel powered generators and locomotives operate throughout India. Generators are installed in most major commercial, industrial and residential complexes. Many tens of thousands of these generators are large units (more than 400kW), many of which are operated for in excess of 6000 hours per year to produce base load power for the facilities. With the Indian price of natural gas being up to 60% cheaper than diesel fuel, very significant annual savings will be able to be obtained as these generators are converted to dual fuel operation as natural gas becomes more widely available throughout India. Natural gas availability is anticipated to rise from 5 million tonnes per annum to 25 million tonnes per annum during the next five years, and at the same time many thousands of kilometres of transnational pipelines and many city gas distribution networks which, are under construction or planned, are scheduled for completion during the same period to facilitate distribution of the natural gas to more than 500 million people.

It is not anticipated that private power production in India will be displaced in the short term, as it has been estimated that to meet projected growth, India will require more than 800 megawatts per week of additional electricity production capacity for the next 15 years. It is most unlikely that it will be able to meet even a large part of this demand.

Hythane Company has completed its development work on the dual fuel kit, and plans are underway to demonstrate firstly the natural gas/diesel version, and later the Hythane®.

Eden proposes to supply both the dual fuel kits (unless an arrangement with another dual fuel kit manufacturer is concluded) and the Hythane® production equipment and proposes to market the Hythane® dual fuel systems in conjunction with both Natural Gas suppliers and with the generator manufacturers to their existing customers. With the substantial saving in the cost of producing electricity, Eden anticipates that its sales of these products will increase rapidly as natural gas becomes more widely available over the next few years.

Indian Hythane Target Market Projections

There are still many contingencies and variables that are not yet certain, including the effects of the current market turmoil. The rate of take up of the Hythane® and dual fuel technologies in India will depend in a large part on how the Indian market responds to the global changes in oil and natural gas prices over the next 12-24 months and in particular the amount of the price differential between these fuels. However, it is anticipated that natural gas will continue to be far more economical in India that diesel, which will open up the Hythane and dual fuel markets.

The key driving factors for the Indian Hythane® market.

Subject to the longer term Indian response to the current economic turmoils, there are a number of drivers considered likely for the Indian Hythane® market. These are as follows;

1. Environmental Concerns

• As a rapidly industrialising nation, India faces huge environmental challenges, related not only to local air quality in its major cities, but also resulting from global climate change due to both potential increases in ocean levels and to reduction in the Himalayan icepack, which provides the water for many of India’s major rivers, and much of its water supplies. The World Bank, in 2007, estimated that presently there are more than 500,000 people dying in India annually, as a result of air pollution.

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Concern over the severe public health effects from poor air quality led the Indian Supreme Court in 2001 to compel all public transport in Delhi to be converted to natural gas operation, and to also identify a further 12 cities which are required to develop and implement similar plans. As a result of this change to natural gas, emission levels in Delhi went down, but now, with a huge increase in the number of vehicles, the high levels of air pollution have returned

2. Huge increase in motor vehicle numbers India is experiencing a very rapid economic expansion which is accompanied by a huge increase in the number of motor vehicles. This is both contributing to the increasing levels of air pollution, and also consuming ever larger amounts of expensive imported oil. In Delhi alone, the number of new car registrations is reportedly currently running at more than 400 per day, and this trend is mirrored in cities all over the country.

3. Indian Hydrogen Roadmap To address both the local air quality issue and also the longer term issue of global warming, the Indian Government in 2007 established a hydrogen road map, in which it is targeting to have at least one million vehicles operating on hydrogen based fuels by 2020. As part of this plan, the Government’s initiatives include:-

• 3.1 The Indian Government has adopted a hydrogen roadmap which proposes the use of Hythane® as the transitional fuel, to bridge between hydrocarbons and hydrogen, by providing an immediate benefit by using hydrogen to enrich natural gas to optimise efficiency and minimise emissions from natural gas, whilst at the same time making pure hydrogen available for hydrogen powered fuel vehicles (both fuel cell and internal combustion) as they become available to the market. As India already has developed natural gas refuelling stations in several cities, and this number is anticipated to be expanded significantly with the rollout of natural gas across the country, this provides an economically viable strategy for developing the necessary infrastructure to support a future hydrogen market.

• 3.2 The Government established the fund to develop Hythane® compatible engines with the automotive sector in the first public/private partnership in this technology area. This project aims at optimising the blends of hydrogen with natural gas for various engine types for optimal vehicle performance and minimal emissions.

• 3.3 The Government funded the first hydrogen/ Hythane® dispensing station at a natural gas outlet at Dwarka, near Delhi. This project, which is now complete, can supply both pure hydrogen and blended Hythane®. The Hythane® Company built this station for Indian Oil .

• 3.4 The appropriate committee has now approved the use of Natural Gas with up to 20% (by volume) hydrogen for vehicles. Regulations for Hythane stations are presently being drafted, opening the way for all necessary approvals and licences to be sought to enable the rollout of Hythane® stations and vehicles to begin.

4. Significant Increase in Supply of Available Natural Gas India has a growing domestic supply of gas, particularly from significant offshore natural gas discoveries during the past few years and in addition has established facilities for importation of significant quantities of liquefied natural gas. On the other hand, India has very little domestic oil, and as a consequence, is forced to import almost all of its rapidly expanding vehicle fuel requirements.

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5. Natural Gas as Vehicle Fuel Natural gas is already widely used in India as a vehicle fuel, particularly for buses, in the several cities that currently have natural gas available. It sells at approximately 40% cheaper than diesel and with rapidly rising oil prices, this differential is likely to increase and make natural gas an even cheaper alternative fuel. The Indian Government proposes to extend the use natural gas as a major fuel for motor vehicle and power generation applications, and as part of this strategy, already several major cities, including Delhi and Ahmedabad have commenced building extensive Bus Rapid Transit systems, which will operate exclusively on natural gas. It is planned to progressively establish similar systems in over 50 cities.

6. Expansion of Natural Gas Pipeline Network In order to deliver the gas, the Gas Authority of India, together with Reliance Industries Ltd, has commenced major programs to extend the Indian natural gas pipeline grid.

7. Expansion of City Gas Distribution Networks

• As part of the strategy to make natural gas available throughout India, in addition to the expansion of the trans-national pipeline grid, natural gas distribution networks throughout major cities are also being constructed. The Gas Authority of India has itself developed, in conjunction with joint venture partners, city gas distribution networks in 8 cities and is planning in the medium term a further 20 cities where it proposes to establish city gas distribution networks and in the long term plans to develop city gas distribution networks in a total of 230 cities. Reliance Industries, the other major gas supplier, also is planning to roll out gas ultimately to more than 60 cities.

Eden’s Progress to Date in India

Within this highly favourable and emerging energy market environment, Eden, on its “first mover basis”, has made significant progress during the past 3 years in marketing Hythane® in India. Highlights to date include:-

1. In March 2007, Eden entered into an agreement with Gujarat State Petroleum (“GSPC”) to promote Hythane® and to conduct a Hythane® bus demonstration in the state of Gujarat. This has been re-affirmed in January 2009 by GSPC forwarding a Letter of Intent to Eden. This project has the support of the Gujarat State Government and is planned to start by late 2009/ early 2010.

2. For the past two years, Eden has been working with Ashok Leyland pursuant to an agreement entered into in December 2006, developing Hythane® compatible bus engines.

3. In May 2007, Eden entered into an agreement with Larsen & Toubro, a world class Indian engineering company, to manufacture in India the hydrogen reformers of HyRadix Inc, then a wholly owned subsidiary Eden. The first reformer was completed in January 2009 and is scheduled for delivery to Eden within the next month or so.

4. In January 2009, Eden completed the construction for Indian Oil Corporation, which is one of India’s largest petroleum marketing groups, of the first public hydrogen/ dispensing station in India to supply fuel to motor vehicles running on either hydrogen or Hythane® (see above).

5. Eden has completed the development work on the dual fuel kits (see above) and anticipates a large emerging market for this product.

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Hythane® and OptiBlend Dual Fuel Projects in USA

San Francisco Airport (SFO) Hythane® Project

• Hythane Company is working with a major industrial gas company to provide hydrogen fueling adjacent to the Hythane fueling station at SFO. This will create a synergy for alternative fueling at the site, and provide the necessary hydrogen source for the Hythane fueling. Future station expansion plans include additional alternative fueling options, such at biodiesel and ethanol.

• As part of a 2008 alternative fuel award from the Bay Area Air Quality Management district, an additional 13 Hythane-fueled vehicles were awarded funding, bringing the total number of Hythane-fueled vehicles at the site to 27. In order to support the fueling requirements for the additional vehicles, the BAAQMD awarded an additional $205,000 for infrastructure funding for the station. For the project to proceed, some additional funding is required and it is hoped that this will be secured under the initiatives detailed below. This would then give Hythane Company a very strong beachhead into the US market, particularly in locations such as airports or very congested urban areas, where NOx is the major air pollution problem.

US Hythane Engine Certification

• Hythane Company, in conjunction with BAF Technologies, is obtaining CARB and EPA certification for the 2009 Ford E-450. Completed certification is expected by April 2009. This certification will allow Hythane to sell and market a Hythane-fueled vehicle commercially, and the vehicle will no longer be limited to use for demonstration projects only. Achieving this certification will give Hythane unlimited sales potential for a Hythane-fueled vehicle that is already used in a wide array of applications. Aside from the 27 vehicles already funded for the Hythane station at SFO, one additional E-450 is being requested by the City of Hempstead for use at their Hythane station. With this many orders already achieved before completion of certification, a healthy market is expected for the Hythane-fueled Ford E-450.

Significant US Funding Opportunities

• Stimulus Package - The American Recovery and Reinvestment Act (ARRA) of 2009 (economic stimulus package) will provide another $300M for 20 to 30 grants for projects that expand the use of alternative fueled and advanced technology vehicles. Hythane is well positioned to take advantage of this funding, and is working on project concepts with municipalities to take advantage of this funding.

• AB 118 – California Assembly Bill 118 authorizes the Energy Commission to provide approximately $120 million annually as incentives for projects that:

• Develop and improve alternative and renewable low-carbon fuels

• Optimize alternative and renewable fuels for existing and developing engine technologies

• Produce alternative and renewable low-carbon fuels in California

• Expand fuel infrastructure, fueling stations, and equipment

• Improve light-, medium-, and heavy-duty vehicle technologies

• Retrofit medium-and heavy-duty on-road and non-road vehicle fleets

• Expand infrastructure connected with existing fleets, public transit, and transportation corridors

• Hythane is specifically identified in this Bill as a technology that is expected as part of this funding

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OptiBlend Dual Fuel Projects in USA

Hythane Company is in discussions with a number of groups with the aim of trialling the OptiBlend dual fuel kit on diesel generators and possibly locomotives, as a first step towards a commercial rollout of this product in USA.

Hydrogen/ Solid Carbon Project (50/50 JV with The University of Queensland)

This project targeted production of hydrogen and carbon powder and fibres (commonly known as Carbon Black), instead of producing carbon dioxide. Under certain conditions, highly sought after multi-walled and single-walled carbon nanotubes were however also produced together with hydrogen. Under other conditions, instead of causing the methane molecules to separate into carbon and hydrogen, the molecules amalgamated to form more complex liquid hydrocarbons, some of which could potentially be used in the production of plastics.

Carbon nanotubes have enormous tensile strength (several hundred times stronger than steel) as well as being exceptional conductors of electricity, and this process potentially opens up large markets for this carbon in both the structural materials markets and the electronics market.

Eden has reached a preliminary agreement in principle with the University of Queensland (“UQ”) for Eden to take a licence from UQ over its 50% interest in the patents and intellectual property developed by this project, to enable Eden to progress its initial discussions with a major overseas company in relation to the up-scaling and commercialisation of this exciting technology and has commenced discussions with a foreign corporation for a joint venture to develop this technology and scale it up with a view to then commercialising it.

New Gas to Liquids Research Project – The University of Queensland

Eden and The University of Queensland (“UQ”) have taken out a provisional patent application on a new simplified method of producing liquid hydrocarbons and hydrogen from methane (natural gas), and have secured a $500,000 Australian Research Council Grant to fund a significant portion of the 3 year project. Preliminary indications are that the elegant new process has potential for production of both ethylene (which is used in the plastics industry as a major feedstock) and liquid motor vehicle fuel from natural gas, with highly encouraging economic potential particularly related to stranded natural gas fields in remote locations. A formal agreement to proceed with this project was entered into by Eden and UQ.

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ENERGY ASSETS

South Wales – Coalbed Methane/Coalmine Methane/Natural Gas

Award of 17 New Blocks

Eden Energy Ltd (“Eden”) jointly with Coastal Oil and Gas Ltd and UK Methane Ltd, its Welsh coal seam methane partners, were successful in the 2008 13[th] round of on-shore licensing conducted by the British government. Applications were made by the Joint Venture for 10 additional blocks surrounding their existing South Wales coal seam methane project, and Eden and its joint venture partner were successful in 8 of those applications. In addition, applications by the Joint Venture for five blocks in the South West of England covering an area of approximately 450km[2] of the coal fields, and for four blocks covering approximately 300km[2] of the Kent coal fields in Eastern England, were also successful.

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Prospective Resource Estimate

Following the completion of the first phase of exploration drilling in its South Wales Coal Seam Methane project, Eden Energy commissioned independent consultant, RISC Pty Ltd, to provide an initial CSM resource estimate. This resource estimate is based on wellbore data from the 3 holes drilled to date in PEDL 100 (Aberavon-1, Llangeinor-1, Pencoed-1) and available regional data from 33 offset wells previously drilled by British Coal in the area around PEDL 100.

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The RISC report indicates promising initial results, with estimated recoverable CSM resources of between 380 and 670 PJ (approximately 380 to 670 Bcf in volumetric terms) in PEDL 100. These resources are classified as Prospective Resources due to the usual uncertainties with limited data at this stage of appraisal. Further, the report concluded that the Westphalian coal characteristics appear comparable to those in some Queensland Permian CSM projects.

Further Potential Upside in CSM Resources in PEDL 100

RISC also notes potential upside to the above resource volumes as follows

• Pencoed-1 did not reach planned terminal depth and therefore did not sample full potential of the area around this well. Deeper coals which were not reached are likely to have higher gas contents. This possible extra gas has not been included in the resource estimate.

• Permeability measurements are few due to unfavourable hole conditions. Some encouraging results have been obtained.

• Fault/fracture enhanced permeability is likely and this could greatly enhance connectivity of coal seams.

As mentioned above, significant further upside exists in the area around the Pencoed-1 well. The best quality coals are in the deeper coal sections, which were not penetrated in Pencoed-1 due to drilling difficulties. Additional prospective CSM resources in the order of 80PJ to 160 PJ might have been expected if Pencoed-1 was drilled to its planned terminal depth, assuming the equivalent coal seams were encountered as in the lower sections of Aberavon-1 and Llangeinor-1 wells. This will be tested in subsequent appraisal drilling.

Completion of Eden’s PEDL 100 CSM Farm-in Obligations

With the completion of the three boreholes in PEDL 100, Eden discharged its farm-in obligations under the original farmin agreements with Coastal Oil and Gas Limited to earn 50% in the CSM interests in the Westphalian coal seams in PEDL 100. The purchaser from Eden has taken over the expenditure obligation of 500,000 pounds to complete its farmin obligation on PEDLs 148 and149, the two other licences that were the subject of the original farmin agreement, shown in Figure 1. Eden retains the obligation to expend 1 million pounds to earn a 50% interest in the deeper conventional natural gas targets in all three PEDLs. In aggregate, these PEDLs cover a combined area of 430 Km2, or more than 20% of the South Wales coal bearing basin.

Sale of 45% interest in CSM interests in PEDLs 100, 148, 149 and 218

To provide ongoing working capital, Eden entered into the agreement detailed above to sell for approximately A$5.6 million, 45% out of its 50% interest in the CSM rights to PEDLs 100, 148, 149 and 218 in Wales. This sale was completed on 25 February 2009. This leaves Eden with a 5% interest in the CSM in these four licences, together with its full 50% interest in the other 14 licences, and in the deeper conventional hydrocarbon targets on PEDLs 100, 148, 149 and 218.

Other Potential UK Hydrocarbon Resources

In addition to coal seam gas, there is a substantial opportunity for other unconventional gas resources, abandoned mine methane in the old mine shafts and conventional hydrocarbons in many of these new areas. Potential exists for Devonian-age shale gas and conventional hydrocarbons in sandstones located beneath the coal beds, similar to those existing in the Appalachian Trend in the United States of America, where major shale gas and Devonian-age sandstone and shale hosted natural gas deposits exist beneath the younger coal measures. It has been interpreted that the United States, the United Kingdom and Western Europe were combined at the time of deposition of both the Devonian-age sandstones and the younger coal measures,

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and if this interpretation proves correct, significant potential exists for conventional hydrocarbon deposits to be found in these sandstones and shales beneath the coal fields in South Wales and South Western England.

UK Hydrocarbon Assets Potential

At 30 September 2008, the weighted average of all trades for that day on the OCM platform for the UK Gas Price (NBP) was £0.6393 per therm, based on the weighted average of all trades for that day on the OCM platform (source www.apxgroup.com). Using an exchange rate of 0.3952, this is equivalent to AUD$15.34 per Gigajoule. Coupled with the very limited reserves of gas available in UK, the outlook for gas prices is very strong.

The combination of high UK gas prices, the fourfold increase, to over 1,800 km2, in the total area over which Eden and its JV partners hold petroleum and coal seam methane licences in the UK, provides a very strong the base for the potential development of a significant gas company over the next 1 to 2 years. This adds significant potential value to Eden’s CSM licences. Eden retains a 5% interest in PEDL 100 and the three other licenses( PEDLs 148,149 and 218) in which it sold a 45% interest in the CSM, and 50% in all natural gas and shale gas in all 18 licences and 50% in all CSM rights in the remaining 14 licences in Wales and the UK.

Eden proposes to maintain its interests in these UK gas assets, either directly or through a shareholding in a possible new company that may be established to fund the ongoing exploration costs.

Geothermal Exploration, South Australia (Eden 100%)

Eden, through its wholly owned subsidiary, Terratherma, holds 23 geothermal exploration licences. The exploration portfolio contains a large number of high quality geothermal plays at various stages of maturity. These are grouped in four geographical areas of interest – Moomba (contiguous to Geodynamics’ industry leading Habanero Project), Lake Torrens/Olympic Dam, Renmark/Riverland and Port Pirie.

An independent Risk Assessment of Geothermal Plays was completed by Hot Dry Rocks Pty Ltd on all Eden Geothermal Exploration Licences. This report details technical prospectivity and specific activities required to demonstrate Inferred Geothermal Resources for each Geothermal Exploration Licence in Eden’s portfolio. A comprehensive exploration activity plan through to end 2010 has been developed from this, high-grading the most promising geothermal plays to deliver “Inferred Geothermal Resources” under the new Geothermal Resources Code recently adopted by the Australian Geothermal Exploration Association as quickly as practical. Discussions with various parties are underway to commence the exploration program in 2009.

Demonstrating “Inferred Geothermal Resources” will position Eden to attract quality joint venture partners for the more technically complex and expensive ‘proof of concept’ phases leading to full commercialisation and will allow it to qualify for Government funding programs to progress to deep drilling. Initial plans suggest up to five separate “Inferred Geothermal Resources” might be demonstrated in Eden’s Exploration Licence Areas (perhaps one or two by end 2009 and the rest by end 2010/early 2011 if the program can commence in Q2 2009).

Eden proposes to spin these geothermal assets out into a separate company as soon as possible so that they can be funded independently of the core Eden projects.

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South Australian Gas Play – Mulgaria Sub-basin (Eden 100%)

The gas play area is located in PEL 183, 70km north of Roxby Downs and Olympic Dam.

PEL183 contains the Mulgaria Sub-basin, a geological feature newly recognised on Geoscience Australia (GA) seismic data collected in 2004. Review of gravity data by Eden suggests the subbasin occupies an area of up to 120km long by up to 10km wide. Anticlinal structures highlighted by the seismic imaging correspond with magnetic units within the sediments, supporting the gravity interpretation – the largest has been named the “Arthur Hill Anticline”.

The GA Seismic data was re-processed by Eden. “Bright spot” and “flat spot” anomalies are identified in seismic reflection data at the crest of the anticline and its north-eastern limb. The seismic features at the crest of the anticline could be indicative of potentially large gas accumulations. There is also the possibility that any gas on these structures may contain attractive amounts of helium, given the age and radiogenic character of the basement rocks in the region.

On 4 February, 2008, Petroleum Exploration Licence 183 was granted to Eden Energy for 5 years over 3982km[2] . No field work has been carried out on this prospect. Geological investigations to date, based on regional data, have provided positive indications of potential hydrocarbon source rocks in the area and at least one indication of gas in an offset well. These studies are ongoing. Directors propose to seek a joint venture partner for this project, or otherwise find a means for this project to be independently funded.

SUMMARY

Whilst the past five months have been very difficult following the collapse of Lehman Brothers and the ensuing financial turmoil which triggered the withdrawal of the party that had agreed to provide funding to the Eden Group, Directors have been able to restructure the Group and sell some assets but at the same time, believe that the Company has retained many of its core assets, being the Hythane project, and a modest part of the UK/ Welsh gas assets. In addition, Eden has greatly reduced its cash burn rate, raised in cash and kind the equivalent of nearly $8.8 million and removed approximately $2 million of contingent liabilities from the Group balance sheet, without further dilution to shareholders. Subject to the overall global financial market remaining reasonably stable, Directors look forward to improved times ahead.

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Gregory H Solomon

Executive Chairman

For further information please contact Greg Solomon (+61 8 9282 5889) or visit our website (www.edenenergy.com.au)

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