TALIUS GROUP LIMITED — Interim / Quarterly Report 2007

Apr 29, 2007

www.advanceenergyltd.com.au Suite 4, 16 Ord Street I tel: 08 9486 1122 West Perth, Australia | fax: 08 9486 1011 PO Box 1779, ACN 111 823 762 West Perth 6872

ASX Announcement 30 April 2007

MARCH 2007 QUARTERLY ACTIVITIES REPORT

OVERVIEW

Highlights for the quarter ended end March 2007:

• $\bullet$ . Attributable net cash flow from oil and gas sales increased from \$258,000 in the December 2006 quarter to \$820,000 for the quarter as the PK1 acquisition started to contribute. This represents a 218% increase over the last quarter.
• Completed three wells in Martin County, being the Strain 16-2, Prudie Brown 10-1 and $\bullet$ Hull No1. The full impact of these completions will be reflected in the next quarter.
• Spudded Strain 16-3 $\bullet$
• Completed workovers on 5 wells $\bullet$
• Drafted and commenced implementation of the Possum Kingdom development plan $\bullet$
• $\bullet$ Raised an additional \$525,000 through the issue of various convertible notes

OPERATIONS

Palo Pinto

During the quarter, NAE completed the evaluation and drafted an initial development plan for the new PK1 property acquired late 2006.

Possum Kingdom Project Development Summary
Lease Name	Well No.	Working Interest	Net Revenue Interest	Development Description	Date	100% Cost (USS)	Net cost (USS)	Gross Incremental Reserves (Mch	Net to AVD Incremental Reserves (Mcf)
Deno Gragg	2	90.00%	72.00%	PDPE-Add Perfs & Frac	Apr-07	80,000	72,000	270,000	194,400
Deno Gragg	3	90.00%	72.00%	PDPE-Frac	Apr-07	70.000	63.000	270.000	194,400
Coleman		90.00%	71.14%	PDPE-Frac	Apr-07	70,000	63,000	150.000	106,710
Coleman	2	90.00%	71.14%	PDNP-Perf & Frac	$J$ ul-07	80,000	72,000	317,000	225,514
Dabnev		90.00%	71.14%	PDNP-Perf & Frac	$J$ ul-07	80.000	72.000	204,000	145,126
Dabnev	2	90.00%	71.14%	PDNP-Perf & Frac	Jul 07	80,000	72,000	205,000	145,837
Deno Gragg	3	90.00%	72.00%	PDNP-Perf & Frac	Jul-07	80,000	72,000	121.000	87.120
Deno Gragg	3	90.00%	72.00%	PDNP-Perf & Frac	Јап-09	80,000	72,000	144,000	103,680
Deno Gragg	4	90.00%	72.00%	PUD	$J$ un-07	400,000	360.000	550,000	396,000
Dabnev	3	90.00%	71.14%	PUD	May-07	400,000	360.000	550,000	391,270
Francis	2	90.00%	72.00%	PUD	Apr-07	400.000	360.000	550.000	396,000
TOTALS						1,820,000	1,638,000	1.681.000	1,202,786

NAE also started limited work on four of the wells to maximize immediate production. As expected, current expected production on the property was retarded by the downtime experienced.

The following short term issues at the Palo Pinto properties have been encountered during the first quarter of the year:

• PK1 Liquid condensate loading had been experienced on the Dabney 1, 2 and Coleman 2 wells. This had been anticipated during the initial evaluation and pumping units had been installed. The decision was made by NAE to use electricity to run these pumps as opposed to lease gas. This decision was based on the proximity of the electricity supply. Several ice storms in the area during January and February caused a delay in the supply of power. The electricity provider has now completed installations and production has now increased to projected levels.
• The Lone Camp project also faced down time in the first quarter of this year. In January $\bullet$ the wells were shut for a week while Enbridge made repairs on their gas plant. In February a leak in our five mile pipeline resulted in shutting the wells for 4 days. All wells are back in production and producing to expectations.

Management is confident that the known issues have been sufficiently dealt with and expect revenues continue to increase in line with expectations.

Martin County

As highlighted, the company continues to implement the previously announced workover plan on the Martin county properties. Details are presented to the market on a continuous basis and revenue is increasing as expected.

Subsequent and Future activities

Subsequent to the quarter end, the company has announced the following developments:

• Barnett Shale

On 18th April, the company advised the market that EOG Resources had permitted a second Barnett shale well to the west of its Lone Camp property. These developments seem to confirm that the Palo Pinto properties are strategically placed in the highly prospective Barnett Shale field, now the largest onshore gas field in the United States. These additional assets have the potential to add 6 bcfe of gas to AVD's current proven reserve position of 7.1 bcfe.

Joint Venture to Co-Develop the Motherlode Phase III Project, Martin County, Texas

This project will allow AVD to become a major developer of proven reserves in one of the world's most prolific producing basins. Further, by utilizing current technologies, Motherlode Phase III will position AVD to discover new reserves that could substantially increase the reserve estimates for the project.

Acquisition of Additional Assets in Motherlode project, Martin County, Texas

The Company entered into a purchase and sale agreement to acquire a 12.5% working interest in additional producing assets and developable acreage in the Phase II portion of the Motherlode Project. The \$900,000 purchase price includes:

three wells currently producing 185 Boe/d;

• 960 total acres that is prospective on 12 producing horizons;
• Eight developmental drilling locations that will be drilled over the next 18 months: and
• Average per well reserves of 110,000 BOE.

The Company expects to continue to evaluate and exercise its option in additional Motherlode opportunities as and when they become available.

The group will continue to actively seek additional appropriate investments which conform to the current acquisition criteria.

The directors are confident that the company is creating sufficient funding alternatives with which to continue the expansion and prospects of the business in line with stated objectives.

ABOUT ADVANCE ENERGY LIMITED

Advance Energy Limited is focused on the acquisition and development of oil and gas producing assets in Texas USA. The Company aims to acquire assets with a combination of debt and equity that have current production and cash flow and to enhance production and cash flow through the further development of these assets. One a property has reached its full productive potential and/or has achieved economic payout to AVD the Company would look to on sell all or part of its interest. It is the aim of the Company to develop a portfolio of assets which will be developed and traded to maximize returns on funds invested.

For further information contact:

Mr Lance Camacho Company Secretary Telephone: 08 9486 1122 Facsimile: 08 9486 1011

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Name of entity

ADVANCE ENERGY LIMITED

ABN

111 823 762

Quarter ended ("current quarter")

31 March 2007

Consolidated statement of cash flows

		Current quarter	Y ear to date
Cash flows related to operating activities			$(3$ months)
		\$A'000	\$A'000
1.1	Receipts from customers	820	820
1.2	(a) staff costs Payments for	(150)	(150)
	(b) advertising and marketing	(32)	(32)
	(c) research and development
	(d) leased assets
	(e) other working capital	(888)	(888)
1.3	Dividends received
1.4	Interest and other items of a similar nature
	received	26	26
1.5	Interest and other costs of finance paid	(202)	(202)
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net operating cash flows	(426)	(426)

⁺ See chapter 19 for defined terms.

		Current quarter	Year to date $(3$ months)
		SA'000	\$A'000
1.8	Net operating cash flows (carried forward)
1.9	Cash flows related to investing activities Payment for acquisition of: (a) businesses (item $5$ ) (b) equity investments
1.10	(c) intellectual property (d) physical non-current assets (e) other non-current assets Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets	(292)	(292)
1.11 1.12 1.13	Loans to other entities Loans repaid by other entities Other (provide details if material)
	Net investing cash flows	(292)	(292)
1.14	Total operating and investing cash flows	(718)	(718)
1.15 1.16 1.17 1.18 1.19 1.20	Cash flows related to financing activities Proceeds from issues of shares, options, etc. Less capital raising costs Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material)	525 (63)	525 (63)
	Net financing cash flows	462	462
	Net increase (decrease) in cash held	(256)	(256)
1.21 1.22	Cash at beginning of quarter/year to date Exchange rate adjustments	1727	1727
1.23	Cash at end of quarter	1471	1471

⁺ See chapter 19 for defined terms.

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter SA'000
1.24	Aggregate amount of payments to the parties included in item 1.2	94.
1.25	Aggregate amount of loans to the parties included in item 1.11	Nil

1.26 Explanation necessary for an understanding of the transactions

N/A

Non-cash financing and investing activities

$2.1$ Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

$N/A$

$2.2$ Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

$N/A$

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

		Amount available \$A'000	Amount used \$A'000
3.1	Loan facilities	US\$20million	US\$6.4million
3.2	Credit standby arrangements

⁺ See chapter 19 for defined terms.

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.		Current quarter SA'000	Previous quarter SA'000
4.1	Cash on hand and at bank	1.471	1,714
4.2	Deposits at call
4.3	Bank overdraft
4.4	Other (provide details)
	Total: cash at end of quarter (item 1.23)	1,471	1,714

Acquisitions and disposals of business entities

		Acquisitions (Item $1.9(a)$ )	Disposals (Item $1.10(a)$ )
5.1	Name of entity	N/A
5.2	Place of incorporation or registration
5.3	Consideration for acquisition or disposal
5.4	Total net assets
5.5	Nature of business

Compliance statement

• This statement has been prepared under accounting policies which comply with accounting $\mathbf{I}$ standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.
• $\overline{2}$ This statement does give a true and fair view of the matters disclosed.

Sign here:

(Director/Company secretary)

Date: .....30 April 2007...

Print name:

...Lance Camacho.....

⁺ See chapter 19 for defined terms.

Notes

• $\mathbf{1}$ . The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• $2.$ The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.
• $6.2$ - reconciliation of cash flows arising from operating activities to $\bullet$ operating profit or loss
• $9.2$ - itemised disclosure relating to acquisitions
• itemised disclosure relating to disposals 9.4
• $12.1(a)$ policy for classification of cash items
• disclosure of restrictions on use of cash 12.3
• 13.1 - comparative information
• 1. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

⁺ See chapter 19 for defined terms.