looking good, page-4

wilson's recom buy Recommendation
The conditional gas sales agreement with Wambo Power Ventures Pty Ltd
has been amended to add 15 PJ p.a. of gas sales from 2008. This
increases the conditional sales from the Tipton West project for 2008 from
about 10 PJ p.a. to 25 PJ p.a.
Production testing is currently in progress at Tipton West aimed at proving
commercial gas flow rates and achieving certification of proved and
probable gas reserves required to service the contracts associated with
the project. We retain our Spec BUY recommendation.

Price Performance
Feb 05 Oct 04 Jun 04 Feb 04
$0.45
$0.30
Security/Capital Details
ASX Code AOE
Market Cap $55.3 M
Issued Shares 127.1 M
Avg Mth T’over 12.8 M
12 Mth High – Low $0.19- $0.47
Key Points
�� Arrow Energy NLO (AOE) announced the ammendment of its Heads-of-
Agreement (HoA) with Wambo Power Ventures Pty Ltd (Wambo). It has
increased the conditional supply of coal seam gas (CSG) from the previous
3.97PJ p.a. up to 18.97 PJ p.a. (for a 15 year period), to supply Wambo’s
proposed gas fired electricity generation projects.
�� The National Electicity Market manager (NEMM) has indicated that: (a) the
stage-1 Braemar gas-fired power station (3x150 MW generators) is planned
for commercial load in April, May and June 2006. Construction is to
commence in February 2005; (b) a base-load gas-fired power station
(480MW capacity) is also planned with a service date of 2008, subject to
verification of adequate recoverable gas reserves and full project feasibility.
�� The power plants are planned to be located adjacent the Braemar electricity
substation 38 km SW of Dalby in SE Qld. These plants’ proposed locations
are about 45km NW of the Tipton West project (AOE 80%:COI 20%), and
5km SW of Kogan North (AOE 50%:CS Energy 50%) and within similar
distances of other AOE early stage projects.
�� AOE plans to deliver ‘first gas’ from Tipton West, at a rate of 3.97 PJ p.a in
2006, subject to demonstrated gas delivery capability by AOE. Achivement
and delivery of commercial CSG gas flow rates is key to successful contract
performance with regard to over 10 PJ p.a. from 2006, with a further 15 PJ
p.a. required from 2008.
�� AOE is presently resuming pump-testing on its Tipton West project where a
prior test of hole TWP #13 was interrupted by mechanical failure. The hole
has since been worked over and has resumed pump testing. Two additional
production wells are being drilled and completed in the pilot.
�� The achievement of commercial flow rates from holes in the Tipton West
project will be critical for the certification of proved and probable reserves
that are required to meet the conditional sales contract requirements.
�� We retain our Spec BUY recommendation.
10 February 2005