takeover or merger, page-15

Under the terms of the sale of 50% of the Camden Gas project to AGL, AGL will pay SGL up to an additional $51 million if the joint venture can prove up to an additional 500PJ of 1P Reserves by 31 December 2008.

The Review of Strategic Options stated:

"It follows the receipt by the Company of preliminary proposals from different parties to accelerate the exploration and development of its coal seam gas resources and/or to merge with another group."

No new reserves have been delineated by SGL since the AGL was initiated two years ago. There is less than 14 months left to prove up an additional 500PJ at Camden to axcess the additional $51 M.

The Sept Quarterly Report stated that plans for the Dec Quarter for Camden were :

1. Drill 3 in-seam wells; 2 Fracture-stimulate 1 or possibly 2 vertical and 2 directional wells; 3 Complete drilling of Raby 01 and drill 2 additional coreholes in the Camden area; 4 Continue constructing gathering pipelines to connect recently drilled vertical, directional and SIS wells to the RPGP gas gathering network; and 5 Continue seismic interpretation of the 1987, 1988 and 1990 reprocessed data to locate potential drilling targets.

What are posters opinions on SGL meeting the 500PJ of P1 target by 31 December 2008 in order to axcess the addition $51 million from AGL?

I think time could be running out if they have to significantly increase exploration from current levels to meet the target. They will obviosly axcess some of the additional funds.

Hopefully Babock & Brown, who are also shareholders in SGL, will also share this concern and hopefully will address it in their review.

Regards

SP