5 fold increase in gas

MEDIA RELEASE 14th July 2008 MOLOPO ANNOUNCES FIVEFOLD UPGRADE OF GAS POTENTIAL IN QUEENSLAND
• Queensland acreage now estimated to contain 7.5 Tscf Gas-in-Place.
• Some 2.3-3.6 Tscf of Gas-in-place potentially commercial at current gas prices with existing technology.
• Molopo estimates total combined reserves and contingent resources as 1.1 Tscf at 2P and 2.1 Tscf at 3P, Molopo net share is currently 50%.
• Improving Queensland gas prices and developments in technology have the potential to make a significant additional portion of the resource commercially viable.
Molopo Australia Ltd has completed a detailed volumetric review of the potential of its Queensland based assets and has revised its total Gas-in-Place (GIP) estimates to 7.5 Tscf (Trillion standard cubic feet). The review includes ATP-564P, ATP-602 and PL-94 and represents approximately a 5 fold increase on the previously announced potential of these areas.
Area
Total Acreage GIP Bscf
Initial Target Development 2P GIP Bscf
Initial Target Development 3P GIP Bscf
Greater Mungi Area
1500
550
700
Greater Harcourt Area
2500
850
1200
Greater Timmy Area
2300
550
850
Lilyvale & Oak Park Area
1000
300
700
Sirius
200
50
100
Total
7500
2300
3550
At current Queensland gas prices, Molopo’s gas-in-place is believed to be commercial down to approximately 700-800m depth, resulting in a currently commercial GIP target of 2.3 to 3.6 Tscf as depicted in the table above. However, it should be noted that the Paranui pilot adjacent to the PL94 producing areas is seeking to test coals down to 950 m.
Based on a horizontal well approach and current industry costs, Molopo Australia estimates a recovery potential of 1.1 Tscf to 2.1 Tscf on a 100% gross basis. Current certified reserves in the Mungi and Harcourt areas total 95 Bscf at 2P and 469 Bscf at 3P (100% basis) following the recent upgrade to Harcourt South.
MOLOPO AUSTRALIA LIMITED
ABN 79 003 152 154
Registered Office
Level 14, 31 Queen Street, Melbourne, Vic. 3000, Australia
GPO Box 223, Melbourne, Vic. 3001, Australia
Telephone: (61 3) 9618 8722 Facsimile: (61 3) 9620 2804
Website: www.molopo.com.au Email: [email protected]
NSW Office:
Suite 1006, Level 10, 50 Clarence Street, Sydney, NSW, 2000, Australia
GPO Box 7075, Sydney, NSW, 2001, Australia
Telephone: (61 2) 9290 2267 Facsimile: (61 2) 9290 2099
The majority of the potential recovery would therefore be classified as contingent resources representing some 650 Bscf at 2C and 1650 Bscf at 3C.
The Contingent Resource recovery category is defined under the SPE/World Petroleum Council Petroleum Resources Management System definitions as “Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered recoverable due to one or more contingencies”. In this case the sub-category of uncertainty is that the “Development is Unclarified”.
More of the permit Gas-in-Place is expected to become commercial over time as result of:
• Increases in Queensland gas prices due to the development of LNG export and power generation opportunities;
• The advent of carbon trading schemes;
• Improvements in CBM development technology
The Mungi and Harcourt areas represent the closest gas production to the Gladstone industrial/LNG export area. The Wallumbilla to Gladstone pipeline runs through the middle of the Harcourt area while the Mungi Field already produces into this pipeline via the Dawson Valley spur pipeline. Molopo has commenced a sole risk development drilling trial at Mungi using its horizontal drilling approach. The first well in the drilling programme has been completed, tied-in to the gas gathering system and dewatering is now underway. Production results from the first well Mungi-22 are expected to be available within the next 1-2 months. Further optimisation of the drilling trial is now underway, with upgrades to the rig and drill-string design based on the experience gained with the first well. Drill-string integrity issues were encountered on the first well Mungi-22 and the current Mungi-20 well, while these will not prevent completion of either of the wells, more reliable drilling equipment is being sourced. Molopo expects to demonstrate the wider commercial potential of the contingent resources over the next 12-24 months through additional exploration and pilot well activity. In addition to the sole risk development well trial at Mungi referred to above, Molopo has proposed a sole risk seismic programme at Mungi and Harcourt.
SSiirriiuuss
MOLOPO AUSTRALIA LIMITED
ABN 79 003 152 154
Registered Office
Level 14, 31 Queen Street, Melbourne, Vic. 3000, Australia
GPO Box 223, Melbourne, Vic. 3001, Australia
Telephone: (61 3) 9618 8722 Facsimile: (61 3) 9620 2804
Website: www.molopo.com.au Email: [email protected]
NSW Office:
Suite 1006, Level 10, 50 Clarence Street, Sydney, NSW, 2000, Australia
GPO Box 7075, Sydney, NSW, 2001, Australia
Telephone: (61 2) 9290 2267 Facsimile: (61 2) 9290 2099
Some market analysts have valued Queensland CBM reserves based on recent industry transactions at $1.5 to $2.7million/Bscf for 2P and from $0.7 to $1.7million/Bscf at 3P. Based on these multiples the recently announced upgraded certified reserves at Mungi and Harcourt South could be worth net to Molopo some $70-$130 million (or $0.39-$0.71 per share) at 2P and some $160-$400 million (or $0.87-$2.18 per share) at 3P. These ranges illustrate the additional potential value inherent in the Queensland acreage held by Molopo if its net contingent resources can also be converted to reserves. Interest holders in the acreage are Molopo Australia 50%, Anglo Coal 25.5% and Mitsui 24.5%. Issued by: Molopo Australia Limited