b2 to mjr, page-4

of much interest to any LGO holders

Exploration Review – 2003

Since last year's report, Longreach has sought to acquire prospective acreage through exploration permit applications or farm-ins in energy related ventures. The most significant achievements have been the lodgement of applications for ATP-755-P in the Surat Basin, Queensland and ELA 2114 in the Sydney Basin, New South Wales. The former is for an oil exploration area and the latter is for hot dry rock exploration (to create geothermal energy for electricity generation). In

both exploration areas, Longreach will have a 50% working interest in joint venture with other parties.



The following is a review of the main exploration activities during the year:



Western Australia - Onshore Carnarvon Basin - EP 369, EP 405, EP 410



In March, 2003, Longreach became registered as the holder of 100% interest in EP 369, EP 405 and EP 410. Applications, after 50% area relinquishment, for 50% area renewal for the three permits have been lodged with the Western Australian Department of Industry and Resources. Recent geotechnical works on the areas have further encouraged Longreach to carry out further work, including aeromagnetic geochemical and seismic surveys, which are planned to be followed by exploration drilling. The prime objectives in the permits are the Permian Moogooloo Sandstone and Devonian Reef Limestone. Longreach intends to invite other explorers to participate in the permits.



Western Australia - Onshore Carnarvon

Basin - Application 16/00-1



The joint venture participants in this application for an exploration permit which lies to the west of EP 405 are:



Empire Oil Company (WA) Ltd 35%

Pancontinental Petroleum N L 23%

Longreach Oil Limited 18%

Gulliver Productions Pty Ltd (Operator)

and other private interests 24%



Negotiations with the Gnulli aboriginal tribe on native land rights is progressing satisfactorily. The next and probably last meeting is scheduled for November, 2003.



It is anticipated that Application 16/00-1 will be approved by the Western Australian Government in the first half of 2004. Exploration work would then be able to commence on maturing the large Devonian

anticlinal structures for drilling.



Queensland, Surat Basin - PL 18 and PL 40



Brisbane Petroleum N L, in which Longreach has 19.8% equity, holds a 50% interest in each of the above two petroleum leases and is the Operator. Due to the high water cut in the Louise oil field, there was no oil production for the year in PL 40. However, at the time of reporting, Bounty Oil and Gas N L and another party are planning to spud in Thomby Creek #7 in PL 18 - a development well - in the fourth quarter of 2003. The drilling rig is being imported from Europe and is expected to arrive in Roma some time in November, 2003.



There is a possibility that a second well would be drilling shortly after the completion of Thomby Creek #7.



The Thomby Creek field has three oil wells and all of them are currently shut in due to high water cut. Any oil production revenue generated from the well, or wells, would provide additional cash flow to Brisbane Petroleum N L and indirectly to Longreach.



The average oil production from PL 18 for the year was around 500 barrels per month. A successful Thomby Creek #7 development well is likely to increase oil production to at least several thousand barrels of oil per month. More seismic review and re-mapping of existing lines are being carried out in PL 18 with the emphasis on maturing drilling prospects outside of the Thomby Creek and Yellowbank Creek oil fields.





Applications



ATP-755-P - Surat Basin, Queensland



Longreach Oil Ltd (50% - Operator) and Brisbane Petroleum N L (50%) have applied for ATP-755-P, which is located immediately west of PL 18 (in which Longreach holds its indirect interest through Brisbane Petroleum). The area is approximately 320 km2 (79,000 acres) in size. Advice has been received that granting of the permit is imminent. Two small oil fields are known to exist in the application area and other prospective structures are expected to be present.



The high quality oil producing zone is from the Triassic Showgrounds Sandstone, similar to the oil production zone in PL 18.



The company has recently been advised by the Department of Natural Resources and Mines that the above area will be formally offered to the company shortly.





ELA-2114 (Hot Rocks - Group 8 Minerals)

- Sydney Basin, New South Wales



Longreach (50%) in conjunction with Hot Rock Energy Pty Ltd (50% Operator) have applied for a large area in New South Wales in the Sydney Basin for hot rock exploration. This energy source can be readily utilised for electricity generation.



The new frontier exploration programme of obtaining a new source of clean energy from the hot igneous (granite etc.) body is currently being experimented with in the Cooper Basin by Geodynamics and others.



To tap the heat of the energy-providing hot rock, one needs to drill into the igneous body, followed by hydraulic stimulation, creating fracture paths between water injection wells and hot steam producing wells drilled nearby.



The application made for the above area is still pending but the information received recently

from the Department of Minerals Resources is that the area applied for will be granted in due

course.



Future Prospects


Acquisition of prospective exploration acreage is an important part of the company's policy to

concentrate on oil and gas projects and possibly other energy sources. However, the company is an exploration company and may consider other commodities should some special opportunities

arise.



Kin Tjhin

Consultant Geologist

14 October 2003