Ann: June 2020 Quarterly Activities Report and Appendix 5B, page-27

Hi Verily,

If you look at table 6.1 in that AEMO report (https://www.aemo.com.au/-/media/files/gas/national_planning_and_forecasting/gsoo/2020/final_reserves_contracts_cost_report.pdf?la=en) you will see that the "Forward Costs" in the first column are roughly in the $2.50 to $3.50 per GJ range.

For existing suppliers who have already drilled their production wells and invested in the production and export infrastructure, it makes sense to continue to produce as long as the gas price they are getting is above this range. Plus, as AL points out, they may have contractual obligations which oblige them to continue to produce.

However, whilst gas prices remain at the current levels, these producers be cutting right back on new investment. New projects will be put on hold until gas prices, on a long term basis, go back above the $5-7 per GJ range that it costs to develop the new resources.

The way it will need to work for Mahalo or Mahalo North is a customer needs to be found who is will to pay above that $5-7 per GJ range for 5 to 10 years. Having this long term stable customer will allow Comet to get financing for the investment. No long term customer means no financing.