Ann: Kumbarilla Drilling Update, page-27

OGP - I welcome your challenge to my analysis. Makes for a good discussion!

I am sure GLL will be able to make a 2P booking based on existing wells and boreholes - but will they have enough dynamic reservoir data (flow data) to make a booking of 500 PJ that they have spoken so often about. That's what I would question.

With respect to the Canaccord Report, I would caution everyone to be aware that:

i) Canaccord are a financial services firm and not a firm of reservoir engineers and
ii) as they say themselves "Galilee Energy currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During this period, Canaccord Genuity or its affiliated companies provided investment banking services to Galilee Energy.In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services from Galilee Energy" - they are not independent

You are correct that Jemena will finance the pipeline but to say they are waiting in the wings implies they are ready for action.

They are most certainly not. They will not move one shovel or one digger until a decent proportion of the capacity of any pipeline to be built is contracted under a firm contract.

The capacity of the pipeline will only be contracted by a gas purchaser with a balance sheet big enough to support a 10 or 15 or 20 year firm capacity agreement, firms such as AGL or Origin or Shell.

The gas purchasers are not going to take any serious interest in Glenaras until there is a lot more than 0.25mmscf/d flowing.

As for the economics, potential investors in this company should be encouraged to read a report by Core Energy that I found on the Australian Energy Market Operator (AEMO) website - https://www.aemo.com.au/energy-systems/gas/gas-forecasting-and-planning/gas-statement-of-opportunities-gsoo . It shows that full life cycle costs for CBM projects in Queensland are $5-$8 per gigajoule. Therefore if Glenaras has 500 PJ of 2P reserves, it will likely cost $2.5-4 billion to develop over the full life cycle.

This is the reality of the gas industry.