Associated News, page-1826

From the Blue Energy Annual Report,

The Sapphire Pilot drilling program was completed in December 2022 and the production testing phase has been underway since
February 2023. During the period, the gas rate from the Pilot reached 140,000 standard cubic feet per day and water rate is
approximately 200-250 barrels per day (Figure 5). This water rate was deliberately regulated with monitoring of fluid levels within
the vertical wells and pump capacity and speed.
Since the end of the year, the decision was taken to perform a Pressure Build Up survey to assess the pressure connectivity
between the Sapphire 5 and Sapphire 6 Pilot wells. This will involve temporarily shutting in the Sapphire lateral wells for a period
of two to four weeks and to observe the pressures in the wells.
Geological data from the drilling phase was provided to the Company’s independent reserve certifier Netherland Sewell and
Associated Inc of Dallas (NSAI), for assessment. The results of this initial assessment by NSAI is still pending completion,
however, their review of the Lancewood and Central Blocks as announced to the market on 31 July 2023 ( and reflected in Tables
2,3 and 4), has increased the 3C contingent gas resource in the Lancewood Block to 573.1 PJ (+32%) and the Central Block 3C
contingent gas resource to 469 PJ (+53.4%).
In addition to this resource upgrade, NSAI has reassigned 2P and 3P reserves in Lancewood (1PJ 3P) and Central (75 PJ 3P) to
the Contingent Resource category. This is based on review of regional data and that Blue has applied to the Qld Government to
convert the current Production Licences (PLA 1038 and 1045) to Potential Commercial Areas (PCA’s) in order to focus the
Company’s resources on the Sapphire Block Production Licence (PLA 1034.)
The PL 1034 application area (Sapphire Block) is located immediately adjacent to the Moranbah Gas Project (MGP), a producing
gas field which is now owned by Queensland Pacific Minerals Energy (QPME). Blue Energy has an existing non-binding
Memorandum of Understanding to supply gas to the proposed QPM (parent entity to QPME) Nickel refinery in Townsville. With
the acquisition of the MGP by QPME, there is now full alignment for Blue to utilise MGP infrastructure and to fulfil the supply
agreement to the proposed QPM Townsville plant. Reflecting this alignment, Blue and QPME executed a non-binding MoU to
supply pilot gas to the MGP from the Sapphire Pilot via a proposed pipeline from Sapphire Pilot location to an infield location
within the Moranbah Gas field (Figure 4)