review of operations

Highlights
�� EBITDA improved to a positive of $1.560m from a loss of $0.282m in the prior corresponding half-year.
�� Cash on hand at end of reporting period was $9.397 million, a decrease of $5.861 million since 30 June 2007, primarily as a result of investment on exploration and development activities (31 December 2006 $20.514 million).
�� Sales volume averaged 14.23TJ per day, compared to 11.74TJ per day in the prior corresponding period (100% basis),registering 21% increase in the sales volume.
�� Produced and sold a small volume of gas from the initial production in August 2007 from a conventional well drilled in the Camden Project area.
�� Best producing vertical and inseam wells in Camden produced on average 854GJ and 982GJ per day (100% basis)
respectively during the reporting period. A new inseam well completed in the second half of December produced on
average 1,436GJ per day.
�� Drilled two Surface to In-Seam (SIS), two directional and two vertical wells in the Camden Project area.
�� Six wells were fracture stimulated in the Camden Project area.
�� Two coreholes were drilled in the Camden Project area.
�� Completed one corehole in the Hunter area which intersected over 65 metres of gross coal thickness.
�� Completed 93km of Hunter seismic data acquisition and processing.