hi guysnot exactly what we want to hear..GGX will retest at a...

hi guys

not exactly what we want to hear..

GGX will retest at a later stage when stability is better

drilling continues, lets hope the next primary objective is better.

comments welcomed..

Level 14, 19 -31 Pitt Street
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A.C.N. 112 138 780
10th January, 2006
Update on Drilling Activity -
Malolos-1 and Nuevo Malolos-1, SC44, Cebu Island, Philippines
Nuevo Malolos 1 Daily Status Report (Day 14)
Time of report: 6 am (Philippines = GMT + 8), 10th January 2006
Current depth: 2,895 ft ( 882 m)
Current operation: Drilling ahead
Forward operation: Drill ahead to M 3 objective at 3,300 ft (1,006 m)
Comment: Cavings continue to create difficulty in a section between 2,730 ft and 2,780
ft. Current hole conditions are not favourable for a test although peak gas of
6.77% was encountered at 2,760 ft. We will continued to work with a view to
straddle test at a later stage when continued conditioning has improved the
stability. At 6 am the hole was showing already some improvements.
Background
Gas2Grid owns 100% of the 100,000 hectare onshore licence SC44 on Cebu Island in the Philippines. The
licence contains two 1960’s gas discoveries, Malolos-1 and Zaragosa-1. Gas2Grid’s objective is to
appraise the Malolos feature with a view to establishing a sustainable gas flow. In 1960, the well flowed
gas from drill stem tests at rates of 5 mmscfd and 12.6 mmscfd from zones at 850m and 1850m
respectively. If the aggregate flow of 17.6 mmscfd flow could be sustained, it would be sufficient to fire a
40MW power plant.
The objective of the current campaign is collect modern reservoir data and establish if the gas flow can be
sustained and if, at what rates and pressure. A longer term (6 – 8 week) production test is scheduled to be
carried out following the drilling campaign, should the result of the well be sufficiently encouraging.
The Malolos feature alone has potential gas resources of 50 bcf. It is on trend with three other culminations
(Butak, Barili and Esperanza) which have a combined area of closure of 24 sq. km and estimated gas
resources of 240 bcf based on simple assumptions derived from the Malolos-1 discovery. There are
another 10 leads in the licence, the most attractive of which have potential gas resources in the order of 150
bcf. The tax regime in the Philippines is benign and affords returns similar to those achieved in Australia.
In the 60’s, gas had no commercial value, as gas-fired power generation as it is now used was not yet
developed. Furthermore, an electricity-hungry market has developed some 30 km north of SC44 where
Cebu City has 1.5 million inhabitants, and is the 2nd largest city in the Philippines and a significant
manufacturing centre. Gas2Grid will be appraising the Malolos discovery with the aim to produce gas for
electricity generation. A deed of agreement has been entered into with Marubeni who would operate any
power installation.
Gundi Royle
Managing Director