kingaroy update

KINGAROY PILOT PLANT UPDATE
Installation of two new injection and gas production wells continues
Production and testing of gas forecast to recommence in late June
Recommendations on power project options from the pre-feasibility work due by early July
Cougar Energy Limited (ASX: CXY) provides an update on the operations at its Underground Coal Gasification (UCG) pilot project at Kingaroy in Queensland, following on from the ASX announcement released on 27 April 2010. The preparation work for the installation of the two new process wells (P5 and P6) is almost complete. The casing design for these wells has been modified to improve performance. The drilling rig will arrive on site early next week and drilling of the new wells will be completed in the third week of June (current forecast) with a re-commencement of the gasification process and production of gas to occur at the end of June 2010. As part of the previously advised Pre-feasibility Study for the construction of the Kingaroy Power Station, further drilling delineating the JORC resource on site will be completed this week. Due to changes in rig mobilisation schedules, the planned drilling program at the Companys Wandoan site in Queensland using the current rig on site has been deferred until later this year. Present indications are that wells P1 and P4 will not be utilised in the on-going production and testing of gas in this initial phase and will be plugged. However the operations of wells P2, P3, P5 and P6 will enable the proposed pilot burn test area of 20,000 tonnes of coal to be gasified and meet the requirements of the pilot program. Work on the Pre-feasibility Study is nearing completion. Preliminary assessments are consistent with the project economics and returns from previous modelling work for the proposed power station. The Company anticipates being able to announce recommendations on power project options by early July 2010.