half yr report to 31.12.04 looks interesting to me!!!!!!!ARROW...

half yr report to 31.12.04 looks interesting to me!!!!!!!

ARROW ENERGY NL and CONTROLLED ENTITIES
DIRECTORS’ REPORT

The directors present their report for the half-year ended 31 December 2004.

Directors

The names and details of the directors of the company in office during the half-year and until the date of this
report are:
Mr William R Stubbs
Mr Stephen G. Bizzell
Dr Robert W. Day
Mr Ron Prefontaine
Mr Nicholas Mather (resigned 20 October 2004)
All directors shown were in office from the beginning of the half-year until the date of this report unless
otherwise stated.
Review of Operations and Significant Changes in the State of Affairs
A major event in the development of Arrow occurred during the period when Queensland Government owned
CS Energy Ltd elected to take up their option to farm in to the development phase of the Kogan North Coal Seam
Gas Project thus finalising the development decision for Arrow’s first project. Under this election CS Energy
will spend up to $10.8 million towards the estimated $13.5 million Kogan North Project. Commitment to this
expenditure earned CS Energy an additional 42.5% equity in the project, increasing their share to 50%. The
current 7.5% CS Energy equity was earned through an initial $1 million payment and a further $1.3 million
payment towards the field appraisal program.
Following this election, the Initial Sales Contract, for the sale of 2 PJ per annum of gas for 15 years from the
Kogan North field, was executed by CS Energy and Arrow’s wholly owned subsidiary Australian CBM Pty Ltd
(ACBM). In addition to the 2 PJ per annum of gas sales from ACBM to CS Energy, CS Energy will also
produce its own 50% share of the Kogan North Field for its own use, bringing the total production to 4 PJ per
annum for 15 years.
Arrow also signed Heads of Agreement (HOA) with Australia Pipeline Trust (APT) for the construction,
ownership and operatorship of facilities required to process and compress gas from the Kogan North Project.
Under the HOA, Arrow will design and build the facilities (comprised of dehydration, compression and metering)
with the assistance of AGL’s 100% owned engineering subsidiary, Agility. APT will finance the expected $11
million construction cost of the facilities.
Arrow announced the formation of Bow Energy Ltd (Bow). Bow was assigned selected Arrow non-CSG
interests in the Surat-Bowen and Clarence-Moreton Basins as well as Arrow’s interest in Carnarvon Basin permit
WA 261P in Western Australia. Bow will also have other interests in the Carnarvon Basin, the Cooper-Eromanga
Basin and the Surat-Bowen basin. Bow Energy secured seed capital of $1.25 million that funded Bow’s costs for
two wells in the Carnarvon Basin and has firm commitments of $5 million for IPO funds in preparation for a
listing of Bow on the Australian Stock Exchange. Subsequent to the period end Arrow distributed 2 shares and
one 20 cent option in Bow Energy for every 10 Arrow shares held by Arrow security holders (at 11 January
2005) by way of a return of capital.
The separation of Arrow’s conventional oil and gas prospects into Bow Energy will enable Arrow to maintain the
focus of its management and financial resources on the development of its considerable coal seam gas resources
in Queensland whilst also unlocking the value for Arrow shareholders of Arrow’s other project interests and
provide shareholders with a direct interest in two separately listed companies. The separation will also provide
greater flexibility to pursue further project opportunities.
Auditor Independence Declaration under Section 307C of the Corporations Act 2001
The Auditor’s Independence Declaration is attached and forms part of the Director’s Report for the half-year
ended 31 December 2004.

ARROW ENERGY NL and CONTROLLED ENTITIES

DIRECTORS’ REPORT

CEO and CFO Declarations
The Directors have received from the CEO and CFO of the Company a declaration in the form set out by Section
295A(2) of the Corporations Act 2001 in relation to the Interim Financial Report of Arrow Energy NL for the
half year ended 31 December 2004.
Signed in accordance with a resolution of the Directors.
Stephen G Bizzell
Director
Brisbane 15 March 2005