ASX/Media Release 15 April 2009 FOR IMMEDIATE RELEASE Arrow opens up the potential for a substantial new coal seam gas resource. Arrow Energy’s plans to supply multiple liquefied natural gas (LNG) trains in Gladstone have received a major boost following first gas flows from the Fort Cooper Coal Measures (FCCM) in the Bowen Basin together with high flow rates being achieved from the pilot wells in the Rangal Coal Measures at South Walker. The FCCM are estimated to contain in excess of 20 TCF (21,050 PJ) of gas and feature up to six separate coal seams with high gas saturation - each ranging in thickness between six and fifty metres. These coal seams have high gas saturation, but their banded nature has previously cast doubt about their ability to viably produce Coal Seam Gas (CSG). The FCCM are not mined for coal so access to them for CSG production is a simpler process than for the Moranbah or Rangal Coal Measures. Arrow began targeting the lowest seam in the FCCM in late 2008 using a three-well hydraulic fracture trial. These wells were recently brought into production and have started to flow gas after only a few weeks of water flow (see attachment 1 - photograph of flare from FCCM well). We emphasise that it is early days for the testing of the FCCM as a major producing zone however the company is very excited about the initial results from these first pilot wells. Separately, within the Bowen Basin, Arrow has recently achieved some excellent flow rates from coals with permeability previously thought too low for gas production. In the deep section of the Moranbah Gas Project, where permeability is estimated to be around 1 milliDarcy (mD) or less, early gas flow rates of 200 MCF per day have already been achieved in the initial days of production testing. A continued build up in production rates is expected from these wells. In similar testing at the South Walker Creek field on the eastern side of the Bowen Basin, where measured permeability is also low, flow rates in excess of 1,000 MCF per day have been achieved. Attachment 2 provides stratigraphy of the Moranbah area detailing the position of the various coal measures. All of these are exceptional results which open up the potential for substantial new coal seam gas resources in the Bowen Basin for extensive further development according to Arrow Managing Director, Nick Davies. “These advances in exploration and appraisal success together with further development well optimisation continue to increase our confidence in delivering large volumes of long-term, reliable gas supply to the proposed Gladstone LNG projects and in being able to convert Arrow’s vast contingent and prospective resource base into economically recoverable reserves,” Mr Davies said. “We have identified gross prospective and contingent reserves of more than 70 trillion cubic feet of gas on our tenements. That equates to about 12 billion barrels of oil equivalent. As a comparison, that is approximately equivalent to the amount of energy produced to date from the giant Prudhoe Bay field in Alaska and is approximately six times the energy that has been produced to date from the North West Shelf Venture,” he said. Arrow Energy Limited AOE.AX 15 April 2009 Page 2
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