GEODYNAMICSL I M I T E D ABN 55 095 006 090SUITE 6 LEVEL 1 19...

GEODYNAMICS
L I M I T E D ABN 55 095 006 090
SUITE 6 LEVEL 1 19 LANG PARADE PO BOX 2046 MILTON QUEENSLAND 4064 AUSTRALIA
TEL +61 7 3721 7500 FAX +61 7 3721 7599 EMAIL [email protected]
ASX ANNOUNCEMENT 29 JUNE 2006
Habanero #2 – Well Suspension
Geodynamics announces that the drill stem has been successfully parted near the
bottom of the casing using a severing tool at a depth of 3,765m (12,350ft) or 436m
(1,430ft) above the stuck drill bit. This is considerably higher than aimed for, a direct
consequence of restriction in the drill stem which prevented the setting of the
explosive charge at a greater depth.
On the basis of the slow and costly progress made to date and taking into account
the remaining risks involved in completing the side track with the current on site
equipment, it was reluctantly decided to stop the drilling operations. Geodynamics
has further decided to restore the connection with the heat exchanger using a
conventional drilling rig. Geodynamics has recently obtained an option on a suitable
rig which will become available in the last quarter of this calendar year. One option
open to the Company is to drill another side track from near the bottom of the casing
in Habanero #2, starting drilling at a depth of approximately 3,750m (12,300ft). A
similar side track (Habanero #2, side track 1) was previously drilled in 23 days. Once
the new hole approaches the depth of the underground heat exchanger, specialised
equipment (snub assist unit) will be used to avoid damaging the underground heat
exchanger with drilling mud.
The decision to stop the current snub drilling operations is a major set-back for all
stakeholders involved as it will delay the proof of economic heat extraction from the
extensive geothermal resources underlying the Cooper Basin. However, it should
only be regarded as a delay and not as a threat to the viability of the geothermal
project. All drilling engineering experts consulted by the Company to date agree that
the drilling problems encountered will be overcome and that experience has shown
that drilling costs can be significantly reduced over time.
As a pioneer, the company has learned many valuable lessons on drilling fully under
balanced in the high pressure/temperature environment of the target hot granites.
This experience will be of great value for the future development of the Cooper Basin
HFR geothermal project. The underground heat exchanger we have developed
remains intact with all evidence pointing to success once the connection with it is
restored.
The Company will now focus on resuming drilling with a new rig set up as soon as
possible.
For further information please check our website (www.geodynamics.com.au) or
contact Dr Bertus de Graaf on 07 3721 7500.
Bertus de Graaf
Managing Director