versus epg, page-2

Re. EPG -

EPG is a CBM (Coal Bed Methane) play, whereas GDN is straight gas. Coal Bed Methane entails drilling into unmined coal packets to tap natural gas.

EPG's timeframe is longer than GDN -
EPG are planning pilot production wells for the first half of next year, whereas GDN could (optimistically) be in production in less than 6 months, assuming this well is commercial (and I'm very, very confidend that it is).

CBM typically requires a large number of closely spaced wells, although the depths are much less than GDN's well. The capital cost per well tends to be much less than a 'traditional' gas well like GDN's, however. To cut down the number of wells, EPG are going to use horizontal drilling through the coal seams, giving them a greater contact area than pure vertical wells (vertical wells for CBM are proven and in use in several American CBM projects).

Having said all that, the long - term potential of EPG is, IMHO, greater than GDN. Consider this - their current ~ 1Tcf gas in place estimate is for only 7% (!) of ONE of their five leases (the Lorraine Permit). The other four leases are also highly prospective. Also in their favour:

- The wholesale price of gas in Europe is around EUR 5.00 per mcf - more than the U.S, and nearly an order of magnitude more than Australia (QGC et al).

- There is an existing natural gas pipeline crossing the Lorraine permit area - so relatively low cost to bring to production.

- The company's recently completed Folschviller ST1 test well had some VERY, VERY encouraging results:

- They intersected much more coal than they initially thought was there (over 62 meters of coal was intersected - high to very high for a CBM well)

- They found 'SIGNIFICANT' gas in the inter - burden rocks (ie. the rock between the coal packets), making a significant resource upgrade likely

- The permeability of the coal was better than expected. The more permeable the coal, the more gas
can be recovered.

- The company has over 16 Million AUD in the bank, enough to take them up to production.

- The French have stated their intention to fast - track approval, considering the project to be of national importance, in light of Russia's increasingly belligerent attitude to it's gas customers (Russia supplies about 25% of the EU's gas)

I could go on, but I think you all get the picture! I hold, and won't be selling anytime soon.

Expect a resource upgrade soon, and the results from their second (and final) well in their two well test program.