AUSTRALIAN CBM Pty Ltd ACN 067 312 029

PARTIAL RELINQUISHMENT REPORT

15 BLOCKS RELINQUISHED 30 APRIL

2004

ATP 689P

AUSTRALIAN CBM PTY LTD

(a wholly owned subsidiary of Arrow Energy NL)

Level 5, 60 Edward Street, Brisbane QLD 4000, Australia GPO Box 5262, Brisbane QLD 4001, Australia

Telephone: 61-7-3303 0650 Facsimile: 61-7-3303 0651 Email: geolservices@arrowenergy.com.au

CONTENTS

1.0 INTRODUCTION 1

1.1 Location & infrastructure 1

1.2 Tenure details 1

1.3 Exploration concept 1

2.0 REGIONAL GEOLOGY 2

2.1 Paleozoic basement 2

2.2 Bowen Basin 3

2.3 Jurassic-Cretaceous basins 4

2.4 Surat Basin 5

3.0 PREVIOUS EXPLORATION 8

3.1 Discussion 10

4.0 ARROW EXPLORATION 11

4.1 CSG exploration 11

4.2 Conventional prospectivity 11

FIGURES

1 Location & infrastructure

2 Graticular blocks

3 Regional structure

4 Geology

5 Regional stratigraphy

6 Walloon Coal Measures stratigraphy

7 Drilling

8 CSG prospectivity

9 Petroleum prospectivity

1

1.0 Introduction

1.1 Location & Infrastructure

The area of 15 blocks relinquished from ATP 689P is situated between the towns of Millmerran and Yelarbon, approximately 185 km southwest of Brisbane. The area is serviced by major road and rail links (Figure 1).

The Jackson oil pipeline extends in an east-west direction 33 km to the north, and the main trunk high pressure gas line is 64 km east at its closest point.

Within the region significant industries include a major cotton gin and various feedlots. A major coal fired power station has been constructed at Millmerran immediately east of the permit, where there are large reserves of Walloon steaming coals. These reserves extend into the retained eastern part of ATP 689P.

1.2 Tenure details

ATP 689P originally comprising 59 blocks was granted to Falcon Resources Pty Ltd and Seqoil Pty Ltd on 1 December 2000 for a term of 4 years. The permit was transferred to Australian CBM Pty Ltd on 28 May 2001.

Australian CBM Pty Ltd subsequently became a wholly owned subsidiary of Arrow Energy NL.

A prescribed relinquishment was made at the end of Permit Year 3 comprising 15 blocks (Figure 2).

1.3 Exploration concept

The relinquished blocks were held to examine the coal seam gas (CSG) potential of the Walloon Coal Measures which crop out along the northeast trending flank of the Texas High, and dip west into the Mimosa Syncline (Figure 3 & 4). The economically optimal depths at which to encounter coals are between 200-500m below surface, although extraction of CSG from deeper coals is feasible. A fairway of coals at these optimal depths extends in a more or less northeasterly direction to the north of the relinquished ground.

Coal thickness information is available from petroleum wells drilled in or near the permit, and some coal bores within it. A large number of coal intercepts are reported in water bore records.

A single dry petroleum well, Commoron-1, is located near the boundary of the relinquished ground.

LIMEVALE

" 00 ' 5TEXAS 1° FIG 1

RELINQUISHED AREA LOCATION & INFRASTRUCTURE

ACBM PTY LTD ATP 689P 'INGLEWOOD'

CECIL PLAINS SOUTH $1

$River Road-1

AI$1 AGAI$1

MOONIE

$-27°45' 00"

W

AGGABA$1

JACKSON-ROMA-BRISBANE OIL PIPELINETINKER CREEK 1$

$Glenburnie-1

$ $ MILLMERRAN $1

STATION CREEK 1$

WEIR$1$

URANILLA

$1

ZIG ZAG

1$MILLMERRAN

$Bora Creek-1

-28°00' 00"

$Scrubby Creek-1

REEK$1

$Kendor-1 $Trapyard-1

SON$1

$Glenhaven-1

MOOGOON$1

INGLEWOOD

OM-2M8O°RO3N0$'100"

ex ATP 689P

YELARBON

-28°45' 00"

0 5 10 15 20

KILOMETRES

151°

00' 0

0"

150°

45' 0

0"

150°

30' 0

0"

YETMANZ:\arrow\689\Mapinfo 30 Jan 05

"00 ' 51° 151

-27°45' 00"

-28°00' 00"

16

88

160

372

-28°30' 00"

438

510

-28°45' 00"

439

511

440

512

441

513

442

514

443

0 5 10 15 20

KILOMETRES

150°

30' 0

0"

150°

45' 0

0"

151°

00' 0

0"

ACBM PTY LTD ATP 689P 'INGLEWOOD'

RELINQUISHED AREA GRATICULAR BLOCK

NUMBERSBIM: ARMIDALE

Z:\arrow\689\Mapinfo FIG 230 Jan 05

2

2.0 REGIONAL GEOLOGY

2.1 Paleozoic basement

South East Queensland consists of several fault bounded basement blocks and exotic terranes of late Paleozoic age, intruded by Permian and Triassic granitoid plutons and covered by Triassic to Jurassic and Tertiary intra- cratonic sedimentary basins (Figure 3). These rocks form part of the New England and Yarrol Orogens.

The present day New England Orogen extends for 1500 km from Newcastle to Bowen, and is bounded to the west by the Hunter-Mooki-Goondiwindi Fault System. This fault system is interrupted by the ‘embayment’ of the northeast striking Undulla Fault (north of ATP 689P), and re-commences further north as the Burunga Fault.

From the Cambrian, Eastern Australia was situated on an active plate margin, although the present tectonic pattern dates principally from the Devonian.During early Devonian to Carboniferous times the region was dominated by a westward dipping subduction zone with a forearc basin (Tamworth and Yarrol Belts) bounded to the west by a volcanic arc (Connor-Auburn Arch) and to the east by an accretionary wedge (Coffs Harbour, Beenleigh and South D’Aguilar Blocks).

These accretionary wedges are sub-parallel to the present coast line and aligned approximately north-south. The Beenleigh, D’Aguilar and Coffs harbour blocks consist of deformed and metamorphosed turbidite sequences and minor deep sea floor basalt and chert of late Paleozoic age.

Cessation of subduction at the end of the Carboniferous was followed by orogenic deformation and accretion of exotic terranes during the Permian and Triassic. From the Permian to mid Triassic Eastern Australia was part of a convergent plate margin system related to the coalescence of the constituent parts of Gondwana.

The Gympie block accreted to the Yarrol Orogen in mid Triassic times, accompanied by initiation of the Ipswich Basin. The process of orogeny and accretion was accompanied by significant strike slip displacement, possibly of the order of hundreds of kilometers in the Permian-Carboniferous, and tens of kilometers in the Triassic.

Subduction ceased in the Late Carboniferous and re-commenced in the east from the Permian to Triassic, with Mesozoic basin development forming in a back arc setting. Southern Queensland Mesozoic basins are en-echelon in arrangement, and formed as depressions genetically related to the twisting of the New England Orogen into two coupled oroclines (Texas Orocline and Coffs Harbour Orocline).

Taro

omBowen Basin

YARRAMANYARRAMAN

BLOCKBLOCK ESK

GYMPIEGYMPIE BLOCKBLOCK

NORTH

DD''''AGUILARAGUILAR

MARMARYBOROUGH BASBASIN

Surat Basin

Surat

TROUGH

BLOCK

NAMBOUR BASIN

Horrane

Trough Gatton Arch

SOUTH D'AGUILAR

BLOCK

IPSWICH BASIN

Basin

Swan Ck Anticline

Laidley Sub-basin

South

Moreton

Anticline

Logan

Sub-basin

ACBM PTY LTDSEQ Regional Structure

Tertiary basin

Carboniferous

Permian

Pluton

Triassic

Great Artesian BasinBowen Basin

ex ATP 689P

TEXAS

BLOCKNEWNEW

ENGLANDENGLAND

SILVERWOOD BLOCK

EMU CK BLOCK

Clarence

Moreton

Basin9 June 04 Fig 3

0 10 20

KILOMETRES

30 40 BATHOLITHBATHOLITHDRAKE BLOCK

Trou

gh

3

To the east of the present day Moonie Fault, Paleozoic basement is represented by the late Carboniferous Camboon Andesite and Kuttung Volcanics, known collectively as the Kuttung Formation. These indurated Carboniferous sediments outcrop to the southeast and within the relinquished blocks where they form the Texas High indicated as ‘Clt’ on Figure 4.Kuttung basement is thought to completely underlie the permit as it has been encountered as economic basement in petroleum wells within and close to the tenement.

Kuttung sediments are assumed to be the same age as Texas Beds in Arrow/ACBM stratigraphy ( Figure 5).

2.2 Bowen Basin (Permian-Triassic )

Tectonically Eastern Australia evolved orogenically from a subduction to cratonic environment by the late Triassic. The earliest rocks of the Bowen- Gunnedah-Sydney Basin (referred to here as the Bowen Basin) are early Permian volcaniclastic marine sediments deposited in an extensional phase in the Denison Trough, Taroom Trough, Gympie Basin and Esk Trough.Subsidence was rapid in fault bounded grabens and half grabens, although sediments may have deposited under relatively shallow conditions.

Early Permian extension was terminated by compression of a late Permian orogeny, followed by intrusion during Triassic extension and a shift to non marine (alluvial and lacustrine) conditions.

Passive thermal subsidence commenced in the mid Permian marked by a widespread marine transgression. Sediment supply from the now inactive volcanic eastern margin decreased, and sedimentation was dominantly clastic with some carbonates.

In the late Permian a belt of fold-thrust mountains developed on the eastern margin. This mountain belt moved progressively westwards, incorporating the older foreland basin. Sedimentation changed diachronously from uniform sheets of marine sediment to syntectonic detritus marked by slumps, debris and turbidity flow deposits representative of an unstable shelf environment.

From the late Permian to mid Triassic the Bowen Basin subsided as a foreland basin (Hunter-Bowen event), while intra-cratonic basins to the west (such as the Galilee Basin) also subsided. On the east margin a resurgent volcanic arc developed, with volcanic sediment deposited to the west and south in alluvial fans. Volcanogenic clastic deposits formed the late Permian Baralaba Coal Measures within the Taroom Trough, age equivalents of the Rangal Coal Measures and Bandanna Formation to the north.

The main locus of deposition was the axial north-south oriented Taroom Trough, and the Denison Trough to the north of the ramp-like Comet Ridge. The basin was asymmetric, with greater sediment thickness on the

"00 ' 51° 151

$

$CECIL PLAINS SOUTH$River Road-1

$GILGAI 1

$MUNDAGAI 1

$-R2E7T°R4E5A'T010"

$WAGGABA 1

$TINKER CREEK 1$WILKIE 1

$STATION CREEK 1

$Glenburnie-1

$MILLMERRAN 1

$WEIR 1

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$Bora Creek-1

-28°00' 00"

$YARRILL CREEK 1

$Scrubby Creek-1 T

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$THOMPSON 1

$Kendor-1

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$Trapyard-1

JKkJw

Jlm Clt

$ Glenhaven-1

$MOOGOON 1

-28°30$' 00C

"OMMORON 1

ex ATP 689P

-28°45' 00"

JKkJw

0 5 10 15 20

KILOMETRES

Jlm

ACBM PTY LTD ATP 689P 'INGLEWOOD'

RELINQUISHED AREA 1:250,000 SCALE GSQ GEOLOGY

Z:\arrow\689\Mapinfo 30 Jan 05

FIG 4

T Basalt

JKk Kumbarilla beds

Jw Walloon CM

Jlm Marburg

Fm Clt

Basement Pg

granite

150°

45' 0

0"

151°

00' 0

0"

Ma STAGE SURAT (BOWEN) BASIN CLARENCE MORETON BASIN

-100

-110

Cenomanian

Albian

Roma Shelf Mimosa Syncline Cecil Plains Depression Tarong Basin Esk Trough/Laidley SB Ipswich Basin NSW

-120

-130

-140

-150

-160

-170

-180

-190

-200

-210

Aptian

Barremian

Hauterivian

Valanginian

Berriasian

Tithonian

Kimmeridgian Oxfordian

Callovian

Bathonian

Bajocian

Aalenian

Toarcian

Pliensbachian

Sinemurian

Hettangian Rhaetian

Norian

Wallumbilla Formation

Bungil Formation

Mooga Sandstone

Orallo Formation

Gubberamunda Sandstone

Westbourne FormationSpringbok Sandstone

Walloon Coal Measures

Hutton Sandstone

Evergreen Shale

Boxvale Sand

Precipice Sandstone'58-0' sand

Kumbarilla Beds

Raceview Fm

Grafton Formation

Kangaroo Ck Sandstone

Walloon Coal Measures

Koukandowie Formationoolite marker

Gatton Sandstone

Ripley Road Sandstone

Helidon Sand

AAAbbbeeerrrrdddaaarrrreee////LLLaaayyyttttooonnnsss RRaaannngggeee CCooommgggllloloommeeerrrraaatttteee

Blackstone Fm Ipswich-220

-230

-240

Carnian

Ladinian

Anisian

Moolayember Formation Snake Ck Mudstone Clematis/Showgrounds Sandstone

Tarong Beds Tivoli Fm

Kholo sub Gp

Neara Volcanics Bryden/Esk Beds

Coal Measures

-250Olenekian

InduanRewan Formation 'Red Shale' 'Red Beds'

-260Tartarian

Kazanian

Bandanna Fm KIanga CM Back Ck GpCressbrook Ck Beds

-270

-280

-290

-300

-310

-320

-330

-340

CapitanianWordian Roadian

Kungurian

Artinskian

Sakmarian

Asselian

GzhelianKasimovian

Moscovian

Bashkirian

Serpukhovian

Visean

Aldebaran Sandstone

Cattle Ck Formation

Reids Dome Beds

Back Ck Group

Buffel Formation

Camboon Volcanics Buaraba Mudstone Marumba Beds

-350Tournaisian Yarrol Basin Accretionary Complex Kuttung Fm Texas Beds Neranleigh Fernvale Beds

CA

RB

ON

IFER

OU

SPE

RM

IAN

MID

DLE

TRIA

SSIC

JUR

ASS

ICM

IDD

LEC

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SE

AR

LYM

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ISS

IPP

IAN

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NN

SY

LVA

NIA

NE

AR

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TEE

AR

LYM

IDD

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TEE

AR

LYLA

TE

MA

RB

UR

G

SU

B G

RO

UP

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AH

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UP

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K

TRO

U G G

H

NY

MB

OID

A C

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CH

ILLI

NG

HA

M

VO

LCA

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S

Fig 5

4

mountainous eastern overthrust margin within the Taroom Trough, thinning markedly to the west.

The eastern volcanic arc supplied the bulk of sediment to the Bowen Basin, although periodic uplift of cratonic rocks to the west provided influxes of quartzose sediments. Alluvial and lacustrine deposits of the Rewan, Clematis and Moolayember Formations deposited in the early to mid Triassic over a very wide area, and the Rewan and Moolayember sequences can be traced through the Cecil Plains depression and as far east as the Esk Trough.Alluvial fan material within the Rewan Formation and quartzose sand sheets of the Clematis Group derived from uplift to the west.

Sediment flow was along a meridonial southward flowing drainage system which at times was swamped by a lake to form sealing units such as the Snake Creek Mudstone. Sediment flow was likely affected by eustatic changes, and at times supply outstripped the capacity of the basin and sediment flowed into the adjacent Galilee and Cooper Basins.

Towards the end of the Hunter-Bowen event in the mid to late Triassic, deformation was accompanied by westward thrusting and formation of high angle reverse faults by reactivation of earlier extensional faults. The resulting uplift brought about an end to deposition, although a late Triassic extension formed a number of small rift and half graben structures such as the Tarong Basin. Many of these basins contain significant coal seams interbedded with dominantly volcaniclastic rocks. They formed within mountainous terrain and often feature coarse alluvial and colluvial sediments.

The Esk Trough and Cecil Plains Depression (also known as the Horrane Trough) are generally considered to belong to this last extensional phase. They could however on the basis of seismic interpretation be much older and possibly date to the Permian extensional phase of the Bowen Basin.Similarities of age and lithology suggest they are likely to represent erosional remnants of the Bowen Basin proper rather than geologically distinct structures.

2.3 Jurassic-Cretaceous Basins

Great Artesian Basin

A very large intra-cratonic basin complex known as the Great Artesian Basin developed over most of Eastern Australia from the latest Triassic/earliest Jurassic. The Basin formed by a process of passive thermal relaxation over a very large area, terminating with the opening of the Tasman/Coral Sea in the late Cretaceous.

The Great Artesian Basin comprises, within Queensland, the Surat and Eromanga Basins, and is syn-depositional with adjacent basins including the Mulgildie, Nambour, and Clarence-Moreton Basins. The divisions between basins are based in some cases on underlying structural features, such as the

5

Nebine Ridge separating the Surat Basin from the Eromanga Basin to the west, and the Kumbarilla Ridge which has in recent years been said to separate the Clarence-Moreton and Surat Basins. Basins such as the Nambour Basin and Mulgildie Basin are erosional remnants of a formerly continuous basin.

The entire basin complex represents a giant river and lake system that at one time drained to the east through the northern part of the Clarence-Moreton Basin, via a choke point termed the ‘Toowoomba Strait’. The Strait was a broad synclinal valley which breached the barrier of the elevated Texas Block to the south and the Yarraman Block to the north, and was later filled by Tertiary basalts and eroded to form a modern reversed topography.

A series of six fining upward cycles related to eustatic seal level change can be identified within the GAB. Units form a thick layer cake stratigraphy that is only lightly deformed and can be traced over great distances across several individual basins. The earlier sequences are alluvial and lacustrine, although with the progressive inundation of Gondwana in the Cretaceous the rocks become marine in character.

2.4 Surat Basin

The relinquished blocks are situated within the Surat Basin, a large intracratonic sag structure which extends over 43,000 km2 through southern Queensland into NSW. It forms part of the Great Artesian Basin complex and unconformably overlies the Bowen Basin. The Surat Basin is flanked by the Nebine Ridge to the west and Toowoomba Strait to the east (contra Wells & O’Brien), and is stripped to the north where the Bowen Basin is exposed at surface. An axial syncline, the Mimosa Syncline contains the thickest sediments and appears to be at least in part syn-depositional. This syncline is superimposed on the Taroom Trough, probably attributable to a deep seated crustal feature.

The earliest sediments of the Surat Basin may be a late Triassic lacustrine phase equivalent to the Raceview Formation of the Clarence-Moreton Basin. These sediments are significantly more deformed than the overlying Jurassic rocks, however they post-date recognised Bowen Basin sequences. It has been suggested that this unit could represent a separate eustatic cycle.

As occurred during deposition of the Bowen Basin, periodic uplift of cratonic rocks to the west supplied quartzose sand sheets which formed reservoir rock units such as the Precipice, Hutton, and Boxvale Sandstones. However, the dominant sediment supply was from volcanic highlands to the east.

Cycle 1

The earliest accepted Surat Basin unit is the Precipice Sandstone, which dates from the latest Triassic/early Jurassic, and forms an extensive, thick, braided sand sheet. This is overlain by meander and swamp deposits of the

6

Evergreen Formation, which together with the Precipice forms a single fining upwards eustatic cycle (Cycle 1). The Evergreen Shale often contains a basal sand unit and an intermediate sand member (Boxvale Sandstone) as well as an oolite horizon that can be correlated with a similar horizon in the age equivalent Marburg Formation in the adjacent Clarence-Moreton Basin.Published 1:250,000 scale geology maps depict the Evergreen Shale and Hutton Sandstone as undifferentiated Marburg Formation south of Chinchilla although this has little scientific justification as the two units can be easily distinguished in petroleum wells from the relinquished area and into Cecil Plains, and appear to be lithologically identical to rocks west and north of Chinchilla.

The basal sandy (Precipice) unit is missing in the relinquished area, presumably because the Texas High manifested itself in Jurassic times. Braided river systems forming an extensively reworked sand sheet flowed around the northern edge of the paleo hills. As the dominant drainage system changed to one of meandering rivers, sediments began to overlap the flanks of the High. A return to braided river sand sheets at the beginning of deposition of the Evergreen Shale laid down the Upper Precipice Sand or Basal Evergreen Sand, which is oil bearing at Moonie (56-4 sand).

Cycle 2

Overlying Cycle 1 is the Hutton Sandstone which forms the basal section of cycle 2. The fining upwards meander/back swamp phase of Cycle 2 is represented by the mid-Jurassic Walloon Coal Measures, which may be subdivided into an upper (Juandah) and lower (Taroom) coal sequence (Figure 6), separated by the erosive Tangalooma Sandstone.

The Taroom sequence contains often very thick seams up to 20m aggregate thickness, which have been further divided into 3 seams by some workers.

The Juandah sequence is divided up into the Argyle, Iona, Wambo, Macalister, and Kogan seams. Individual coal seams cannot be correlated with certainty for any distance, but seam packages can be traced over several tens or even hundreds of kilometers. Each seam represents a fining upwards cycle with a basal sand unit, and may incorporate smaller sub-cycles. This repetition of similar units can make correlation extremely difficult where a recognisable feature such as the Hutton or Tangalooma Sandstone is not logged within a bore.

The overall thickness of the Walloons north of Kogan and into the Cecil Plains area is remarkably consistent, averaging 420-440 m thick, although individual seam packages can vary in thickness. To the south of Kogan the overlying Cretaceous Springbok Sandstone becomes erosive, progressively removing the Juandah seams. Within the relinquished area the upper seams are entirely removed, leaving only the Argyle and Taroom seams.

WES

TBO

UR

NE

FM

MID

JU

RA

SSIC

CA

LLO

VIA

N -

BA

JOC

IAN

(AA

LEN

IAN

?) 1

61.2

-171

.8

Ma

EROMANGA BASIN SURAT BASIN CLARENCE MORETON BASIN

ADORI SANDSTONE

BIRKHEAD FORMATION

JUA

ND

AH

SEQ

UEN

CE

SPRINGBOK SANDSTONE

KOGAN

SEAM

MACALISTER

SEAM

KUMBARILLA BEDS

SPRINGBOK SANDSTONE

UNDIFFERENTIATED

WA

LLO

ON

CO

AL

MEA

SUR

ES

MIAD SANDSTONE

WAMBO SEAM

IONA SEAM

ARGYLE SEAM

TANGALOOMA SANDSTONE

A SEAM

B SEAM TAROOM SEAMC SEAM

TANGALOOMA SANDSTONE

A SEAM

B SEAM TAROOM SEAMC SEAM D SEAM

TAR

OO

M S

EQU

ENC

E

EUROMBAH SANDSTONE EUROMBAH SANDSTONE UNDIFFERENTIATED

HUTTON SANDSTONE HUTTON SANDSTONE HEIFER CK SANDSTONE (MARBURG SUB GROUP)

FIG 6

7

The Walloon coals were laid down in a highly seasonal polar climate, and are derived from higher plant material which deposited in back swamp environments in what appears to have been a giant meander system analogous to the modern River Ob in Siberia. The perhydrous nature of the coals and their structure and permeability has made them particularly suitable for gas formation and retention.

Cycle 3

The mid-late Jurassic erosive Springbok Sandstone progressively removed the underlying Walloon sequence southwards, and sits directly on the Taroom seam within the relinquished ground. The Springbok Sandstone forms the basal unit of Cycle 3 and is overlain by labile sediments and minor coals of the Westbourne Formation.

Cycle 4-6

Cycle 4 comprises the late Jurassic to early Cretaceous Gubberamunda Sandstone, which formed in a braided to meander environment and is overlain by the fossil wood bearing Orallo Formation. The Orallo Formation contains thin high ash coals. These sediments are progressively preserved as section deepens to the east.

Cycle 5 is early Cretaceous in age and consists of the Mooga Sandstone and Bungil Formation. The upper parts of the cycle reflect marine transgression from the east. Cycle 6 is made up of the Wallumbilla Formation and reflects the regression of the Cretaceous sea with a sequence progressing from neritic to estaurine and fluvial.

Cycle 6 is the last sequence to be preserved and dates from the early Cretaceous. Compression with uplift and tilting of the Surat Basin to the south followed, with the opening of the Tasman/Coral Sea commencing some 10 Ma later.

8

3.0 PREVIOUS EXPLORATION

HOLDER ATP DATE COMMENT

Federal Oil Syndicate

20 Prior to 1957 Report not in digital format.

Australian Oil and Gas Corp

36 1957-1959 Work included compilation of bore records, aeromagnetics, and photogeology between Undulla Nose and Nebine Ridge

Australian Oil and Gas Corp

57 1959-1960 Work to the west and north of the permit, including drilling Cabawin-1 and Wandoan- 1, and seismic surveys

Phillips-Sunray- Qld American

71 1959-1963 This was a very large ATP. The consortium carried out extensive seismic and drilled The Overflow-1, Kogan-1.Kogan South-1, Durabilla-1, and Waggaba-1, Tnker Creek-1, Durabilla West-1, Zig Zag-1, Kumbarilla-1, none of which are within the permit.

Analog seismic was run within ATP 689P in 1962, (CP 309 & CP 310A) but theresults are lost.

Woods Petroleum 157 1969-1972 Woods drilled 4 wells to test the Precipice Sand stratigraphic play, without running any new seismic, although there was an existing analog grid in place. These were Billa Billa-1, Thompson-1, Commoron-1 and Moogoon-1. Only Moogoon-1 was within ATP 689P.

While holes north of Goondiwindi had thick Precipice Sand, it was known to wedge out against the flanks of the Surat Basin.

It had been believed that the Precipice Sand was absent east of the Goondiwindi (Moonie) Fault, but Thompson-1 disproved this by intercepting 160’ of sand. However the well tested only water despite oil shows in Widgewa-1 downdip. Moogoon- 1 was designed to be structurally higher and was drilled on an anticline but the Precipice Sand was absent. Commoron-1 was also drilled updip on a structural ridge but the reservoir was absent in this well too.

Drilling of the 4 wells was thought to make the possibility of a major oil discovery very remote and the ground was dropped.

9

Amalgamated Petroleum NL

159 1969-1973 Work was in the Cecil Plains area, whereHorrane-1 was drilled, and also Toora-1 at Kumbarilla.

Kamon Petroleum Exploration

222 1976 Report not in digital format.

Bruce Anderson Oil Corp Of Aust & GeologicalSurvey Of Qld

255 1980-1982 Most work was carried out in the Paringa and Goondiwindi (Moonie) Fault areas. Several wells were drilled, all to the west of ATP 689P.

Qld Petroleum Pty Ltd

282 1981-1990 This ATP extended from Ipswich west to Kumbarilla Ridge. Nangway-1 and Ropeley-1 were drilled. Seismic programmes were run in the Clarence Moreton Basin and areas west, however no work took place within the presentpermit.

King Solomon Mining Co Pty Ltd Alpha ResourcesLtd

291 1981-1984 Report not in digital format. Work is interpretation with no new ground work.

Alkane Exploration NL Carr Boyd Minerals Ltd Cluff Oil (Pacific) Ltd

350 1986-1991 The consortium drilled Bendidee-1, carried out seismic and re-interpreted old data, all outside ATP 689.

Golden West Hydrocarbons Pty LtdVoyager Petroleums Aust LtdFrontier Resources Ltd ChimellePetroleum Ltd

311 1983 Report not in digital format. This is a review and there appears to be no new ground work.

Ogm Development Pty Ltd

397 1990? Report not in digital format. Re- interpretation of geophysical data with no ground work.

10

3.1 Discussion

The only significant work to take place near the area of the relinquished blocks is a 1962 vintage seismic survey for which the sections and tapes are evidently lost, and a single petroleum well Moogoon-1 (Figure 7).

Only wireline logs and a one page summary are available for the wells drilled by Woods Petroleum.

Woods Petroleum did however produce a contour map of the ‘G’ horizon (described as the top of the Evergreen-Precipice-Hutton) based on the lost Kogan seismic data. This shows an en echelon arrangement of north-south to north-northeast trending anticlines extending through Commoron-1 and Moogoon-1. An embayment or valley interrupts the north-northeast trending ridge, which manifests itself again near Zig Zag-1.

$

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CECIL PLAINS SOUTH $1

$River Road-1

AI $1 AGAI 1$

$-27°45' 00"

WAGGABA

$1

JACKSON-ROMA-BRISBANE OIL PIPELINETINKER CREEK $1

$Glenburnie-1

WILKIE $1 $ $MILLMERRAN$1

WEIR $1

$URANILLA

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ZIG ZAG$1

$Bora Creek-1

-28°00' 00"

$77,131

$10,227

$Scrubby Creek-1 $71$,656

$

$ $18,678

$80,953

REEK

$1

$10,630

$16,25$1$MS1

2

$MS11 $9,931

$$12714

$$35,962

$77,004 $15,491

$15,451

$80,280

$64,055

$Kendor-1 $Trapyard-1$$80,167

$ $ID$1$9$ID$16 $ID 01 $108,040$MS7 $ $MS9$11,950 $$ $$$ $cro 28

$ MS8 $ $014 $$$$cro $16 $$ID 02$$ID 4$3 ID 10$10,605 $ID 26 $

$15,180 $B07 $c$ro$17$$$$$$

$ $ID 05

ON

$1 35,628$EX51$

$ B05 $$$$$B01 $ $$B04

$$E$X5$4 EX56

$$$ $B02

$$GOO-R-4 $Glenhaven-1$IG$7R$IG$5R

$$ID 33

$$IG 1R

$NHK2 $$IG$8R $ $ID 0$6

$EX7$ $$EX5

$NHK3$IG 28R

$GOON$DIWINDI 1

$IG 11RMOOGOON 1$ $ EX3 EX1 $$IG 25R $ID 07

$10,519 $EX14 $GOO-R-2$EX50

$EX36$

$ $$ $ $ $IG 1$2R $

$30,081

$EX12

$EX11

$EX$10

$EX49$$EX47

$ $

$EX34$$EX32$

$EX30

$16,636

$11,395 $IG 13R

O-M

2M8O°R3O0N$'100"

ex ATP 689P

$ $$EX15$$$EX16

$GOO-R-3$

$EX44

$EX42$

$EX40$$EX38

$11,270

$14,043

$I$G$17$R $IG 14R

$EX19

$un-named

$IG 31R $IG$22R

$IG 18R$IG$20R

$

"00 ' 51° 151

$41,640,001

ACBM PTY LTD ATP 689P 'INGLEWOOD'

-28°45' 00"

0 5 10 15 20

KILOMETRES

RELINQUISHED AREA DRILLING

$ Arrow CSG bore

$ Coal bore

$ Petroleum bore

$ Waterbore with coal intercept

Z:\arrow\689\Mapinfo 30 Jan 05

FIG 7

151°

00' 0

0"

150°

45' 0

0"

150°

30' 0

0"

11

4.0 ACBM/ARROW EXPLORATION

4.1 CSG Exploration

No wells were drilled within the relinquished ground. Compilation of existing data allowed total coal thickness isopachs and depth maps to be produced (Figure 8).

Within the eastern relinquished block up to 15m of coal is predicted, but at shallow depths not exceeding 100m from surface. Due to the shallow depths these coals are most likely to be degassed.

Within the southern relinquished block maximum predicted depths to the base of the Walloons exceed 600m, with predicted coal thickness up to 10m net coal. While depths are within the optimal range over part of the relinquished ground, net aggregate coal thickness is likely to be sub-commercial. This is because of the progressive non-deposition or removal of the Walloon coal measures to the southwest, accompanied by a general thinning of seam development and an increasingly sandy section.

4.2 Conventional Play

The relinquished ground is situated within the Surat Basin, with the northern edge of the permit approximately 45 km southeast of Moonie Oilfield.

Moonie Oilfield is hosted within two Jurassic aged sand units known as the ‘58-0’ and ‘56-4’ sands (so called because they were encountered at 5800’ and 5640’ in Moonie-1).

4.2.1 Lower Precipice Sand

The ‘58-0’ sand, or Lower Precipice Sand, is a thick basal sand with excellent reservoir properties. This sand forms a continuous sheet over a very large area and can be traced as the same unit eastwards into the Cecil Plains Depression and as far as the Beef City bore near Toowoomba, where it undergoes a significant facies change at the Toowoomba Strait to become the Ripley Road Sandstone.

In the Cecil Plains Depression the sand indicated in wireline logs forms an almost homogeneous unit up to 83m thick with very few shale layers, and with excellent porosity and permeability throughout the section. At Moonie the sand is thinner at about 30m thick, and contains shale layers, possibly with the upper (56-4) and lower (58-0) reservoir sands corresponding to the top and bottom of the thick single reservoir of the Cecil Plains Depression.Alternatively the upper reservoir sand may represent the basal sand of the Evergreen Shale.

"00 ' 51° 151

$3.4$ $

STATION CREEK 1

$

$

$

CECIL PLAINS SOUTH $121.4$River Road-1

AI $1 AGAI

$1

$-27°45' 00"

TINKER CREEK

$1

WAGGABA $1

WILKIE $1 $ $

20.3$Glenburnie-1

MILLMERRAN $1

WEIR$1$

URANILLA

$1

ZIG ZAG$1

7.9$Bora Creek-1

-28°00' 00"$

$10.3$Scrubby Creek-1

$ $$

$ $ $$ $ $ $

$EEK $1

$$

$ $ $$$ $

$$ $$

$

$Kendor-1 9.5$Trapyard-1$$

$1.9$5.$8$$1$24.3.3$ $ $$$3.9$$7 $4.2 5.9

$2$.8$3$.36.35.4 $$3.63.7$$2.15$.1 $7$.$7$5.7$$4.17.4$

$ $3.5$ $$

$$$3.$8$2.26.4$ $4$.6 2$.4$$4$.$5$1.7 $$$5.3 $$ 0.4$S

ON$1$ $3$$.$1 $1$.6

1.2 $4.1

$$ $ $$

$$10.43 4$Glenhaven-1

$$$ $$2$.60.82$.3

$3$.451$.053$.550$.351

.65$ $$0.3

$$

$ $ 6.96$$ $0.1 $ $

$

MOOGOON $1

$ $ 0.5$ $$ $$0.207.95 $

-700 $ $7.49

$$ $

$$ $

$ $ $$$$$

$$

$ $$

$

$ $ $

$

O-M2M8O°R3ON0$'100"

$ $ 2.08

$$

$$$ $ $$ $

$9.86 $$

top Hutton

30m+25-30m

-600

ex ATP 689P$$

$ $$2.84 $ $

$ $

$ 1$.3$1$.95

2$.05

$ $

20-25m15-20m

10-15m5-10m

$ 0.6 $ $ $0.01

2.5-5m

-500$

-400

-28°45' 00"

-300 0 5

-200

150°

30' 0

0"

151°

00' 0

0"

$

$

$0

$$

$$

ACBM PTY LTD ATP 689P 'INGLEWOOD'

RELINQUISHED AREACSG PROSPECTIVITY

$ Arrow CSG bore$ Coal bore$ Petroleum bore

10 15

KILOMETRES

-100

150°

45' 0

0"

ACBM PTY LTD ATP 689P 'INGLEWOOD'

RELINQUISHED AREACSG PROSPECTIVITY

$ Arrow CSG bore$ Coal bore$ Petroleum bore

12

Changes in electrical log character are evident as the sand pinches out against the Texas High. In Waggaba-1 the basal porous unit is only about 6 m thick, and the unit fines upwards into tight shales with thin water bearing sands. In Tinker Creek-1 to the southwest this basal unit is confirmed to be a conglomerate of rounded pebbles set in a soft sand matrix, and this has been noted in other wells such as Nangway-1. Log characteristics of these wells and Thompson-1 show similarities.

This suggests that at least to the north and west of the relinquished area the lower Precipice unit is represented by a reservoir quality pebbly conglomeratic sand. This fines upwards into shale with thin porous sand beds.

4.2.2 Upper Precipice/Basal Evergreen Sand

The upper Precipice sand is thinner and can be locally absent or a non- reservoir, but is identifiable as a unit over a considerable area. Controversy has existed as to whether this is a Precipice or Basal Evergreen Sand, but it is generally considered now to be the latter.

Possibly some of the upper sandy units apparent in wireline logs in wells such as Tinker Creek-1 are basal Evergreen sands rather than Precipice sand as logged.

4.2.3 Undifferentiated Triassic rocks

In Wilkie-1, Nangway-1, and Zig Zag-1 undifferentiated dark colored shales are reported. These seem identical to the Triassic shales logged in Cecil Plains South-1, and are likely to belong either to the Raceview or the Moolayember Formation. In either case they are evidence of preservation of a thin Triassic basin extending to the northeast from the interpreted high in the western part of ATP 689P.

4.2.4 Discussion

The Moonie field is located on an upthrown fringing anticline adjacent to the Goondiwindi-Moonie-Burunga Fault (also known simply as the ‘Moonie Fault’), a major deep seated north-south trending structure. Moonie itself is underlain by barren Carboniferous Kuttung Volcanics, and is charged via the fault from coaly and carbonaceous Triassic to Permian beds down faulted to the west.

The Moonie oilfield is enigmatic in that it is preserved whereas many other apparently similar structures exist which have been water flushed and now contain only residual oil (eg Widgewa-1 and Giligulgul-1). This may be in part due to a major Cretaceous trap-spilling event where the entire basin tipped to the south and the northern extension eroded off. Oil within the Moonie structure was preserved despite this event, which is strong evidence of a stratigraphic element to the trap. For this reason pinchout plays combined with rollovers offer the best chances of trap preservation.

"00 ' 51°

$CECIL PLAINS SOUTH 1

19.2 m Triassic

AI

$1

$MUNDAGAI

1Precipice

WAGGABA$1

$-27°45' 00"

reservoir sandTINKER CREEK

$1 WILKIE

$1

11.4 m Triassic

$ $STATION CREEK 1

MILLMERRAN $1

$WEIR 1 KEGGABILLA$1 U

RANILLA

$1Evergreen Shaalllle on Carboniferous bbasemenenttt

ZIG ZAG $150m Triassic

-28°00' 00"lobe of porous & permeable

sand

$YARRILL CREEK 1

Evergreen S halllle on Carboniferouuussss bassssementttt high interpreted from

magnetics & gravity

flushedTHOMPSON 1

$ combined stratigraphic-structural play - protected from flushing

Precipice/BES on Carboniferous basement no shows

$MOOGOON 1Evergreen Shale on Carboniferous basement

COMMORON 1 Evergreen Shale on

-28°30$'

00"

Carboniferous basement

-28°45' 00"

0 5 10 15 20

KILOMETRES

High interpreted from geophysics

Precipice Sand

150°

30' 0

0"

150°

45' 0

0"

151°

00' 0

0"

-500

ACBM PTY LTD ATP 689P 'INGLEWOOD'

RELINQUISHED AREA

PETROLEUM

PROSPECTIVITY

Z:\arrow\689\Mapinfo FIG 9

13

No original seismic data remains on open file, although there are a few 1960’s vintage interpretive sections and structural maps available. Woods Petroleum’s structural map suggests a major north-south trending ridge extends through Comoron-1, Thompson-1, and Yarill Creek-1 wells.

This ridge contains a saddle immediately north of Thompson-1, with an embayment interpreted to the east. A splay ridge visible in magnetics and gravity extends to the north-northeast from Moogoon-1 to Uranilla-1, with another structure not interpreted by Woods extending to Zig Zag-1. These sub-parallel ridges are interrupted by an embayment which forms a topographic low. This embayment may represent a north-east oriented series of faults cutting across the ridge structure, as occurs at Undulla.

A porous and permeable sand described in well completion reports as a ‘Precipice Sand’ is found in wells to the west of the relinquished ground, but is absent in all nearby wells except Thompson-1. The presence of this sand in Thompson-1 and its absence in the wells further along the ridge to the north and south suggests the sand sheet flowed through that point and either did not deposit or was stripped from what must have been topographically higher points on the structure.

Assuming that the low point interpreted in seismic to the east of this point represents paleo-topography, it is a possibility that a continuous lobe of sand extends into this valley, where it pinches out against the Moogoon-Zig Zag ridge. Subsequent tilting in the Cretaceous and Miocene will have formed a combined structural and stratigraphic trap. This is likely to have been protected from the effects of water flushing that have stripped most or all purely structural traps within this part of the Surat Basin.

In order to charge this trap oil would have had to migrate from Widgewa-1 past Thompson-1, however that well had no reported shows. A probable explanation is that the thick reservoir sand encountered in that well is entirely unprotected from artesian water flow and the reservoir has been stripped of all traces of oil post-migration.

Only the southern extension of the interpreted high extends into the relinquished ground, this structure having been tested by nearby Commoron-1 which from the sketchy well completion report appears to have been devoid of hydrocarbon shows, and encountered the Evergreen Shale sitting directly on Kuttung Volcanics basement.

There are no known conventional targets within the relinquished ground, which is predicted to be devoid of the Precipice Sandstone reservoir.

150°

30' 0

0"

150°

45' 0

0"

151°

00' 0

0"