19 September 2013 Company Announcements Officer Australian Securities Exchange 20 Bridge ...

80 Pages·2013·1.41 MB·English

Comet Ridge Limited
ABN 47 106 092 577
GPO Box 798
Brisbane Qld 4001
Phone : [phone]
Fax:- [phone]
[email protected]

Our Ref: Stephen Rodgers
Your Ref:

19 September 2013

Company Announcements Officer
Australian Securities Exchange
20 Bridge Street
Sydney NSW 2000 By Electronic Lodgment

Dear Shannon.

RE: COMET RIDGE LIMITED - ANNUAL FINANCIAL REPORT 2013

Please find attached the 2013 Annual Financial Report for Comet Ridge Limited.

The printed version is expected to be released mid-October 2013.

Yours Faithfully
Comet Ridge Limited

STEPHEN RODGERS
Company Secretary
Comet Ridge Limited
Annual Financial Report
30 June 2013
Comet Ridge Limited -
Annual Report 30 June 2013

Corporate Directory

Directors
James McKay – Non-executive Chairman
Tor McCaul – Managing Director
Gillian Swaby – Non-executive Director
Jeffery Schneider – Non-executive Director
Christopher Pieters – Executive Director
Anthony Gilby – Non-executive Director
Stephen Rodgers – Company Secretary

Registered Office Media Relations
Level 3 Three Plus
283 Elizabeth Street 15 Cordelia Street
Brisbane Queensland 4000 South Brisbane Queensland 4101
Telephone: [phone] Telephone: [phone]
Facsimile: [phone] Facsimile: [phone]
Website: www.cometridge.com.au
Email: [email protected]

Share Registry Securities Exchange Listing
Computershare Registry Services Pty Ltd Australian Securities Exchange Ltd
117 Victoria Street Home Exchange: Brisbane
West End Queensland 4101 ASX Code: COI
Telephone: [phone]
Facsimile: [phone]

Auditors Lawyers
Pitcher Partners Chartered Accountants Porter Davies Lawyers
Level 30, Central Plaza One Level 5/ 46 Edward Street
345 Queen Street Brisbane Queensland 4000
Telephone: [phone]
Brisbane Queensland 4000
Facsimile: [phone]
Telephone: [phone]
Website: www.porterdavies.com
Comet Ridge Limited -
Annual Report 30 June 2013

Contents
Chairman’s Letter 1
Managing Director’s Report 2
Overview of Activities 3
Corporate Governance Statement 8
Directors’ Report 17
Remuneration Report 22
Auditor's Independence Declaration 29
Statement of Profit or Loss and Other Comprehensive Income 30
Statement of Financial Position 31
Statement of Changes in Equity 32
Statement of Cash Flows 33
Notes to the Financial Statements 34
Directors' Declaration 72
Independent Auditor's Report 73
Additional Shareholder Information 75
Comet Ridge Limited -
Annual Report 30 June 2013

Chairman’s Letter

Dear Shareholders,
Comet Ridge has had an active year in progressing it coal seam gas assets. This has centred on the Mahalo project in the Bowen Basin, which
has seen the installation of two pilot projects in preparation for production testing. The Company also completed a pre-pilot drilling programme in
the Galilee Basin that highlighted the strong potential of this emerging basin. The portfolio was strengthened during the year with Comet increasing
its interest in the Galilee Basin as well as completing the purchase of additional interests in the Gunnedah Basin.
The progression to establishing gas reserves has been somewhat slower than we expected due to technical issues at the Mahalo project and
restrictions on drilling in the Gunnedah. However, our Queensland based projects are gaining momentum with the Company targeting to have
reserves certified at Mahalo early 2014.
A recent visit to Chinchilla and Roma showed overwhelming strong support for the coal seam gas industry, which is not surprising given the
dramatic increase in economic activity and the wealth of the area as a result of coal seam gas development. Comet has maintained its
commitment to community consultation in all areas where the Company has an active operational role. In particular, your board and I have been
very pleased with the way the Galilee Basin local councils, development groups and the landowners in our tenement areas, have engaged with the
coal seam gas industry.
NSW is rapidly approaching a gas shortage and it is difficult to understand their Government’s lack of support for the industry, especially in light of
the considerable success, free of significant problems, north of the border. One would think that as the gas shortage draws nearer, the NSW
Government must remove unworkable roadblocks to the development of the industry with urgency. Geologically we believe our NSW licenses
show significant promise and the Company has identified a number of leads, some of which have similarities to the highly prospective Pilliga
trough.
The first shipment of LNG from Gladstone next year will be a significant milestone for the industry, exposing domestic producers to international
markets and creating a step change in eastern Australian gas demand. Comet Ridge continues to believe that having deliverable gas reserves
feeding into this market will prove lucrative and remains the Company’s key priority.
I believe that Comet Ridge has a very exciting future as the Company moves towards the establishment of gas reserves. Reaching such a
milestone puts Comet in a strong position that will be supported by the developing gas market.
I would like to express my thanks to the Board, management and staff very ably led by our Managing Director, Tor McCaul, for their efforts
throughout the year. Progressing projects in the current operational environment has at times been difficult and the commitment Comet’s team
has shown over the year puts the Company in a strong position to realise its potential.
I look forward to the upcoming year and sincerely thank our loyal shareholders for their continued support.
Yours faithfully

James McKay
Chairman

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Comet Ridge Limited -
Annual Report 30 June 2013

Managing Director’s Report
It has been another busy year for the team at Comet Ridge Limited, with most of our technical focus directed towards our Queensland assets.
In Queensland, we have participated in the drilling of 14 wells over the past year, operating (being directly responsible for the drilling of) three of
these. The Mahalo Block in the southern Bowen basin, about 240km west of Gladstone in central Queensland, has seen the majority of our
drilling activity, with 11 wells drilled since July 2012. Comet Ridge is the biggest equity holder in this block with 35% equity, with APLNG (30%),
Santos (30%) and Stanwell Corporation (5%), the other participants. APLNG has managed most of the work in the field in the past year on behalf
of the Joint Venture. The wells drilled included two pilots schemes (the Mahalo field pilot and Mira field pilot) of four wells each, plus three step-
out core holes to further appraise the block. The pilot schemes also required the construction of additional facilities, which included separators
and flowlines for gas and water, power generation, water tanks and gas flare facilities.
The pilot wells were drilled in two phases over the past year and the Joint Venture was very pleased with the drilling results achieved. Comet
Ridge had been keen to see the first pilot scheme on-line and pumping water by late 2012 but unfortunately this wasn’t achieved until April 2013.
Gas production was recorded from two wells however not at sufficiently high rate to be considered commercial and the Joint Venture is currently
designing and planning stimulation on two wells, which we expect to occur in October this year. The second pilot (Mira) came on line in June this
year and has demonstrated much better productivity. We expect to pump water consistently from the Mira pilot for at least a few months before
being able to quantify gas rates. Looking forward our plan is to continue to have both pilots on-line and pumping water in the Mahalo Block,
leading into the end of this calendar year, with continued dewatering leading to higher gas rates as we head into the early part of 2014, with the
plan to achieve a reserves booking.
Unallocated gas reserves are becoming increasingly more difficult to find and subsequently we believe Mahalo holds significant value potential for
the Company.
In ATP 744P in the Gunn Project Area, in the Galilee Basin, we hold 100% equity. The Gunn 2 well was drilled as the start of a three well
programme in October 2012 and we ultimately completed this well (ran a downhole pump and tubing into the well) and put the well on an
extended production test (EPT) earlier this year. This well flowed at a rate of 400 bwpd (barrels of water per day) confirming the productivity of
coal in this area and providing valuable information to aid in the design of future appraisal. The Galilee basin holds the largest upside potential for
the Company at this point, with 1870 PJ of 3C contingent resource, and we believe the commercial options around Galilee Basin gas could be a
combination of (1) power/gas for coal mines in the east of the basin, (2) supply for LNG manufacture in Gladstone or (3) domestic/industrial gas
supply - or a combination of some or all of those options.
We followed the Gunn 2 well with two more wells a little further to the east in the ATP 1015P farm-in area. These wells confirmed the presence of
coals over a wide area to the east of the Gunn Project Area and earned the Company 20% equity in the farm-in area.
In his letter, our Chairman has highlighted our concern about the lack of physical exploration and appraisal progress that has been possible for the
industry in New South Wales to this point. This has made a tightening eastern Australia gas market even tighter and in our view, increased the
price pressure on gas customers. NSW imports 95% of its natural gas needs and has over one million retail gas customers who rely on natural
gas daily to cook their dinner and heat their water and homes.
During the year, we completed the transaction that was announced during 2012 to purchase more equity in two of our blocks in north-central
NSW in the Gunnedah Basin, PEL 427 and PEL 428, and also entered a new and very prospective block just to the east of these, PEL 6. Comet
Ridge is now the conventional oil and gas Operator of these blocks whilst Santos is the CSG Operator. We look forward to working with Santos,
to successfully explore and appraise these blocks. To date, our contingent resource base (3C) in these blocks exceeds 470 PJ net to Comet
Ridge.
Notwithstanding the inability of the industry to actively explore in NSW over the past couple of years, we believe that the significant progress made
by the industry in Queensland, and the economic revitalisation of many parts of rural Queensland through gas developments, will ultimately show
the NSW Government that it needs to encourage gas exploration and development in that state. Natural gas has been safely and efficiently
produced in Queensland, to supply homes and businesses, for the past 45 years. Natural gas from coal seams has been safely and efficiently
produced in Queensland for almost the past 20 years, and now accounts for almost 100% of Queensland’s gas production. There is a growing
feeling in Australia, that a small minority of anti-fossil fuel extremists have strived to control the public agenda and the industry is now working
much harder to get real information and facts out about the industry to balance these extreme and unsubstantiated claims. Indeed, part of this
information flow is revolves around how dependent our economy and our lives are on natural gas as a reliable source of clean energy.
Subsequently, the Company remains hopeful that exploration and appraisal of our extensive NSW acreage position of 18,000 km2 will be able to
move forward in the short to medium term and we will ultimately be able to play our part in the gas supply story in NSW.
In terms of the gas market in Queensland and NSW, almost daily in the media we are reminded that the buying side of the market is feeling very
exposed and in a strange new position, where gas volumes are no longer easy to find nor do Australian domestic gas prices remain amongst the
cheapest in the world. Significant upward pressure on prices has already occurred and we expect the market to remain very tight over the next
couple of years, as the Gladstone LNG schemes commence export in 2014 and 2015 and a range of domestic gas contracts expire with those
customers looking to find extensions to these contracts.
The focus for our Company is quite simple. Over the past several years, through both exploration of our acreage position and low-cost acquisition
in basins where we have some knowledge, we have built a very large contingent and prospective resource base, which is in excess of 5000 PJ
net to Comet Ridge. Our plan is to continue to appraise our acreage in an efficient and technically focussed manner, such that we can commence
the conversion of our large resource base to reserves at a time when the market for gas in eastern Australia is tightening significantly.

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Annual Report 30 June 2013

Overview of Activities
Comet Ridge Limited (Comet Ridge or the Company) has an active exploration and appraisal work programme for coal seam gas resources and
reserves in eastern Australia. The Company also has CSG interests in New Zealand and oil and also gas interests in the United States through
Comet Ridge Resources LLC (CRR), a US company based in Denver, Colorado.
Comet Ridge has had an active financial year to June 2013, with a drilling programme and Extended Production Test (EPT) in the Galilee Basin
and the installation of two pilot projects in the Mahalo block in ATP 337P, executed by its joint venture partner APLNG (the Origin, Conoco,
Sinopec company). During the year, Comet Ridge increased its interest in the Galilee Basin with the completion of the first phase of a Farm-In into
the Lake Galilee farm-in area as well as completing the purchase of northern NSW assets from Petrel Energy, increasing Comet Ridge’s interest in
the Gunnedah Basin.
Activities in Australia
Comet Ridge has interests in four coal seam gas assets in the Bowen and Galilee Basins in Queensland, and three in the Gunnedah Basin in New
South Wales.
Comet Ridge Permits Basin State CSG Interest Area (km2)
ATP 743P Galilee QLD 100% 4,214
ATP 744P Galilee QLD 100% 6,615
ATP 1015P Lake Galilee farm-in area Galilee QLD 20% 825
ATP 337P Mahalo Bowen QLD 35% 910
PEL 6 Gunnedah NSW 22.5% 5,162
PEL 427 Gunnedah NSW 50% 7,010
PEL 428 Gunnedah NSW 60% 6,018
The past 12 months have been an extremely active period for Comet Ridge with significant field activity as the Company focused on consolidating
its acreage position in the Galilee and Gunnedah Basins and following this with exploration and appraisal work programmes in the Galilee Basin
and Mahalo Block in the Bowen Basin.
In June 2012 Comet Ridge announced that it had executed an agreement to acquire Petrel Energy’s interests in the Gunnedah Basin. After all
necessary approvals, this transaction was completed in April 2013. Soon after this agreement was executed, in July 2012 Comet Ridge entered
into a farm-in agreement with Queensland Energy Resources (QER) Pty Ltd to enter ATP 1015P in the Galilee Basin. Both these strategic
acquisitions have strengthened Comet Ridge’s asset portfolio in these areas, where the Company already held material interests.
Activities in Queensland
Considerable technical progress was made across both Queensland Basins during the year. A three well Galilee Basin exploration and appraisal
programme commenced in September 2012, which included an Extended Production Test on one of the wells, Gunn 2.
In July 2012, Comet Ridge commenced a 12-well drilling programme at ATP 337 Mahalo, including two pilot projects. Included in the programme
were two four-spot pilots at Mahalo and Mira and an additional four step out core holes. Only one of the core holes is yet to be drilled.
The additional equity obtained in PEL 427 and PEL 428, and the entry into PEL 6 in NSW, increases Comet Ridge’s net resource position and is
detailed in the table below:
Resources (PJ) Interest 1C 2C 3C Prospective
(net to Comet Ridge) Resources
Gunn Project Area (ATP 744P) 100% - 67 1,870 597
ATP 337P Mahalo 35% 73 193 387 -
PEL 427 & PEL 428 25% & 40% - - 474 2,101
Total (Australia) 73 260 2,731 2,698
The current work programme is focused on maturing Contingent Resources into Certified Reserves in the Mahalo Block during the coming year.
ATP 337P Mahalo Project
Comet Ridge’s ATP 337P Mahalo asset is located in the Denison Trough area of Queensland’s Bowen Basin near Rolleston, and covers an area of
910 km2. Comet Ridge has a 35% interest in ATP 337P Mahalo with a clear focus on maximising 2P Reserves in the block.
In July 2012, the Joint Venture commenced work on the first four-well pilot scheme with the drilling of the Mahalo 3, 4, 5 and 6 wells, north of
Rolleston. Drilling was completed at the end of July. Each of the wells intersected approximately seven metres of net coal in the main Castor-
Pollux seam as anticipated. This area of the block has shown good continuity and thickness of coal with very good to excellent permeability
across the main reservoir section observed just after drilling. Following drilling of the four Mahalo field pilot wells in mid-2012, the Joint Venture
commenced drilling of the second pilot at Mira in December. Each of the wells intersected approximately eight and a half to nine metres of net
coal. Like the Mahalo field, 13 km to the northwest, Mira continued to demonstrate excellent coal productivity. Completion operations were then
undertaken, with both the Mahalo and Mira pilot wells set up for production with tubing and pumps installed.

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Comet Ridge Limited -
Annual Report 30 June 2013

Overview of Activities (continued)
ATP 337P Mahalo Project (continued)
These pilot programmes are a key component in the Joint Venture plan to book gas reserves across a large part of the Mahalo project area.
Having two independent pilot schemes operating concurrently significantly increases the likelihood of achieving a commercial gas rate for
establishing reserves, and also allows the Joint Venture to gather valuable data on optimal well completion design for field development.
Drilling operations then stepped-out from the pilot area at Mira and coreholes were drilled southeast, south and southwest of the Mahalo and Mira
pilot areas at the Scrubber Gully 2, Turkey’s Nest 1 and Humboldt Creek 2 wells. Scrubber Gully 2 was a 5.2 km step-out from Mira and
intersected 7.2 metres of net coal whilst Turkey’s Nest 1 was drilled 5 km southwest of the Mahalo pilot intersecting 9.6 metres of net coal.
Humboldt Creek 2 was drilled in the southern part of the block, intersecting 9.4 metres of net coal.
In the final quarter of the reporting year, the Mahalo and Mira pilots were commissioned. Preliminary analysis of data from the Mahalo Field pilot
scheme confirms that productivities seen in the pumping wells are lower than that measured when the wells were drilled in 2012, with remedial
work involving a work-over rig required to restore the productivity of these wells. This work is scheduled for October 2013. At the Mira pilot, the
initial water rates observed were in line with the high productivity seen when the wells were drilled in January this year. A scheduled well shut-in
for pressure build-up surveys at the Mira Field has confirmed the generally high productivities seen during testing when the wells were initially
drilled. The wells are back on line to continue de-watering of the coal seams. A work-over to restore the bottomhole assembly on the Mira 3 well
was successfully carried out in September 2013.
ATP 337P Mahalo is well placed with respect to existing infrastructure, with a pipeline connection to Gladstone available just to the west of the
block. The Mahalo block holds significant value potential for Comet Ridge Limited, given the proximity of the Mahalo block to infrastructure, the
shallow nature of the coals and the rapidly increasing demand for natural gas in Queensland.
Galilee Basin Permits:
Comet Ridge has a 100% interest in two very large and adjacent permits on the eastern flank of Queensland’s Galilee Basin, ATP 743P and ATP
744P. The area remains only lightly explored to date. After the end of the financial year, one third of ATP 743P was relinquished as part of the
normal tenure management process with the Queensland Department of Natural Resources and Mines (DNRM). This relinquishment was effective
3 September 2013.
ATP 1015P Farm-in
In July 2012, Comet Ridge announced that it had signed a three-Stage farm-in agreement with Queensland Energy Resources Pty Limited (QER)
to earn up to 75% of a farm-in area, located in the south east of permit ATP 1015P, adjacent to the Company’s 100% held Gunn Project Area in
ATP 744P.
The farm-in area consists of two separate blocks totaling approximately 825 km2. These areas represent 21% of QER’s total permit area in
ATP 1015P. QER will retain a 100% interest in the remaining area of ATP 1015P, while Comet Ridge has become Operator of the farm-in area.
This transaction creates a continuous acreage position across a key area in the Galilee Basin, expanding the Gunn Project Area to the east and
allowing it to be appraised as a single project.
On completion of each stage of the farm-in, Comet Ridge has the option to proceed with the subsequent stage. Having completed the Stage 1
work programme, Comet Ridge announced in March 2013 that the Company had elected to proceed to Stage 2 of the Farm-in by drilling a further
three wells in the Farm-in area.
Galilee Basin Drilling Campaign
Comet Ridge commenced a three-well exploration and appraisal drilling programme in the Galilee Basin in October 2012 with the first well in the
Company’s 100% held ATP 744P and the following two wells in the farm-in area, part of ATP 1015P.
The first well, Gunn 2, reached a total depth of 1,050 metres and intersected 16.2 metres of net coal in the Betts Creek Beds. Wireline conveyed
testing tools were used to flow test four separate coal intervals in the Betts Creek Beds, including two coal intervals in the base of the section that
had not been previously tested in the Gunn Project Area. All four coal intervals demonstrated good to excellent productivity.
The Schmitt 1 well, located in the farm-in area, 17km further to the southeast, was fully cored through the Betts Creek Beds to determine key coal
properties and reached a depth of 1,005 metres, intersecting 22 metres of net coal. Cernan 1, the final well in the programme, was located 13km
further east of Schmitt 1 and intersected 20.6 metres of net coal. These wells have confirmed the extension of the Gunn Project Area to the east
into the farm-in area. Analysis of the data indicates that the Gunn Project Area and Farm-in area coals contain recoverable gas, over an estimated
area of approximately 1,865 km2.
The Schmitt 1 and Cernan 1 wells earned Comet Ridge a 20 % equity interest in the farm-in area.
Gunn 2 Well Extended Production Test
In parallel with the drilling programme, the Gunn 2 well was completed for production in November 2012, with tubing and a downhole pump
installed to enable water to be produced. During December 2012, surface facilities including water storage tanks, flowlines, metering facilities and
power generation were installed on site and in early January 2013, these facilities were commissioned for operation.
The objective of the EPT was to provide information to test the completion methodology for a full pilot scheme and to obtain good quality water
samples from the Betts Creek coal.
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Overview of Activities (continued)
Gunn 2 Well Extended Production Test (continued)
The well was perforated over a four metre interval from 952.5 to 956.5 metres which is bounded above and below by impermeable mudstone.
The EPT was designed in this manner to ensure water would only be produced from the Betts Creek reservoir coal. By excluding water from other
zones in the well, surface water handling requirements could be optimised and dewatering time could also be minimised.
The pump and other equipment performed as designed with no mechanical or electrical issues throughout the test. The water rate was
progressively increased over a period of a few weeks, with the well reaching a stabilised production rate of approximately 400 bwpd (barrels of
water per day) which is the limit of the pumping system under the current configuration. Analysis of the pressure data showed that the four metre
coal interval, which was the subject of the test, has even greater flow capacity. Formation water samples from the coal were taken at regular
intervals for very detailed laboratory analysis.
The progress of the EPT has been extremely pleasing, with this well an important milestone for the Company in the Galilee Basin. This is the first
test for the Company on a completed well, where the well has been set up for long term production.
Another very important outcome from the EPT is that the simple completion style of the well (case, cement and perforate) has proved to be
extremely effective in both connecting the wellbore to the fractures in the coal and also in isolating the coal from sandstones. This simple design
can subsequently be applied to a pilot scheme to access selected coals.
The Company is now evaluating different methods of water treatment. This trial will aid in forming the basis of design for a pilot scheme in the
Gunn Project Area with the intention of achieving independently certified gas reserves, which would be available for power generation, LNG
manufacture or domestic gas markets.
New South Wales Projects
In 2012, Comet Ridge announced that it had signed an Asset Sale Agreement to acquire an interest in PEL 6, and further interests in PEL 427 and
PEL 428 in the Gunnedah Basin in northern New South Wales for $750,000. This transaction was completed during April 2013 and further
consolidates Comet Ridge’s position in the northern Gunnedah Basin given our expectation that ultimately significant volumes of natural gas are
likely to be produced from the Gunnedah Basin for the NSW domestic market further south, based around Sydney and Newcastle.
These three contiguous licences are located immediately north and west of Santos’ Narrabri CSG Project in the Bohena Trough, and cover a total
area of approximately 18,000 km2. Comet Ridge currently holds between 22.5% and 60% CSG interest across these licences and between 97.5%
and 100% conventional oil and gas equity (CSG and conventional equity are held independently in these blocks). Comet Ridge is the conventional
interest operator. Santos operates the CSG interest.
Comet Ridge has been working with Santos to renew its Gunnedah Basin permits and plan the work programme for 2013 and beyond. To date,
PEL 427 has been extended for a period of three years and extensions are currently being processed for PEL 428 and PEL 6.
The Company has identified a number of Permian-aged troughs throughout its acreage position and believes that several of these may contain
large volumes of recoverable gas, which is evidenced in the Bohena Trough just to the south of PEL 427, which holds significant 2P and 3P gas
reserves for Santos.
These permits are strategically located as this area has the potential to mature into a major CSG producing province, with gas to flow south to
meet an important part of NSW’s gas needs.
Activities in New Zealand
At the beginning of the year, Comet Ridge held a 100% interest in three petroleum permits in New Zealand, each with known coal resources and
CSG potential. PMP 50100 and PEP 50279 are located on the west coast of the South Island, and contain the gassy Greymouth Coal Fields. PEP
50280 is located adjacent to the Huntly coal mines in the North Waikato region on the North Island.
As detailed in last year’s Annual Report, Comet Ridge had made application to NZ Petroleum and Minerals (NZP&M) to vary the work programme
commitments on all three of the Comet Ridge 100% held blocks. The extensive technical work conducted over the previous two years by Comet
Ridge (based around aerial magnetic and gravity surveying) which included extensive geological and geophysical analysis, had identified the parts
of these three blocks that were most prospective for gas.
For the North Waikato exploration block (PEP 50280), an appropriate work programme could not be agreed with NZP&M and subsequently Comet
Ridge elected to surrender the block in March 2013. For the west coast blocks, a suitable work programme for PEP 50279 was agreed with the
permit being renewed for a further three years. As part of the three year extension, approximately three-quarters of the block area was
relinquished and the Company has retained the key area of the block where Contingent Resources have been previously booked.
PMP 50100, also on the West Coast of the South Island, has been renewed for a term of 20 years after agreement on the work programme with
New Zealand Petroleum and Minerals.
A strategic review of Comet Ridge’s New Zealand portfolio is planned in the coming months.

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Overview of Activities (continued)
Activities in the United States
Comet Ridge Resources LLC (CRR), based in Denver, has continued the exploration and evaluation of its large acreage position in the Rockies
including structural mapping, 3D seismic processing and interpretation, and drilling. As of July 2013, in SE Colorado CRR has drilled three wells;
two have been completed and are undergoing initial testing. A fourth well is currently drilling. An existing old well was re-entered and converted
into a water disposal well and water handling facilities have been built and commissioned.
During the year, CRR issued three cash calls to Comet Ridge Limited. Given the strong focus that Comet Ridge Limited has on booking gas
reserves for the eastern Australian market, the Company elected not to pay these US cash calls and consequently its interest in CRR has been
reduced from 17.2% to 12.1%.
Early in the reporting year, CRR (through its subsidiary Pine Ridge Oil and Gas, LLC) completed the sale of the Florence oil field for US$12.25
million. In the Pacific Northwest, the Yeti 1 well at Grays Harbor was drilled to a total depth of 1381 metres in September 2012 and was plugged
and abandoned following logging.
Health, Safety and Environment
Comet Ridge recognises the importance of effective HSE systems and has engaged the services of HSE professionals for specific safety and
environmental advice.
No recordable health, safety or environmental (HSE) incidents were reported in the period 1 July 2012 through to 30 June 2013. Total Recordable
Injury Frequency Rate (TRIFR) and Lost Time Injury Frequency Rate (LTIFR) remain at zero. No recordable environmental incidents occurred
during this period.
A full review of the existing Safety Management Plan and Company HSE Policies has been undertaken with upgrades implemented as required.
Safe Operating Procedures processes have also been developed, consistent with the Queensland Petroleum & Gas (Production & Safety)
Legislation and good oilfield practice. These procedures are specific to Comet Ridge’s operating parameters and all processes have been aligned
according to AS 4801 Safety Management System specifically suited to coal seam gas production.
A full upgrade of the Comet Ridge Induction programme has been undertaken. It is envisaged that the new system will ultimately be accessed via
the web so that personnel and contractors have global 24/7 access to facilitate efficiency for remote operations.
A formal Environmental Management Plan has also been developed in the reporting period. This plan captures all the required management plans
associated with the environmental conditions set out in the Environmental Authorities issued by the Queensland Government. The plan is
consistent with good gasfield practice and will also be used to manage generic conditions associated with all Comet Ridge tenements.
Training is now underway for Comet Ridge personnel and appropriate contractors associated with key components of the safety and
environmental systems to ensure consistency of approach. Training is assessed and records are maintained within the HSE IT system. Training
will be ongoing as the Company matures to incorporate effective application of specific procedures.
Community
Comet Ridge respects the communities in which it operates.
The Company strongly believes that co-existence and co-operation between landowners and exploration companies can be achieved while
protecting the environment and landowners’ livelihoods. Comet Ridge believes that Queensland has actively demonstrated that this co-existence
and co-operation is possible for the past four decades. The company also wants to ensure the long term sustainability of our projects which in
turn will generate very positive economic benefits for local communities.
Comet Ridge appreciates and values the consultation and negotiation process with landowners and acknowledges that the Company is a visitor in
its exploration permit areas. The Company has met with over many landowners and have successfully negotiated more than 15 landowner
agreements to date.
Comet Ridge is committed to building strong relationships based on respect, honesty and trust with all stakeholders including regulators,
governments, joint venture partners, landowners and local communities.
The Company has developed many excellent stakeholder relationships over the past few years, particularly in the Galilee Basin.
The Company’s involvement as a founding member of the Galilee Basin Operators Forum (GBOF) has broadened its exposure to the key
stakeholders in the Galilee Basin communities and strengthened its relationships there. The forum, an informal group of coal seam gas
exploration companies with petroleum exploration tenements in the Galilee Basin, was formed three years ago, initially to jointly fund a baseline
water assessment for the basin.
This first hydrogeological assessment report for the Galilee Basin was delivered to the local community and a range of government organisations
early in 2013 and is available for download on the GBOF website (www.gbof.com.au). Further detailed isotope studies, to help to identify which
water zones are currently being produced by many agricultural bores in the basin, are being funded by GBOF and are structured as research
projects in co-operation with the Queensland University of Technology.
Increasingly, Comet Ridge is engaging with stakeholders such as RAPAD (Central West Remote Area Planning and Development Board, MITEZ
(Mt Isa to Townsville Economic Zone), AgForce, the Queensland Gas Commission and the wider community.
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