30 September 2010 Quarterly Report – Highlights Promotion ... · Blackwater Power Project Commences Construction Bow has commenced the construction on its 100% owned 30 megawatt

ASX: BOW Bow Energy Limited ∙ ACN 111 019 857 ∙ Street Level 7, 10 Eagle street, Brisbane QLD 4000 ∙ Post GPO Box 5244, Brisbane QLD 4001

Phone +61 7 3238 6300 ∙ Fax +61 7 3238 6399 ∙ Web www.bowenergy.com.au ∙ Email [email protected]

30 September 2010 Quarterly Report – HighlightsPromotion to S&P/ASX200 Index Bow was promoted to the S&P/ASX200 Index, effective after the close of business on 27 September 2010. The S&P/ASX200 Index is recognised as the primary investable benchmark in Australia, covering around 82% of Australian equity market capitalisation.

Bow Targets Continued Reserves Growth Bow’s current gas reserves/resources and end 2011 gas reserves targets are summarised below.

Project (all 100% unless stated otherwise)

Current Certified Reserves/Resources

End 2011Reserve Targets

2CResources (PJ net to Bow)

3P Reserves (PJ net to Bow)




Blackwater CSG Field* 435 1,382 59 1,600 450

Comet CSG Field* 439 871 ‐ 1,000 200

Vermont CSG Field (within ATP1031P) 1,402 ‐ ‐ 1,400 200

Norwich Project (within ATP1031P) ‐ ‐ ‐ 625 100

Dysart Project (within ATP1031P) ‐ ‐ ‐ 625 100

Gunyah Project (ATP 1053) ‐ ‐ ‐ 600 100

Bandanna Project (ATP 805) ‐ ‐ ‐ 200 ‐

Don Juan Project (55%) ‐ 107 55 150 100

Total Reserves (net PJ to Bow) 2,276 2,360 114 6,200 1,250

* 286PJ of 3P and 7PJ of 2P gas reserves included above is over land awaiting conclusion of native title processes which are in progress.

Drilling Success at Norwich Park Indicates Large Gas Field The first six core holes have been drilled and completed (VM‐1, VM‐2, VM‐3, NW‐1, NW‐2 and NW‐3) within the Vermont CSG Prospect and Norwich CSG Prospect of ATP1031P. The core holes intersected an average of 60 metres of gassy coals. Bow obtained an initial certification of 2C (contingent) resource of 1,402 PJ in the Vermont CSG Prospect. Preliminary results from the drilling at the Norwich CSG Project indicate it could be of similar size and prospectivity to Vermont.

Pilot Production Programs Underway at Blackwater Bow has started trialling several well completion techniques in the Blackwater CSG Field. The first ‘four spot’ vertical frac well pilot has been successful at fracturing the targeted zones and increasing permeability. A further ‘four spot’ vertical frac well pilot is scheduled to commence in Nov 2010. Both ‘four spot’ pilots are expected to be completed with pumping equipment by Dec 2010. Additionally two parallel lateral (horizontal) pilot wells drilling into an eight metre Rangal coal seam target are underway and also planned for completion in Dec 2010. Both completion methods have been successful in yielding commercial gas flows in other Bowen Basin CSG producing fields.

Gas Development Strategy Bow has advanced discussions with a number of counterparties for significant volumes of long‐term off‐take gas arrangements.

Blackwater Power Project Commences Construction Bow has commenced the construction on its 100% owned 30 megawatt gas‐fired Blackwater Power Project located approximately 15 kilometres north‐east of the town of Blackwater. The first seven of ten GE Jenbacher engines have been delivered to site. The Blackwater Power Project will require around 2PJ of clean‐burning coal seam gas (CSG) per annum which will be supplied from Bow’s underlying Blackwater CSG Field.

Cash of $54.8 million at end of quarter

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Bow Energy Limited Quarterly Report ending 30 September 2010

Events Subsequent to 30 September 2010 Blackwater CSG Field – Pilot programs targeting commercial gas flows Initial Fracture Work Successful Initial fracture stimulations (fracs) have been completed on the northern ‘four spot’ CSG fracture pilot, located about four kilometres west of the Blackwater Power Project. The fracs were successful at fracturing the targeted zones and pumping sand to prop open the induced fractures in the coals. All of the fracced wells are expected to be completed for production testing during November. While the initial frac work was successful in increasing permeability, gas flows are not expected until these frac wells are completed with pumping equipment and dewatering of the target seams is in progress. Lateral drilling has commenced after vertical wells encounter free gas and indications of permeability in the thick target coal. The vertical production and flush wells for Bow’s first lateral CSG pilot program have been drilled and cased. The target seam varied in thickness from four to eight metres and the vertical wells encountered live gas shows and good indications of permeability during post‐drilling flushing of the holes. A surface to inseam (SIS) lateral rig is being used to drill the lateral well pilot program. Lateral drilling and completions have been successful in obtaining commercial gas flow rates in adjacent tenements and numerous other CSG and underground mine areas of the Bowen Basin. Early results at Norwich Park confirm at least one large gas field Bow has identified three high potential CSG prospects within this block; Vermont, Norwich and Dysart. To date six core holes have been completed within the Vermont and Norwich Prospects. Bow Energy has obtained an initial 2C (contingent) resource certification of 1,402 PJ in the Vermont CSG Field from the results of the first three core‐holes (VM‐1, VM‐2 and VM‐3). Adjacent and to the southeast of the Vermont CSG Field is the Norwich Prospect. Recent data from the three core holes in the Norwich prospect (NW‐1, NW‐2 and NW‐3) indicate it could be of similar size and prospectivity to Vermont. Drilling has also recently commenced on the Dysart Prospect with the first of three core holes (DY‐3) spudded in October 2010. Permeability testing is currently being carried out on the Vermont and Norwich CSG wells targeting 2C to 3P and 2P reserve upgrades. Federal Government Approves Third Party Gladstone LNG Projects On 22 October 2010 the Federal Government approved two major CSG‐supplied liquefied natural gas projects to be located at Gladstone. The approvals are conditional on maintaining the highest environmental standards in construction and operation, including comprehensive water management requirements.

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TABLE OF CONTENTS

30 SEPTEMBER 2010 QUARTERLY REPORT – HIGHLIGHTS 1

EVENTS SUBSEQUENT TO 30 SEPTEMBER 2010 2

1. STRATEGIC MILESTONES FOR BOW ENERGY 4

2. EXPLORATION, APPRAISAL AND PRODUCTION 5 COAL SEAM GAS (CSG) ACTIVITIES 5

CURRENT CERTIFIED RESERVES AND RESERVES TARGETS 5 GAS IN PLACE OF OVER 13.8 TRILLION CUBIC FEET 5 INITIAL WATER MANAGEMENT ASSESSMENT IN NORTHERN BOWEN BASIN 7 ATP 1025P COMET BLOCK (Bow 100%) 7 ATP 1053P GUNYAH CSG PROJECT (BOW 100%) 10 ATP 805P BANDANA CSG PROJECT (BOW 100%) 11 SURAT BASIN DON JUAN CSG FIELD (Bow 55%) 11

CONVENTIONAL OIL AND GAS ACTIVITIES 13 TECHNICAL REVIEW OF CONVENTIONAL ASSETS 13 COOPER BASIN 13 CENTRAL EROMANGA BASIN (Bow 40‐100%) 14 SURAT‐BOWEN BASIN 15 CLARENCE‐MORETON BASIN 15 CARNARVON BASIN ACTIVITIES 15

3. COMMERCIAL ACTIVITIES 16 GAS DEVELOPMENT STRATEGY 16 CONSTRUCTION COMMENCES ON BLACKWATER POWER PROJECT 17

4. EXECUTIVE APPOINTMENTS 18

5. BOW’S PLANNED ACTIVITIES FOR THE NEXT QUARTER 19 EXPLORATION, APPRAISAL AND PRODUCTION 19 COMMERCIAL ACTIVITIES 19 PL APPLICATIONS TO CONTINUE 19

CORPORATE INFORMATION & DIRECTORY 20

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1. STRATEGIC MILESTONES FOR BOW ENERGY Bow will continue to develop its upstream resource, with the target of significant gas production from 2013. In parallel with production growth, Bow will continue to pursue multiple monetisation strategies including export LNG, electricity generation and domestic gas sales. Discussions with counter parties for long term gas off‐take for significant volumes have continued. Gas demand volumes range from 15 to 30PJ per annum for long term 15 year contracts.

Milestone Indicative Timing o Reserves growth and commencement of gas

production pilots o Commenced construction of the Blackwater Power

Project

2010

o Continued reserves and gas production growth o Blackwater Power Project commissioning o Seek development approvals: gas field and pipeline to

Gladstone approvals 2011

o CSG field development and approvals o Conditional off take arrangements

Late 2011 onwards

o Commence construction pipeline to Gladstone Mid‐2012 to Mid‐2013

Sales: Additional power generation, domestic supply and/or LNG sales Mid‐2013 Onwards

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2. EXPLORATION, APPRAISAL AND PRODUCTION

COAL SEAM GAS (CSG) ACTIVITIES

CURRENT CERTIFIED RESERVES AND RESERVES TARGETS Bow has eight CSG projects in the Surat and Bowen Basins that have been, or are scheduled to be explored and appraised during 2010 and 2011. Bow was granted 100% of the Comet (ATP 1025P) and Norwich Park (ATP 1031P) tenements in March 2009. These blocks have a combined area of over 1,600km2 and are located in the heart of one of Australia’s highest rated CSG provinces 250 km west of the Port of Gladstone where several world class export LNG projects are planned by unrelated parties. Following delays caused by unseasonal wet weather, the Company’s pilot CSG production programs in Queensland’s Bowen Basin are targeting to deliver forecast gas reserve upgrades and commercial gas flows. The Company anticipates continued reserves growth, targeting year‐end 2011 certified gas reserves of 1,250PJ (petajoules) of 2P gas and 6,200PJ of 3P (net to Bow). GAS IN PLACE OF OVER 13.8 TRILLION CUBIC FEET A study conducted by MBA Petroleum Consultants Pty Ltd (MBA) of Bow’s 100% owned Bowen Basin tenements; Norwich Park (ATP 1031P), Gunyah (ATP 1053P – subject to grant) and Bandanna (ATP 805P) estimates a total of 8.7 Tcf of GIP potential. Bow’s reserve certifier, MHA Petroleum Consultants, LLC (MHA) had previously provided GIP potential in Comet (ATP 1025P) and Don Juan CSG Field (ATP 771) of over 5.1 Tcf (net to Bow). Bow’s current gas reserves and end 2011 gas reserves targets are summarised below.

Project (all 100% unless stated otherwise)

Current Certified Reserves/Resources

End 2011 Reserve Targets

2CResources (PJ net to Bow)





Blackwater CSG Field* 435 1,382 59 1,600 450

Comet CSG Field* 439 871 ‐ 1,000 200

Vermont CSG Field (within ATP1031P) 1,402 ‐ ‐ 1,400 200

Norwich Project (within ATP1031P) ‐ ‐ ‐ 625 100

Dysart Project (within ATP1031P) ‐ ‐ ‐ 625 100

Gunyah Project (ATP 1053) ‐ ‐ ‐ 600 100

Bandanna Project (ATP 805) ‐ ‐ ‐ 200 ‐

Don Juan Project (55%) ‐ 107 55 150 100

Total Reserves (net PJ to Bow) 2,276 2,360 114 6,200 1,250

* 286PJ of 3P and 7PJ of 2P gas reserves included above is over land awaiting conclusion of native title processes which are in progress.

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Bow’s CSG Tenements in Queensland

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INITIAL WATER MANAGEMENT ASSESSMENT IN NORTHERN BOWEN BASIN Bow commissioned an initial hydrogeology assessment of the water resources in Norwich Park and Comet blocks. The key conclusions highlighted the following: The Great Artesian Basin (GAB) and Recharge Area for the GAB does not intersect Bow’s

Norwich Park block and only has a minor overlap of 6.7 km2 within the south‐east corner of the 470 km2 Blackwater CSG Field. Bow has no current or future plans to drill in this 6.7 km2 overlap area;

Groundwater resources in Bow’s Bowen Basin areas are primarily limited to water courses in the region; and

Groundwater is not heavily utilised in the region and, where available, is commonly used for stock watering, domestic use and local coal mining operations.

Bow’s Chief Executive Officer, John De Stefani said: “Importantly, associated water production from the development of these Bowen Basin projects will be substantially less than that of the Surat Basin CSG fields. Furthermore, Bow’s northern Bowen Basin projects do not overlay the Great Artesian Basin, its recharge area or other significant water aquifers. This is a major strategic advantage for Bow as there is an expectation of relatively lower water management costs and lower environmental water resource risk.” ATP 1025P COMET BLOCK (Bow 100%) Bow has obtained 3P gas reserves of 2,253PJ and 2P gas reserves of 59PJ in the Comet Block. Adjacent tenements are operated by BG Group and Arrow (50:50 owned by Shell and PetroChina). Bow is in the process of trialing several completion techniques in the Blackwater CSG Field to deliver commercial gas flow rates. Initial Fracture Work Successful As a part of the ongoing production enhancement operations, Bow is testing fracture stimulations of target coal seams to increase gas production. This process is commonly referred to in the industry as fracing. The fracture stimulations are designed to enhance the existing permeability and thereby improve fluid and gas flow rates. Fracture stimulation completions have resulted in commercial gas flow rates elsewhere in the Bowen Basin. Bow closely monitors its operations and follows strict procedures in relation to environmental and operational management, in accordance with Queensland’s environmental regulations. Initial fracture stimulations (fracs) have been completed on the northern ‘four spot’ CSG fracture pilot, located about four kilometres west of the Blackwater Power Project. The fracs were successful at fracturing the targeted zones and pumping sand to prop open the induced fractures in the coals. All of the fracced wells are expected to be completed for production testing during November.

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Bow’s frac fluids do not contain BTEX Concerning the use of chemicals for hydraulic fracturing fluids, Bow has confirmed to the Queensland Government that it does not use fracture stimulation fluids containing BTEX (benzene, ethylbenzene, toluene, xylene), naphthalene or phenanthrene; or use chemicals that could likely form benzene, ethylbenzene, toluene or xylene, as they break down in the environment. Lateral Drilling commenced after vertical wells encounter free gas and inferred permeability in the thick target coal. The vertical production and flush wells for Bow’s first lateral CSG pilot program have been drilled and cased. The target seam varied in thickness from four to eight metres and the vertical wells encountered live gas shows and good indications of permeability during post‐drilling flushing of the holes. A surface to inseam (SIS) lateral rig is being used to drill the lateral well pilot program. Lateral drilling and completions have been successful in obtaining commercial gas flow rates in adjacent tenements and numerous other CSG and underground mine areas of the Bowen Basin. Commenting on the early results of the frac and lateral drilling program, Mr De Stefani said: “Bow’s first frac wells have been a technical success and we are very pleased with the results. Now that the wells are fraced, the next step is to complete the wells with pumping equipment and commence dewatering the seams, with the aim of achieving commercial gas flows.”

Comet ‐ 100% Bow

871PJ 3P 439PJ 2C

(Certified in Rangal andBurngroveCoal Seams

Blackwater ‐ 100% Bow

59PJ 2P 1382PJ 3P435PJ 2C

(Certified in Rangal andBurngrove Coal Seams

Over 2,253PJ reserves at Bow 100% owned Comet Block

Blackwater CSG FieldComet CSG Field

Drilled Core Holes

Test WellsLateral Wells4 Spot FRAC PilotExisting Wells

Kilometers

0 5 10

Powerstation

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ATP 1031P NORWICH PARK PROJECTS (BOW 100%) Early results confirm a large gas field Bow has identified three high potential CSG prospects within this block; Vermont, Dysart and Norwich and has now completed 6 core holes of a 9 well initial CSG exploration program. Bow has obtained an initial certification of a 2C gas resource of 1,402 petajoules (PJ) from the Vermont CSG Field. The initial 2C resources are within the Fort Cooper and Moranbah Coal Measures. Bow is carrying out a permeability testing program during this quarter targeting conversion of the 2C resources into substantial 3P and initial 2P reserves in the Vermont CSG Field. Gas contents in the Norwich Park Block are high to very high and range from 10‐26 m3/tonne (Dry Ash Free) and are over 96% methane gas. Adjacent and to the southwest of the Vermont CSG Field is the Norwich CSG prospect. Recent data from the core holes drilled in the Norwich prospect indicate it could be of similar size and prospectivity to Vermont. A second core hole exploration drilling rig is scheduled to commence in November 2010 to complete the Norwich Park initial exploration program by year end, weather permitting. Pilot production programs are scheduled early next year following similar programs scheduled in the Blackwater CSG Field.

Norwich CSG Prospect ‐ 100% Bow

Primary target ‐ Rangal CM

Secondary target – Fort Cooper & Moranbah CM

Dysart CSG Prospect – 100% Bow

Primary target ‐ Rangal CM Secondary target – Fort Cooper

& Moranbah CM

Norwich ProjectDysart ProjectVermont ProjectRangal CM OutcropRegional FaultProposed Core HolesDrilled Core Holes

1,402PJ 2C resources certified at Vermontin Norwich Park Block

Exploration results to date

WellTotal net coal(metres)

DAF Gas Content (m3/t)

VM1 52 14‐22

VM2 77 12‐22

VM3 62 10‐22

NW1 66 18‐26

NW2 53 Data pending

NW3 38 Data pending

0 5 10

Kilometers

Vermont CSG Field ‐ 100% Bow

Primary target – Fort Cooper & Moranbah CM

1,402PJ 2C

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ATP 1053P GUNYAH CSG PROJECT (BOW 100%) Bow owns 100% of the Gunyah block centrally located between the Moura‐Dawson Creek and Scotia Peat CSG production projects. A recent review of Bow’s CSG assets performed by MBA Petroleum Consultants Pty Ltd estimated gas in place (GIP) potential of 1.8 trillion cubic feet (Tcf) for the Gunyah Block. Bow has finalised all relevant documentation, including a Conjunctive Ancillary Agreement (between Bow and the Wulli Wulli People) and the State Deed (all parties including the Queensland Government). The Conjunctive Ancillary agreement captures the significant requirements for CSG exploration and production such as cultural heritage management plans. Bow is currently awaiting formal granting of the tenement from the Queensland Government.

Target (150m to 700m)

Gunyah CSG Project (Bow 100%)Initial 3P program of 3 core holes

LOCATION

3P core holes

Bandana CM Out-Crop

GUNYAH PROJECT GIP Potential 1.8 Tcf

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ATP 805P BANDANA CSG PROJECT (BOW 100%) The Bandana CSG project, is located 70 km north‐west of Santos’s Fairview CSG Field, targets Bandana Coal Measures interpreted to occur at depths between 200‐1000 metres. Bow is planning to drill 2 exploration core holes in the Bandanna prospect in 2011.

CSG DrillingBandana Prospect

Bandana CM Outcrop

Permit - ATP805P

Proposed Core Hole

LEGENDLEGENDLEGENDLEGENDLEGENDLEGENDLEGENDLEGENDLEGEND

ATP805 Bandana Project (Bow’s 100%) Targeting the Bandana coal measures

Bow’s Bandana CSG ProjectBandana Coal Measures Target

Analogous to Fairview and Spring Gully

5 km

SURAT BASIN DON JUAN CSG FIELD (Bow 55%) The Don Juan CSG Project is a joint venture between Bow, as Operator with a 55% interest (Walloon Coal Measures only, including the Juandah and Taroom coal seams), and Victoria Petroleum having a 45% interest. The Don Juan CSG project includes ATP 771P and ATP 593P and is located in the western Surat Basin about 40 kilometres north of Roma, adjacent to and west of BG Group’s Lacerta CSG field. All certified reserves to date are within ATP 771P. Summary of the gas reserves certified for Don Juan CSG project is as follows:

ATP771P Walloon Coal Measures

Gross 2P Certified

Reserves (PJ)

Gross 3P Certified

Reserves (PJ) Juandah coal seams 34.2 69.4 Taroom coal seams 66.7 128.0 Total Gross Reserves 100.9 197.4

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Interpreted Walloon CSG Fairway

Approx. area of 101PJ 2P & 197PJ 3P Certified Reserves

ATP771PATP593P

Existing core holes

CN1CN2

Existing production holes

Don Juan CSG Project (Bow 55%)Gross certified reserves of 101 PJ (2P) and 197 PJ (3P)

BG LACERTA CSG FIELD44PJ 1P Reserves469PJ 2P Reserves1097PJ 3P Reserves

Proposed 3P Core Holes

Location

50kilometers

1019

>150 PJ POTENTIAL

GLADSTONE

ATP593P Exploration Program to Target Additional 3P and 2P Reserves Bow has interpreted the Don Juan CSG fairway to extend further west into ATP 593P where the Walloon Coal Measures are expected to be at reasonable depths. Bow is now planning a 2 well exploration drilling and testing program within ATP 593P to commence in the next quarter, with the aim of certifying additional 3P and 2P reserves. Bow is progressing development paths for the Don Juan CSG Field with gas connection into the nearby Queensland Gas Pipeline which is approximately 15km east of the field.

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CONVENTIONAL OIL AND GAS ACTIVITIES TECHNICAL REVIEW OF CONVENTIONAL ASSETS Bow has engaged an external independent consultant to perform a technical review of Bow’s conventional petroleum assets in Australia. The majority of these conventional assets are located in Queensland, in both the Cooper‐Eromanga and Surat basins. The first phase of this review will provide a refreshed assessment of Bow’s conventional petroleum assets including risked potential and recommended work programs. The review is expected to be complete by end of 2010.

COOPER BASIN ATP 752P (Bow 15% after farmin work completed) Bow is fully carried on a staged farmin oil exploration program in the Barta and Wompi Blocks of ATP 752P, located in the southwest corner of Queensland. The farmin consists of up to seven wells (two completed) and 300km2 of 3D seismic by Santos and Bengal (formally Avery Resources). The blocks are adjacent to and on trend with areas that Santos has concentrated its Cooper Basin oil program. The first two farmin wells drilled resulted in an oil discovery at Cuisinier‐1 in the Barta Block. Barta Block – Cuisinier‐1 continuing to produce at 400 BOPD Cuisinier‐1 is located approximately 6.2km west of the Santos operated Cook oil field. Production commenced during May 2010 with the Cuisinier‐1 well producing at an initial rate of approximately 440 barrels of oil per day. The well continues to produce approximately 400 bopd. Given the higher than expected oil flow rates of the first well on the field, the ATP 752P Joint Venture has agreed to an additional appraisal well on the field following detailed mapping using the 3D seismic data acquired over the field last year. The Cuisinier 2010 appraisal well, a 450 metre step out, will be drilled as a substitute for a Wompi Block Phase 2 farmin commitment. The well is expected to spud in November 2010. Several other oil prospects have been identified in the vicinity of the Cuisinier oil discovery. One such prospect; Barta North, is a new structure located 4.2km WSW of the Cuisinier 1 oil well has been high graded for immediate drilling. Barta North‐1 is due to spud in October 2010. Bow is carried for the drilling of both wells.

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Wompi Block ‐ 3D seismic completed prior to next phase of drilling – Bow fully carried (Bow 15% after farmin work completed). Cuisinier Appraisal well to be drilled prior to year end. Santos and Bengal are farming into this Block with a staged earning program of up to 4 wells plus 200km2 of 3D seismic acquisition. Bow is fully carried through this program. The JV agreed to allow the drilling of a well in the Barta Block as an earning well for the Wompi Block. CENTRAL EROMANGA BASIN ATP 736P, ATP 737P, ATP 738P, ATP 944P and ATP 948P (Bow 20‐100%) A large portfolio of leads and prospects has been identified in Bow’s Central Eromanga permits. The highest ranked prospects are considered to be the Barcoo Junction North and the Moothandella prospects (both in ATP 794P). These areas are being reviewed by an independent consultant. The review is expected to be complete by year end 2010.

Bow’s Central Eromanga Projects

Bow Tenement

Bow Tenement Under Application

Prospects and Leads

Gas Pipeline

Town/City

1000 km

50 km

(20%)

(20%)

(20%)

(100%)

(100%)

(100%)

(100%)

(40%)

(40%)

(65%)

(65%)

(16%)

(16%)

(50%)

(10%)

(20.37%)

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SURAT‐BOWEN BASIN A total of 70 leads and prospects have been identified in Bow’s SW Surat areas. These areas are been reassessed by an independent consultant.

CLARENCE‐MORETON BASIN During the quarter, no additional work was conducted on Clarence Moreton Basin licences PEL 445 and ATP 644P (conventional only). Expenditure commitments in these areas have been met though CSG activities carried out by Arrow on the shallower CSG targets.

CARNARVON BASIN ACTIVITIES

WA‐261‐P (Bow 10%) The offshore permit contains the Chamois oil field, located on the western side of the block. This discovery is deemed sub‐commercial at this stage. A 3D seismic program is planned over the permit to detail the Chamois oil field and high grade other prospects for potential drilling. EP 325 (Bow 11.1%) The completed initial feasibility of supplying gas from the Rivoli Gas Field to fuel power generation for the Defence Communication Station located nearby was submitted to the Defence Department (DOD) for review. The operator is continuing to investigate other markets.

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3. COMMERCIAL ACTIVITIES

GAS DEVELOPMENT STRATEGY Bow continues to pursue its stated strategy of progressing opportunities in power generation, domestic gas supplies and export LNG and has advanced discussions with a number of counterparties for long term off‐take gas arrangements. Generic details of off‐take opportunities include:

o Combination of existing operating projects and new developments (domestic and export LNG);

o Contract renewals where incumbent gas supplier intending to divert gas reserves to export projects;

o Expected FID ranging from as early as mid‐2011 to mid‐2012; o Gas Supply Agreements ranging from 15 to 30 PJ per annum; and o Delivery of first gas from mid‐2013 to mid‐2015

During the quarter Bow had been in discussions with the Board and management of LNG Ltd regarding a number of potential commercial arrangements. Bow ended discussions with LNG Ltd on 21 September 2010. In addition to the 30MW Blackwater Power Project Bow is continuing to pursue electricity generation including feasibility for a 200MW power plant located at Blackwater, Queensland. A key element of Bow’s long‐term development strategy is the required gas pipeline infrastructure from Bow’s Bowen Basin gas reserve base to Gladstone for potential supply to both domestic and export gas markets. Bow has obtained a pipeline survey licence (PSL 51) under the Petroleum and Gas (Production and Safety) Act 2004 for the corridor from Blackwater through to Gladstone and a third party consultant has outlined the preferred pipeline route of 257km.

PROPOSED BLACKWATER – GLADSTONE PIPELINE

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CONSTRUCTION COMMENCES ON BLACKWATER POWER PROJECT

Bow announced on 12th August 2010 the commencement of construction on Bow’s 100% owned 30 megawatt gas‐fired Blackwater Power Project, located approximately 15 kilometres north‐east of the town of Blackwater in central Queensland.

“Bow continues to progress the construction phase of the project as planned,” Mr De Stefani said. “The first 7 of ten GE Jenbacher engines have arrived on site and are ready for electrical and mechanical connection to the HV control room.”

The Blackwater Power Project will be supplied with clean‐burning coal seam gas (CSG) from Bow’s adjacent Blackwater CSG Field, which has current certified CSG reserves of 1,382 petajoules (PJ) of 3P and 59PJ of 2P (net to Bow). This initial power project is expected to require around 2PJ per annum of gas.

The civil works are now 100% complete with electrical and mechanical installations to continue over the coming months. The procurement of all major items of equipment is complete, including the switchroom, high voltage switchboard, low voltage main switchboard, gas conditioning unit, gas compressor and 10 x 3 megawatt GE Jenbacher generating sets, enclosures, radiators and transformers.

Electrical Connection Bow Energy is in continuous discussions with Ergon Energy for the connection of the power station to an Ergon substation located at Blackwater.

A single circuit 66kV transmission line route has been selected to transmit electricity from the power station to the Blackwater substation. Construction of the transmission line is expected to commence following finalisation of permits and approvals over the coming months.

Installation of the first GE Jenbacher engine to the Blackwater Power Project

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4. EXECUTIVE APPOINTMENTS Richard Fenton – General Manager Project Services Mr Richard Fenton started with the company in September, and is responsible for the new project services team. Richard has 14 years of experience in upstream oil and gas projects, principally around the end‐to‐end delivery of CSG projects. Richard’s experience has ranged from, Manager – Environment and Regulatory Compliance with RLMS to Manager – CSG with Sinclair Knight Merz and recently to Manager Water Business Planning for QGC and QCLNG. As the GM Project Services Richard will hold responsibility for Bow’s:

o Landholder Liaison activities; o Environment & Sustainability activities; o Health & Safety; and o Coal Mine Liaison for our overlapping tenure areas.

Competent Person Statements MHA ‐ The estimates of gas reserve and resources for the Comet Block (ATP 1025P) and Don Juan CSG Field (ATP 771P) has been prepared by MHA Petroleum Consultants, LLC (MHA) in accordance with the definitions and guidelines set forth in the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers. The reserve statement has been compiled by Mr Timothy L Hower Chairman of MHA, together with personnel under his supervision. Mr Hower, who has over 28 years industry experience, and MHA have consented to the inclusion of the technical information contained in this announcement in the form and context in which it appears. MBA – The estimates of gas in place potential for the Norwich Park (ATP 1031P), Gunyah Block (ATP 1053P) and Bandanna Project (ATP 805P) has been prepared by Mr Doug Barrenger of MBA Petroleum Consultants Pty Ltd (MBA). Mr Barrenger has more than 25 years of experience in the petroleum industry and 10 years of experience in the coal seam gas industry. Bow – Other technical information contained herein is based on information compiled by the Company’s Chief Operating Officer, Vic Palanyk, who has more than 15 years experience in coal seam gas. Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality. Contingent Resources are further categorized in accordance with the level of certainty associated with the estimates and may be sub‐classified based on project maturity and/or characterized by their economic status.[Reference: Petroleum Resources Management System as sponsored by: Society of Petroleum Engineers (SPE), American Association of Petroleum Geologists (AAPG), World Petroleum Council (WPC), Society of Petroleum Evaluation Engineers (SPEE)] Figure 1 References Great Artesian Basin including Recharge Area (coloured yellow on Figure 1) ‐ digital data sourced from Queensland Government Information Services, DERM Department. Great Artesian Basin Area (coloured green on Figure 1) ‐ digitized from map sourced from the Australian Government Department of Sustainability, Environment, Water, Population and Communities website.

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5. BOW’S PLANNED ACTIVITIES FOR THE NEXT QUARTER

Exploration, Appraisal and Production Blackwater CSG Field: Fracture stimulation and lateral drilling production enhancement pilots will continue with focus on achieving commercial gas flow rates. 2P appraisal programs to continue.

Comet CSG Field: Continuation of 2P appraisal programs. Norwich Park Block: Accelerate 3P reserves drilling program by securing a second core drill rig as well as carrying out 2P reserves testing program.

Other CSG Projects: Planning and the commencement of 3P drilling program across Gunyah, Bandanna and eastern Don Juan CSG Projects during the 4th Quarter of 2010 and early 2011.

Conventional Oil: Drilling of Barta North‐1 oil exploration and Cuisinier‐2 oil appraisal wells in the Cooper Basin

Commercial Activities Blackwater Power Project to continue construction. Progress commercial discussions with counter parties in line with Bow’s strategic development paths.

Progress early phase development activities associated with the Blackwater to Gladstone gas pipeline infrastructure including environmental approvals.

PL applications to continue Negotiate overlapping tenure agreements with coal parties as required in the Comet Block (ATP1025P).

Drilling Program 2010 2011

3rd Quarter(Jul‐Sep)

4th Quarter(Oct‐Dec)

1st Quarter (Jan‐Mar)

2 nd Quarter(Apr‐ Jun)

Production Program (end2010)• 2 x 4 Fracture Stimulation Wellproduction pilots, 1 x 2 Lateral Well production pilot in the BlackwaterCSG Field

Testing Program (end 2011) • Total of 21 wells across entire CSGportfolio

Core Hole Program (end2011)• Total of 21 core holes across entireCSG portfolio

Blackwater 30MWPower Station

END 2011 TOTAL RESERVES(net to Bow) 1,250 PJ 2P / 6,200 PJ3P

Drilling /Completions

Gas Contents and Saturations

Construction

Pumping /Testing Connection

Completions/Testing/Pumping

Commissioning/Ops

Page | 20


CORPORATE INFORMATION & DIRECTORY

For further information, contact John De Stefani, CEO or Duncan Cornish, Company Secretary. Telephone +61 7 3238 6300 or e‐mail [email protected] Electronic copies and more information are available on Bow’s website www.bowenergy.com.au

DIRECTORS

Howard Stack (Non‐Executive Chairman) Ron Prefontaine (Executive Director) Nicholas Mather (Non‐Executive Director) Stephen Bizzell (Non‐Executive Director) EXECUTIVES

John De Stefani (Chief Executive Officer) Vic Palanyk (Chief Operating Officer) Peter Harbison (Chief Financial Officer) Duncan Cornish (Company Secretary) SHAREHOLDER ENQUIRIES

Link Market Services Ltd manages Bow Energy Ltd’s share registry.

If you would like to monitor your shareholding online, you can do so by visiting Link Market Services Ltd’s website,

www.linkmarketservices.com.au and following the instructions.

For issuer‐sponsored shareholders, if you change address, or if you have any other queries regarding the details of your shareholding, please contact the Company’s share registry directly:

Link Market Services Ltd ANZ Building, Level 19 324 Queen Street, Brisbane QLD 4000 Phone: 1300 554 474

ISSUED CAPITAL

Bow Energy Ltd has the following securities on issue:

Ordinary shares on issue at 30 September 2010: 280,607,187

Outstanding options at 30 September 2010:

12.05 million (unquoted) 50c options expiring 7/11/11

16.50 million (unquoted) employee options (various exercise prices and expiry dates)

AUSTRALIAN STOCK EXCHANGE (“ASX”)

ASX Code: BOW (Ordinary shares) S&P ASX 200 Index INTERNET ADDRESS

All Company announcements, reports and presentations are posted on our website www.bowenergy.com.au

If you would like to receive news releases by email, please send us an email to [email protected] or register your details on our website.

AUSTRALIAN BUSINESS NUMBER

ABN 63 111 019 857 REGISTERED OFFICE AND HEAD OFFICE

Bow Energy Ltd Level 7 AMP Place 10 Eagle Street Brisbane QLD 4000 Phone: + 61 7 3238 6300 Fax: + 61 7 3238 6399

Documents

30 September 2010 Quarterly Report – Highlights Promotion ... · Blackwater Power Project Commences Construction Bow has commenced the construction on its 100% owned 30 megawatt