7/5/2005Dave Mathew

AusIMM

Moranbah Gas Project Update

14 June 2005 David Mathew

Dave Mathew

Moranbah Gas Project

PRESENTATION AGENDAPRESENTATION AGENDA

1.1. PROJECT UPDATEPROJECT UPDATE

2.2. TECHNICAL ASPECTS TECHNICAL ASPECTS

ÁÁGeological controls on CSG Geological controls on CSG

ÁÁWell completion Well completion

ÁÁGas profiles and decline analysisGas profiles and decline analysis

3.3. PROJECT LOOK FORWARDPROJECT LOOK FORWARD

7/5/2005Dave Mathew

Moranbah Gas Project

1.PROJECT UPDATE

7/5/2005Dave Mathew

Contract target acheived: 33TJ/day (31 million cubic feet of gas per day) Enertrade Daily Contract Quantity target;

Townsville Power Station now delivering 220MW: base load power produced from Moranbah’s natural gas.

Currently producing 41 TJ/day: 40 million cubic feet of gas per day being produced sustainably.

Largest producer in Australia: producing more CSG than any other project in Australia.

Built in 19 months: from project approval to fulfilling contracted gas sales.

Commissioning complete: all MGP construction completed/commissioned successfully last quarter.

Moranbah Gas Project

Delivering Substantial Production

7/5/2005Dave Mathew

CH4’s Fundamentals

• Over 7,000km2 tenements in highly prospective Bowen Basin

• Well understood geology – 30,000 drill hole database Č a key I.P. advantage

• Exclusive exploration rights to tenements containing in excess of 12,000 PJ GIP

• Delivering into 300PJ contract to supply Enertrade from MGP

• JV with BHPBilliton on MGP

• Well positioned for Townsville and Gladstone.

Well Placed for Growth

7/5/2005Dave Mathew

Moranbah Gas Project

• 384PJ 2P reserve- independently certified; 3P reserves of 1616 PJ

• 50 wells drilled to date

• 2 nodes compressor stations

• Delivering 41 TJ/day

Biggest CSG Project in Australia

7/5/2005Dave Mathew

• 50 wells installed; 90% availability current average

• Averaging 880,000scfd; GM seam more reliable than P seam

7/5/2005Dave Mathew

• 7x 600kW screw compressors; 3x 300kW screw compressors

• Field pressure 120kPag; delivery pressure 800kPag

7/5/2005Dave Mathew

• 80klms P/E pipe; 7klms steel pipe

• 50klms roads; 50klms powerlines

7/5/2005Dave Mathew

Moranbah Gas Project

2. TECHNICAL ASPECTS• Geological control on CSG

7/5/2005Dave Mathew

Coal physical structureHas a dual porosity

Macropores – the cleat system

Micropores – the coal matrixMost of the porosity is in the matrix (eg

85%)Gas is stored as a molecularly adsorbed

phase within micropors

Cleat systemsTwo main sets - orthogonal

Face cleats

Butt cleats

perpendicular to bedding plane

matrix

Plan view

Laubach et al 1998

Cross – section

Nature of Gas in Coal

7/5/2005Dave Mathew

gas adsorbed within matrix

water filled cleats

Initial state – pore fluid pressure maintains a certain mass of gas adsorbed

matrix

pressure difference betweencleat - matrix

Fluid pressure lowered in cleat/fracture system – pressure differencebetween cleat and matrix

Pressure lowered, gas desorbs and diffusesthrough matrix to cleat – water and gasflow within cleats

7/5/2005Dave Mathew

7/5/2005Dave Mathew

Class A Wells on flanks of syncline, north of fault, capped by thick sandstones and basalt

Class C Wells on broad anticline south of hinge zone where fault frequency increases, the GM seam floor splits and seam decreases in quality

Regional Cross Section through MGP

NW SE

GM010VB

GM009VA

GM007VA

GM0O6VA

Approximate location of normal fault12-15m throw, down to north(not modelled)

GM

Psandstone

basaltStanding water level

surface

~300

m

7/5/2005Dave Mathew

Conceptual 1st Order Model for Class A WellsGood production on synclinal flanks

Tension

Syncline

Anticline

Flank Flank

Faulted ground

Low Permeabilityin trough

Class C Wells

Class A Wells

7/5/2005Dave Mathew

Geology – Reservoir Gas Content

GM Seam high domain y = 5.7894Ln(x) - 22.692

P Seam y = 5.2654Ln(x) - 18.754

GM Seam low domain y = 8.0763Ln(x) - 39.164

GL Seam y = 4.5318Ln(x) - 20.534

0

2

4

6

8

10

12

14

0 100 200 300 400 500 600

Depth of Cover (m)

Mea

sure

d G

as C

onte

nt Q

m (m

3/t)

corr

ecte

d to

15%

ash

GM Seam High GradientP SeamGM Seam Low GradientGLQ Seam

GasDataBaseOct02AdjustedJuly03.xls

Gas Contents Gradients All Gas Boreholes

7/5/2005Dave Mathew

Geology – Reservoir Permeability

0

50

100

150

200

250

300

100 150 200 250 300 350 400 450 500

Depth (m)

Per

mea

bilit

y (m

D)

GM MeasuredMean+/- 1 std devApplied to Nov 02 BFS

Perm27May03.xls

GM Ln Perm = -0.01989 * Depth + 8.53976

Ln Perm + 1 std dev = -0.01989 * Depth + 10.36471

Ln Perm - 1 std dev = -0.01989 * Depth + 6.71481

<-------River------>

GM Seam Permeability

1818

Gas Saturation at January 2005

Gas Saturation at January 2006

7/5/2005Dave Mathew

Moranbah Gas Project

2. TECHNICAL ASPECTS 2. TECHNICAL ASPECTS

••Geological controls on CSGGeological controls on CSG

••Well completions Well completions

7/5/2005Dave Mathew

Surface to In-Seam, Medium Radius Drilling

7/5/2005Dave Mathew

Chevron Well pattern

980m 1020m

1200m

1100m

Vertical Wells

1200m 1200m 1200m

2000m

1200m 1200m

1200m

Chevron Well Design

7/5/2005Dave Mathew

• Conventional exploration/coal/minerals drilling rig

• Increased hole size in Phase 2

7/5/2005Dave Mathew

7/5/2005Dave Mathew

Moranbah Gas Project

2. TECHNICAL ASPECTS 2. TECHNICAL ASPECTS

••Geological controls on CSGGeological controls on CSG

••Well completions Well completions

••Gas production profiles Gas production profiles

7/5/2005Dave Mathew

Production History

0

500

1000

1500

2000

2500

3000

12/06/2004 01/08/2004 20/09/2004 09/11/2004 29/12/2004 17/02/2005 08/04/2005 28/05/2005 17/07/2005

Date

Gas

Vol

ume

(Mcf

d); W

ater

Rat

e (B

PD);

Wat

er L

evel

(m a

bove

se

nsor

)

0

50

100

150

200

250

300

Cas

ing

Pres

sure

(Psi

)

Gas Volume (Mcfd) Water Level (m from sensor)Water Rate (BPD) Coal SeamCasing Pressure (Psi)

GM001 P001

GM002 P002

P007

GM008

GM009

P009

GM010

P010

GM011

P011

GM012

P012

GM013

P013

GM003 P004

GM004

GM006

P005

GM005 P006

GM028

GM007

GM016

P008

GM026

GM014

P014

GM015

GM017

GM018

P016

P017

P018

P015

P019

GM020

GM024

GM027

GM023

GM24 + GM10

GM021

GM030

GM019

GM029

Metric ImperialRay's Cheat-O-Matic

Water Level

GM033

GM032

GM031

P021

P031

Q023

GM022

7/5/2005Dave Mathew

Production History

0

500

1000

1500

2000

2500

3000

01/08/2004 20/09/2004 09/11/2004 29/12/2004 17/02/2005 08/04/2005 28/05/2005 17/07/2005

Date

Gas

Vol

ume

(Mcf

d); W

ater

Rat

e (B

PD);

Wat

er L

evel

(m a

bove

se

nsor

)

0

50

100

150

200

250

300

Cas

ing

Pres

sure

(Psi

)

Gas Volume (Mcfd) Water Level (m from sensor)Water Rate (BPD) Coal SeamCasing Pressure (Psi)

GM001 P001

GM002 P002

P007

GM008

GM009

P009

GM010

P010

GM011

P011

GM012

P012

GM013

P013

GM003 P004

GM004

GM006

P005

GM005 P006

GM028

GM007

GM016

P008

GM026

GM014

P014

GM015

GM017

GM018

P016

P017

P018

P015

P019

GM020

GM024

GM027

GM023

GM24 + GM10

GM021

GM030

GM019

GM029

Metric ImperialRay's Cheat-O-Matic

Water Level

GM033

GM032

GM031

P021

P031

Q023

GM022

7/5/2005Dave Mathew

Average Production Rate per Well

0

200

400

600

800

1000

1200

04/03/2004 23/04/2004 12/06/2004 01/08/2004 20/09/2004 09/11/2004 29/12/2004 17/02/2005 08/04/2005 28/05/2005

Date

Gas

Vol

ume

(Mcf

d)

20

30

40

50

60

70

80

90

100

No.

of W

ells

Average Production per Well (Mcfd) Average Rate needed to meet GSA (Mcfd) No. of Wells Running

Conversion

Metric

Imperial

7/5/2005Dave Mathew

Total Field Production

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

04/03/2004 23/04/2004 12/06/2004 01/08/2004 20/09/2004 09/11/2004 29/12/2004 17/02/2005 08/04/2005 28/05/2005

Date

Gas

Vol

ume

(Mcf

d)

Total Field Production (Mcfd) Enertrade + Ergon Nom (Mcfd)

Conversion

Metric

Imperial

7/5/2005Dave Mathew

Moranbah Gas Project

3. PROJECT LOOK FORWARD

7/5/2005Dave Mathew

Growth in Qld Demand Vs Supply

Source: ACIL Tasman

Significant Market Exists

Existing Contracts

Potential Demand

0

30

60

90

120

150

180

210

240

270

300

330

360

390

420P

J/a

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

Queensland supply by Basin

7/5/2005Dave Mathew

Business Development - Strategy

• Our growth strategy remains:– Grow through exploration

– Increase gas sales to Townsville

– Duplicate business model into Gladstone

– Enter the east coast gas market

• Key focus on the growing markets of North + Central Queensland

Focussed Business Strategy

7/5/2005Dave Mathew

Market Developments

• Enertrade increased 2006 nomination by 23% to 14.8 PJ/pa (may request 110% of its nominated amount up to 16.3 PJ)

• Enertrade signed Xstrata’s Townsville copper refinery

• QNI has signed up to take 70 to 150PJ of gas over the next 15 years

• 20PJ/a spoken for including QNI plus Townsville Power Station and Xstrata.

• Expressions of interest called for another Townsville Power Station – declared a Significant Project by QLD Government

The gas market in North and Central Queensland is developing rapidly

7/5/2005Dave Mathew

In Summary

• Robust cashflow and strong balance sheet

• Solid production platform

• 20PJ/a contract fully committed to Townsville

• Market of +40PJ/a in North Qld requires further GSA/GSA’s

• Reserves have increased

• Commitment to exploration effort

Solid Base and Committed to Growth through Exploration