Quarterly Report - renurenuenergy.com.au/.../09/100204-Quarterly-Report-December-2009-1.pdfGEODYNAMICS LIMITED Quarterly Report ... to store and transmit fluids. Under-balanced Drilling

GEODYNAMICS LIMITED Quarterly Report | period ending 31 December 2009 1

PERIOD ENDING 31 DECEMBER 2009

Quarterly Report

GEODYNAMICS LIMITED Quarterly Report | period ending 31 December 20092

GLOSSARY OF TERMS

BOARD OF DIRECTORS

Mr Martin Albrecht AC (Chairman)Mr Gerry Grove-White (Managing Director)Mr Banmali Agrawala (Non-Executive Director)Mr Pieter Britz (Non-Executive Director)Dr Prame Chopra (Alternate Director for Mr Banmali Agrawala)Mr Bob Davies (Non-Executive Director)Dr Jack Hamilton (Non-Executive Director)Mr Keith Spence (Non-Executive Director)Mr Andrew Stock (Non-Executive Director)

COMPANY SECRETARY and CFO

Mr Paul Frederiks FCPA FCIS FAICD

PRINCIPAL and REGISTERED OFFICE

Level 2, 23A Graham Street, MILTON QLD 4064

Telephone: +61 7 3721 7500

Facsimile: +61 7 3721 7599

POSTAL ADDRESS

PO Box 2046, MILTON QLD 4064

INTERNET www.geodynamics.com.au

EMAIL [email protected]

BANKER Westpac Banking Corporation

AUDITOR Ernst & Young

SOLICITOR DLA Phillips Fox

SHARE REGISTRY

Computershare Investor Services Pty LimitedGPO Box 523, BRISBANE QLD 4001 Telephone Australia: 1300 552 270 Telephone International: +61 7 3237 2100 Facsimile: +61 7 3229 9860ABN 55 095 006 090

SECURITIES EXCHANGE LISTINGGeodynamics Limited shares are listed on the Australian Securities Exchange. The Home branch is Brisbane, Ticker : GDY

Annulus In a borehole, the space between the drill pipe and the borehole, between tubing and casing, or between casing and formation.

Bit The end piece of the drill string that cuts and penetrates the earth.

Blow out A large valve at the top of a well that may be closed if the drilling preventer (BOP) crew loses control of formation fluids.

Brine Water containing dissolved inorganic salts, mainly sodium chloride. Brine from Innamincka granite has salinity approximately two thirds that of sea water.

Casing Large-diameter steel pipe with threaded connections lowered into an open hole and cemented in place.

Commissioning The final stage of commissioning involves flowing hot brine through the plant in a series of test runs to demonstrate that the plant meets its operational specifications including the operation of all plant protective systems and devices.

Completion The assembly of down hole tubular and equipment required to enable safe and efficient production from, or injection into, a geothermal well.

Doublet The injection and production wells used in a circulation test.

Enhanced Previously referred to as Hot Fractured Rock, EGS uses the natural Geothermal warmth of the earth to heat fluid which in turn drives a turbine Systems (EGS) generator to produce electricity without producing the emissions of conventional fossil fuel generation.

Hydraulic In the sense of EGS development, a treatment involving the action of stimulation fluid pressure on existing natural fractures to enhance fluid pathways in the granite. It is achieved by pumping water down a well at high pressure.

Hydrogen Cracking of the casing material due to dissolved gases reacting with embrittlement the high strength steel casing material thereby releasing free hydrogen, which in turn is absorbed by the steel casing materials in the low temperature zone of the well under shut-in conditions.

Injection The innermost tubing through which the brine is pumped down tubing string the injection well.

Managed Using a combination of heavy weight drilling fluid and back pressure pressure drilling to drill through overpressured fractures and maintain desired bottom hole pressures.

Reservoir A subsurface body of rock having sufficient porosity and permeability to store and transmit fluids.

Under-balanced Drilling using a reduced mud weight so the amount of pressure drilling exerted on a formation exposed in the wellbore is below the internal fluid pressure of that formation. This allows formation fluids to enter the wellbore during drilling if sufficient porosity and permeability exist. The drilling rate typically increases as an underbalanced condition is approached.

Wellhead The surface termination of a well bore that incorporates facilities for installing casing hangers during the well construction phase.

CORPORATE DIRECTORY

Front cover: Cleaning the casings at Jolokia 1 during 2008


Geodynamics is pleased to report that plans to recommence drilling operations in the Cooper Basin are advanced. The Federal Government has shown support during the quarter through the award of funds under the REDP and the Geothermal Drilling Program.

A summary of activities from the quarter follows:

• AnnouncedtheFederalGovernment’sawardof$90 million in funding under the Renewable Energy Demonstration Program (REDP) for the development of the Cooper Basin Commercial Demonstration Plant.

• AnnouncedtheFederalGovernment’sawardof$7millioninfunding under Round 2 of the Geothermal Drilling Program (GDP) for the development of the Hunter Valley Project.

• Commencedtherevisedforwardworkprogram.

• Planned,designedandprocuredmaterialsforthecompletion and deep stimulation of Jolokia 1.

• AnnouncedtheawardoftheRig100drillingcontracttothe Australian subsidiary of a leading multinational drilling company, Weatherford Drilling International (WDI).

• FormallyissuedwiththeGeothermalExplorationPermitsover Nappa Merrie and Tennaperra areas in Queensland.

• Continuedplanninga2kmexplorationwellintheHunterValley (New South Wales) licence area.

• PresentedattheAustralianGeothermalEnergyConference in Brisbane.

• Releasedthe2009annualreporttoshareholders.

• HeldtheAnnualGeneralMeetinginBrisbaneandshareholder briefings in Adelaide, Melbourne, Canberra and Sydney; and

• AnnouncedtheGeodynamicsLimitedOptionshadexpired.

SUMMARY OF DECEMBER QUARTER ACTIVITIES


• Re-mobilisingpersonnelatsiteoperationsin the Cooper Basin, including Weatherford Drilling International (WDI) taking over Rig 100 operations.

• Continuedplanningforthedrillingofa2kmexploration well in the Hunter Valley.

• Jolokia1casingmanufacturedoverseasandtransported to Australia.

• PlanningforthedrillingofshallowwellsintheNappa Merrie tenement, Queensland; and

• ExecutionoffundingagreementswiththeFederal Government for funding announced under the REDP.

Milestones expected for March Quarter


REVIEW OF THE DECEMBER QUARTER

Subsurface activities - Jolokia 1 update

The Jolokia 1 completion design has been finalised including the selection of casing that will withstand the conditions expected in the Jolokia 1 well. Geodynamics has sought the advice of two companies, expert in the field, on the well design of Jolokia 1. Altus Engineering out of Houston has been integral in designing the Jolokia 1 well completion, and Blade Engineering out of Dallas have verified the work done, confirming that our criteria have been met.

The well completion design has been based on the brine chemistry analyses from Habanero 3. Whilst Jolokia is 9 kilometres away from Habanero, the Company believes the conditions and chemistry will not be significantly different. The granite body in the Cooper Basin is identified as the Nappa Merrie Trough and hence the Company believes that the brine conditions will be consistent across our tenements.

The completion being designed for Jolokia 1 will mean that the diameter of the well will be smaller than before. This will reduce the maximum flow of brine but it will be sufficient to meet the objectives of the Jolokia doublet.

The cost of the casing for future wells will be different to the cost of the completion for Jolokia 1 as future wells will have a different design. The steel material required for future wells will be approximately 10% more expensive than the steel used for the Habanero and Jolokia wells. Steel casing accounts for about 20% of the well cost so the new steel material will increase the overall well cost by approximately 2%. This will not have a material impact on the economics of the project.

Lengths of casing racked at Jolokia 1 during 2008


The Jolokia 1 casing is being manufactured in Japan and is expected to be delivered to site near the end of March 2010. The different grade of casing will then be inserted in the existing casing and cemented into place in preparation for stimulation. This solution can accommodate the injection tubing string needed to satisfy the Jolokia 1-2 closed loop objectives.

Jolokia 2 well design is underway

In addition to the well design program of work for Jolokia 1, Altus Engineering are also finalising the well design for Jolokia 2 which will be a commercial scale well. Once finalised in January 2010, Blade Engineering will verify the design to confirm that our criteria have been met. Both well designs will use casing that is not susceptible to hydrogen embrittlement. The selection of this grade of steel and these well designs will ensure that an incident of the nature of Habanero 3 does not occur again.

Well design is a highly complex technical and planning process which involves much more than just the correct choice of casing. Once the purpose of a particular well (e.g. exploration, injector, producer, or dual function) and performance expectations (e.g. flow rate, temperature profiles) are determined, design of the well must account for the following issues, amongst others, to achieve the goals:

• determiningandspecifyingwelldepth,casingmaterials,diameters, thicknesses and lengths; completion and stimulation programs;

• drillingmethode.g.under-balanceddrilling(UBD),managed-pressure drilling (MPD), etc;

• bitselection;designandmanagementofdrillingfluidsystems;

• pumprequirementsandspecifications;

• cementingprogram;

• considerationofpotentialimpactsonexistingandfuture wells;

• welltestinganddatagatheringrequirements(loggingtools requirements, open vs. closed-loop flow, build-up tests, pressure monitoring, etc.);

• blowoutpreventer(BOP)equipment;

• wellheaddesign;

• envisagedfuturewellinterventionrequirements;

• identificationofnewtechnologyopportunities;and

• applicationofcostestimationtoolstoscreenwelldesign options.

Throughout the design process and prior to any activity in the field, critical well construction and operational risks and hazards must be identified and management plans put in place (e.g. by technical verifications and integrated decision assurance). Long lead-time items must be identified and a procurement schedule developed. Design changes may sometimes be necessary as actual borehole conditions become known during drilling; however, the well design and field activities must always comply with regulatory safety, operational and environmental statutes.


Rig 100 drilling contract awarded to Weatherford Drilling International

During December, Geodynamics appointed the Australian subsidiary of a leading multinational drilling company, Weatherford Drilling International (WDI), to operate the Innamincka Joint Venture’s LeTourneau Lightning Rig (Rig 100). The contract is for an initial two year period with optional extension periods if agreed by both parties.

The drilling contract tendering process was competitive and participants were assessed against an extensive set of benchmark criteria including safety management; alignment with Geodynamics’ values; current performance initiatives and key business drivers.

Although not sucessful in the tender process, we would like to thank Easternwell Group for their service to Geodynamics.

Geodynamics is delighted to have appointed Weatherford as the new operator of Rig 100. The appointment provides confidence that the forward work program will be carried out

in accordance with Geodynamics’ values - of which safety and commitment to the environment are paramount.

Weatherford have commenced transition operations with a view to having the rig fully mobilised and ready for operations by March 2010. The rig will be used to re-enter Jolokia 1 once the casing materials arrive on site in late March 2010.

Weatherford is a leading multinational drilling and services company with a portfolio of drilling services that make well construction safer, reduce unproductive time and enhance reservoir performance. Weatherford Drilling International Australia Pty Ltd has structured its rig fleet in Australia over the past twelve months to be ready for geothermal drilling opportunities. They have two state-of-the-art cyber chairs, high tech drilling rigs - one of which is a 2000 HP LeTourneau Lightning Rig that is identical to Rig 100 and is now drilling for Panax Geothermal. The alliance with WDI will produce beneficial synergies for both companies – particularly with respect to the safe, careful and efficient operation of Rig 100.

Geodynamics and Weatherford sign a contract to operate Rig 100, 16 December 2009.

Left to Right: Mr Andre Mol (Geodynamics’ Wells Manager), Mr Lee Yong Chiang (Weatherford’s Business Unit Manager), Mr Gerry Grove-White (Geodynamics’ Managing Director), Mr Steven Ford (Weatherford’s Chief Financial Officer), Mr Paul Frederiks (Geodynamics’ Chief Financial Officer), Front: Ms Riza Stibbe (Geodynamics’ Procurement Manager).


Work continues on the construction of Rig 200 in Canada

The construction of Rig 200 is on schedule and the timeline for delivery in Australia remains the last quarter of 2010. The mast and substructure are in fabrication and are nearing completion. Other equipment manufacture is progressing well and factory acceptance tests are ongoing. Geodynamics has an engineer supervising all work on Rig 200 to ensure the final product meets our specifications. For example, the engine generator set has been assembled in Calgary and factory acceptance tests were witnessed by a third party as well as National Oilwell Varco – (the builders of the rig) and Geodynamics.

Geodynamics’ Rig 200 is being constructed under a new standard resulting in a substantially heavier mast. One advantage of the more rigorous standard is that Rig 200 will feature improved safety with greater wind loading capability that is suitable to the extreme desert conditions of central Australia.

Future of the Innamincka 1 MW Power Plant

Site Manager Bill Austin met with residents of Innamincka at Geodynamics’ Visitor Centre during November to outline progress on the Habanero and Jolokia projects. Six residents toured the power plant and questioned Mr Austin on various aspects of operations including the Jolokia completion, the 25 MW Commercial Demonstration Plant, and the future of the 1 MW power plant and existing power lines.

The Innamincka 1 MW Power Plant remains important to Geodynamics and will provide technical and operational benefits to the Joint Venture as well as first electricity generation from an Enhanced Geothermal Systems (EGS) source in Australia to the township of Innamincka. The Company is considering various options for the future commissioning timeline and expects to make an announcement in this regard in the next quarter.

Innamincka residents touring the 1 MW plant during November 2009


Coming down the cost curve

As the most advanced geothermal company in Australia, Geodynamics’ management has considerable knowledge of improvements required with drilling and plant equipment, improvements to aim for in computer modelling, and ways to reduce costs in line with international best practice. Advances in research and technology development will place Geodynamics in a key position as a leader in the field and owner of significant intellectual property.

The Subsurface Group at Geodynamics is focussing its efforts and resources on three core areas; reservoir development (science and reservoir modelling), well engineering technology, and well delivery (from well design to drilling, completion and stimulation operations). Each area has a specific focus and a set of research and technology development activities. The aim of the volume of work is to improve and confirm the economics of heat extraction and the electricity production and sale.

Examples of areas being pursued by the Company to improve the economics of the project and come down the cost curve include:

• Optimisedwelldesignstogiveminimumwellcost for optimal energy extraction;

• DrillTheLimitmethodologiesdeployed;

• Rigmovesreducedfrom28daysto10andless;

• Optimisedheatexchangerdesigns;

• Near-wellboreflowenhancement;

• Developanddeploydrillingtechnologiestoimproverates of penetration (ROPs);

• Continuerefinementofeconomicmodellingtools to aid decision-making and option evaluation;

• Continuetodevelopoff-takeoptionsforthecommercial demonstration plant;

• Continuetodevelopoptionsfortheprovisionoftransmission infrastructure;

• Obtainadditionaldatasetstoreducetherangeofreservoir uncertainties.

International Energy Agency – Geothermal Implementing Agreement – 1-2 October 2009

Geodynamics’ representatives attended the Executive Committee meeting of the International Energy Agency-Geothermal Implementing Agreement (IEA-GIA - http://www.iea-gia.org/geo_agreement.asp) in Reno, Nevada.

The IEA-GIA (a cooperative program on geothermal energy research and technology) was established in 2007, with Australia a founding member and Geodynamics a sponsor. Geodynamics delivered a progress report on the Cooper Basin Project.

Geothermal Resources Council conference – 5-7 October 2009

Following on from the IEA-GIA meeting, a number of Geodynamics’ representatives attended the international annual conference of the Geothermal Resources Council (GRC - http://www.geothermal.org/) and annual exhibition of the Geothermal Energy Association (GEA - http://www.geo-energy.org/) in Reno, Nevada. Geodynamics presented three scientific papers at the conference.

A record number of over 2,000 people attended the conference and exhibition to discuss the technology, challenges, policies and development of geothermal energy.

On 5 October, Geodynamics attended a meeting of the Steering Committee of the International Partnership for Geothermal Technology (IPGT – http://www.internationalgeothermal.org). The IPGT was established byAustralia,USA,andIcelandin2008toacceleratethe development of geothermal technology through international cooperation, focusing on lower-cost drilling, high-temperature tools, stimulation procedures, reservoir modeling, zonal isolation, and new exploration technologies. Working teams (Technical Interest Groups, or TIGs)

UPSKILLING / HUMAN RESOURCES


UPSKILLING / HUMAN RESOURCES

have been assigned to each of these key focus topics. Geodynamics’ Well Engineering Technology Manager (Dean Hindle) has been designated as the Convener of the Lower-cost Drilling TIG; and Geodynamics’ well-logging advisor (Holger Lubotzki) is a member of the High-temperature Tools TIG.

During the first half of October, Geodynamics’ representatives also held in-depth discussions with a wide rangeofUS-basedcompanies,governmentalagenciesandgeothermal professional associations towards investigating new technologies and methods that have been identified as having significant potential to improve drilling and well performance, reduce costs, and advance our understanding of risks and uncertainties.

New Zealand Geothermal Workshop – 16-18 November 2009

During November, two of Geodynamics’ surface engineering team attended the New Zealand Geothermal Workshop at the Rotorua Convention Centre, Rotorua. http://www.geothermal.org.nz/nzgeothermal2009/.

Conventional volcanic geothermal energy systems have been operating in New Zealand for approximately 50 years and the workshop included tours of several geothermal power plants and fields owned by Mighty River Power and Contact Energy. Geodynamics’ representatives spoke with geothermal plant managers about the operation and maintenance of the power stations and components, reservoir chemistry, the drilling of wells, environmental constraints and the perceptions of the industry in comparison to Geodynamics’ approach.

The workshop, tours and contacts made are of significant value to Geodynamics’ corporate knowledge and will inform the development of the planned Commercial Demonstration Plant.

Recruitment during the quarter

During the December quarter, Geodynamics recruited a number of new full-time positions. In October, we recruited Amy Hodson to join the Wells team as the Wells Development Manager and welcomed Dean Hindle (a long-term contractor), who joined us as a full-time employee continuing in the role of Well Engineering Technology Manager based in our Perth office. In December, the Wells team welcomed Neville Grulke as Rig Fleet Manager in preparation for the arrival of Rig 200 in 2010.

Nga Ana Purua 132 MW power plant in New Zealand


Site Manager, Bill Austin

DuringNovember,GeodynamicsengagedtheUniversityof Queensland to complete a study of the Company’s emissions footprint for the Year 2008/09. Geodynamics does not currently have an obligation under the National Greenhouse and Energy Reporting Act 2007 but expects to have the obligation in coming years. More information about the NGER Act can be found online at http://www.compliance.org.au/www_aci/user/docs/NGER%20Act%20info%20sheet.pdf.

TheUniversityofQueenslandreportmakesanumber of key recommendations that Geodynamics should:

• Considertheuseofbio-dieselforthedrillingrigandgenerator use;

• ConverttogreenenergyintheBrisbaneoffice;

• Consideroffsettingsomeoralloftheemissions;and

• Improveefficiencyintermsoflightuse,reduceflightsthrough video conferencing, reduce waste, etc.

These recommendations are currently being investigated with a view to having in place target dates for implementation in early 2010.

Regulatory approvals

Geodynamics submitted an Environmental Impact Report (EIR) and Statement of Environmental Objectives (SEO) for the commercial scale power plant to PIRSA in December. These two documents form the basis of the regulatory approvals required for Geodynamics to develop up to ten 50 MW power plants within our licence areas in the Cooper Basin, including field infrastructure.

ENVIRONMENTAL UPDATE HEALTH AND SAFETY UPDATE

During the Christmas period, a resident of Innamincka suffered a heart attack and required medical assistance. Innamincka does not have a medical post and the Royal Flying Doctor Service (RFDS) on this occasion was not able to land due to wet weather conditions. The only option of the attending Innamincka residents was to drive the patient one and a half hours to the RFDS manned clinic in the Santos Moomba Oil and Gas Facility to receive medical treatment. The residents stopped at Geodynamics’ Habanero camp


GOVERNMENT FUNDING OPPORTUNITIES AND ACTIVITIES REVIEW

to request assistance. Site Manager Bill Austin joined the mission by monitoring the resident’s condition and performing CPR on the patient on a number of occasions all the way to Moomba. Two other Geodynamics’ personnel followed in a second vehicle to provide backup support in the event that the lead vehicle became immobilised.

Geodynamics is pleased to report the patient made a full recovery and that he was able to personally thank Bill and the crew for saving his life as soon as he arrived back home at Innamincka. Managing Director Gerry Grove-White congratulated Bill Austin and the site crew for their quick response and proficient handling of the medical emergency.

It is mandatory that Site Managers and the majority of personnel both in the office and the field regularly undertake Senior First Aid courses. Geodynamics does not promote itself as offering medical assistance to tourists and residents in the Cooper Basin and there remains a clear understanding with residents and the South Australian government that, in such a remote setting, the Royal Flying Doctor Service is a necessity. Geodynamics plans to sponsor the residents of Innamincka to attend Senior First Aid training to better prepare them in case a similar situation arises in the future.

The Royal Flying Doctor Service is a fundamental part of Geodynamics’ Emergency Response Plan and the Company and employees regularly make donations. If readers are considering a worthy organisation to which to donate, Geodynamics recommends the Royal Flying Doctor Service. For more information on the service or to donate, go to http://www.flyingdoctor.net/.

Renewable Energy Demonstration Program (REDP) awards $90 million to Geodynamics

On 6 November the Federal Government informed Geodynamics that the Company’s application for $90 million funding under the Renewable Energy Demonstration Program (REDP) was successful. Geodynamics is delighted with the support shown by the Federal Government and believes funding of this nature is vital to ensure we bridge the gap between Proof of Concept and commercial demonstration.

The funding forms part of an overall $235 million award to four renewable energy demonstration projects across a range of emerging renewable technologies.

The funding will be staged over the life of the project with the final grant payment to be received following the commissioning of the 25 MW geothermal power plant in the Cooper Basin, expected to occur in late 2013. The principal objective of this Commercial Demonstration Plant (CDP) is to demonstrate cost-effective technology at a commercial scale to give lenders confidence to finance the commercial roll out of subsequent units and transmission lines.

The Company is assured from a variety of commercial lenders that the 25 MW capacity of the CDP is the minimum output that would demonstrate commercial scale to their satisfaction. Geodynamics is currently investigating a range of potential local users for the power.

The Company is currently in negotiation with the Federal Govern-ment to execute the funding document as soon as possible.


Geodynamics awarded $7m funding under the Geothermal Drilling Program

On 14 December, Geodynamics announced that the FederalGovernmenthadawarded$7millioninfundingunder Round 2 of the Geothermal Drilling Program. The funding has been granted for the development of theCompany’sHunterValleygeothermalprojectandisadditional to the $10m grant received in late 2009 under the NSW Climate Change Fund Renewable Energy Development Program.

The Geothermal Drilling Program is designed to assist project developers reach proof of concept on their

geothermal projects. The program provides matched funding dollar for dollar and will be staged over the duration of the exploration activity with the final amount payable following the successful announcement of ‘Proof of Concept’ in the Hunter Valley Project.

The Company is planning to drill a 2 km deep well in the Bulga tenement to confirm temperature gradients; work is expected to commence later in 2010 with deeper exploration wells to follow if temperature results are good.

A section of the Geodynamics’ website dedicated to information about the Hunter Valley Project is currently under development.

Location of the New South Wales tenements


EXPLORATION AND APPRAISAL

Hunter Valley, NSW - Bulga EL 5886 and Muswellbrook EL 5560

Geodynamics currently holds two Exploration Licences in the Hunter Valley region, at EL 5886 near Bulga and EL 5560 near Muswellbrook.

The Company believes the most promising geothermal location is on the western edge of the Bulga tenement and is focussing its efforts to determine the hottest location in this area.

Nappa Merrie, Queensland – EPG 6

The Queensland Department of Mines and Energy formerly issued Geodynamics with Geothermal Exploration Permits over Nappa Merrie and Tennaperra areas in December 2009. No exploration activities were carried out in the period.

A work program has been agreed with the Queensland government to undertake preliminary exploration activities in the Nappa Merrie permit. Geodynamics plans to drill three shallow (500 metre) exploratory wells, with drilling anticipated to commence later in 2010. Planning is currently underway.

Tenement positions in South Australia and Queensland


Australian Geothermal Energy Conference

During early November, Geodynamics presented a company update and several technical papers to the 400+ delegates at the 3rd Australian Geothermal Energy Conference held in Brisbane.

The Hon. Martin Ferguson MP opened the conference and showed strong support for the industry and its potential to deliver a clear alternative to our reliance on fossil fuel energy sources.

“Geoscience Australia who has a very close working relationship with the industry, and again has represented here today, advises me that if just one per cent of Australia’s geothermal energy was unlocked, it would equate to 26,000 times Australia’s total energy consumption. That represents a huge opportunity for Australia.

“It really is about potential: base-load, reliable power, a clear alternative to our existing reliance on coal-fired power stations; and the potential growth that is going to occur in gas in the foreseeable future,” Minister Ferguson said.

Also interviewed, Mr Charles Baron of Google.org’sClimateandEnergyTeam,thesearchengine’sphilanthropicdivision,described Enhanced Geothermal Systems (EGS) as “the sleeping giant” of clean power, and is investing in its research and development in the United States.

Mr Baron said, “EGS is considered to be a huge leap forward from conventional geothermal, which uses hot volcanic water to generate electricity in countries like Iceland, New Zealand, Indonesia and North America.

“With EGS you’re able to get at a much larger resource than with conventional geothermal. And literally around the world, anywhere you go, there’s hot rock below. So at some depth the rock is hot enough to produce electricity. That is true on virtually every continent on earth,” he said.

A transcript from ABC News, The World Today with Elizabeth Jackson is available online from http://www.abc.net.au/worldtoday/content/2009/s2783888.htm.

The conference organisers, the Australian Geothermal Energy Association (AGEA) and Australian Geothermal Energy Group (AGEG) were very pleased with the conference outcome. The majority of listed geothermal companies participated with trade stalls and major suppliers, contractors and government departments also sponsored stalls.

A copy of Geodynamics’ Managing Director’s presentation is available on our website at http://www.geodynamics.com.au/IRM/content/report_presentation.html, dated 18 November 2009.

PUBLIC AND INVESTOR RELATIONS

Facing page: Mrs Jane Lowe, Public Relations Manager at Geodynamics’ trade display at the 3rd Australian Geothermal Energy Conference.



FINANCE AND ADMINISTRATION

Expiry of Geodynamics Limited Options

During November Geodynamics advised shareholders by mail that listed options in the Company were expiring on 8 December 2009 and the last trading day for the options was 1 December 2009.

As the Options price of $1.50 was significantly higher than the average trading price of $0.81 during December, few shareholders exercised their options.

Geodynamics would like to thank all shareholders for their ongoing support.

Cash on hand at end of quarter

The Company’s cash position at the end of the quarter stood at $91.9 million.

Gerry Grove-White Managing Director

If you have any questions, I would be pleased to assist.

Ph: 07 3721 7500

Email: [email protected]

Geodynamics’ Annual General Meeting and Shareholder briefings

These meetings were held commencing on 30 November with the Annual General Meeting in Brisbane followed by Shareholder Briefings in Adelaide, Melbourne, Canberra and Sydney. All briefings were very well attended and well received by shareholders.

At the Annual General Meeting, shareholders unanimously agreed to all the resolutions proposed.

Of key interest to many was the future of the Innamincka 1 MW Power Plant. Geodynamics maintains that the commissioning of this power plant remains important to the Company’s commercialisation strategy. As the first EGS powered electricity generation plant in Australia, it will provide the Company with invaluable experience in the long-term operation of the production system, brine heat exchangers, injection pumps and the remainder of the plant. The Company will continue to consider options for the location and commissioning timeline as the work program unfolds and future well locations are determined.

Geodynamics’ Board and management, would like to thank shareholders who were able to attend these sessions and for sharing your thoughts regarding the Company’s presentation and progress.

Board changes

During the quarter, Dr Prame Chopra retired as a Non-executive Director, to assume the role of Alternate Director to Mr Banmali Agrawala. This change was announced in the Chairman’s Statement of 30 November 2009.

Documents

Quarterly Report - renurenuenergy.com.au/.../09/100204-Quarterly-Report-December-2009-1.pdfGEODYNAMICS LIMITED Quarterly Report ... to store and transmit fluids. Under-balanced Drilling