A.B.N. 47 106 092 577

CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

Corporate Directory

COMET RIDGE LIMITED DIRECTORS' REPORT

The Directors present their report on the consolidated group ("the Group") consisting of Comet Ridge Limited ("Comet Ridge" or "Company") and the entities it controlled at the end of, or during, the half-year ended 31 December 2015.

Directors

The names of the Directors who held office at any time during the half-year and up to the date of this report are:

James McKay Non-Executive Chairman

Tor McCaul Managing Director

Gillian Swaby Non-Executive Director

Christopher Pieters Executive Director

All Directors have been in office since the start of the half-year to the date of this report unless otherwise stated.

Principal Activities

The principal activities of the Group during the half-year were to carry out coal seam gas (CSG) exploration and appraisal. The Group has tenement interests and exploration and evaluation activities in Australia and New Zealand and an investment in a limited liability company based in the United States.

There have been no significant changes in the nature of the Group's principal activities during the half-year.

Review of Operations and Results

The loss for the half-year after providing for income tax amounted to $1.759 million (December 2014: loss $1.3 million). Comments on the operations and results of those operations are set out below.

Exploration Activities

1. ATP 1191 Mahalo - Bowen Basin, Qld (Comet Ridge 40%), Santos (30%), APLNG (30%) Mahalo Pilot

   The Mahalo pilot project has continued to operate over the six month period to 31 December 2015. The project is located approximately 240km west of Gladstone in the southern Bowen Basin and is 11 kilometres from an infrastructure connection to the Gladstone LNG market with significant gas supply requirements.

   
   

   The project has seen significant progress with strong and increasing gas production performance from the Mahalo 6 / 7 Vertical-Horizontal well combinations. Pump speed increases were applied throughout November 2015 and into the first half of December 2015, with each of these achieving successive increases in the gas rate from the well. Gas production during January 2016 passed 360,000 scf/d (standard cubic feet per day).

   
   

   An initial independent certification of Reserves at Mahalo was announced on 28 August 2014. As a result of the promising results being achieved from the Mahalo pilot project, in early December 2015 the Company was also able to achieve an upgraded 2P and 3P reserves certification for Mahalo Block. Both 2P and 3P Reserves were increased by converting part of the significant Contingent Resources in the block to the higher category of Reserves. The most significant part of this Reserves upgrade has been the conversion from the 1C Contingent Resource category, into the 3P Reserves category. In addition, some conversion of 3P to 2P Reserves has also been achieved.

   
   

   The Group is extremely pleased with the results in the Mahalo Block to date and believes it is a clear demonstration of strong commercial production potential. In the coming months, well deliverability at the Mahalo pilot will be the primary focus of the Group so as to continue the conversion of 3P to 2P reserves.

   
   

   The table below summarises the changes to the Company's Reserves and Resources position for Mahalo as contained in its announcement to the market on 2 December 2015:

   
   

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   COMET RIDGE LIMITED

   DIRECTORS' REPORT Continued

   
   

   Exploration Activities (continued)

   
   

   Mahalo Independent Reserve and Resource Upgrade (COI Net Interest 1)

   COI Net Equity Share 1	Gas Reserve (PJ) 2			Gas Contingent Resource (PJ)
   Category	1P 3	2P	3P	1C	2C	3C
   30 November 2015 certification	-	30	219	112	232	372
   27 August 2014 certification	-	22	124	208	328	468
   Increase (PJ)	-	8	95	-96	-96	-96
   Increase (%)	-	36%	77%	-46%	-29%	-21%

   
   

2. COI has a 40% net equity share of Mahalo.

3. COI's net Reserves have not been adjusted for fuel or shrinkage (estimated at approximately 3%) and have been calculated at the wellhead (which is the reference point for the purposes of Listing Rule 5.26.5).

4. 1P Reserves have not been attributed to the Mahalo Block under SPE 2007 PRMS Guidelines as the field is not yet at development stage with an approved development plan.




In accordance with Listing Rule 5.34.3, Comet Ridge confirms that it is not aware of any new information or data that materially affects the information in the announcement to the market of the Reserves 2 December 2015 and that all of the material assumptions and technical parameters underpinning the estimates in that announcement continue to apply and have not materially changed.




During the half-year ATP 337, which includes the Mahalo Joint Venture Area ("MJVA") and the Mahalo pilot project, was converted from a 1923 Petroleum Act permit to a Petroleum and Gas (Production and Safety) Act 2004 permit with effect late in 2015 for a term of four years. As a consequence the permit has been allocated a different number and has been changed to ATP 1191. The change of permit number has had no impact on the area of the permit.




5. ATP 743P and ATP 744P - Galilee Basin, Qld (Comet Ridge 100%) ATP 1015P - Galilee Basin, Qld (Comet Ridge 20%)




During the half-year, activity in the Galilee Basin has concentrated on the Albany (formerly known as Carmichael) sandstone structure in ATP 744P. The Albany Structure is situated just north of the Gunn Project Area where Comet Ridge already holds a significant Contingent Resource Certification for coal seam gas (CSG).




The structure was first drilled in the 1990's when the Carmichael-1 well was drilled in 1995 by Maple Oil & Exploration NL. This well was designed as an oil exploration well to test the petroleum potential of the Late Carboniferous Lake Galilee Sandstone over a robust seismically defined anticlinal structure in the then ATP 588P (now ATP 744P). The structure is approximately 15km long on its main axis. Three separate zones within the Lake Galilee Sandstone flowed gas to surface at low rates. An additional significant section of gas pay was not tested. The well discovered a large natural gas accumulation which was deemed uneconomic at the time based on drill stem test results, and historic very low gas prices, and the well was plugged and abandoned.




Recent reprocessing and reinterpretation of the seismic data over the structure undertaken by the Group confirmed the presence of a large anticlinal feature with a significantly larger structural closure than had been previously mapped. This latest technical review also indicates the 1995 well was not optimally located over the crest of the structure, leading to significant upside for a future appraisal well. A review of the well data and results has been used to quantify key reservoir parameters. The well results also indicated that the productivity of the tight gas formation was not optimally tested in Carmichael-1 due to the significant overbalance in mud weight and the presence of liquid hydrocarbons decreasing relative permeability to gas. Further drilling is required to test the crest of the structure to demonstrate commercial flow rates for gas.







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