June 2010

2. Queensland based company - Started in 2000, first gas sales in 2004 Currently provides >20% of gas consumed in Queensland 50/50 Shell and Petrochina – 2 stable owners committed to safety, environment and long term relationships with stakeholders 500 staff in Dalby, Moranbah and Brisbane Arrow Energy is a major coal seam gas (CSG) company; Exploring for gas since 2000 Producing gas since 2005 Experienced in all aspects of coal seam gas - exploration, production, power generation – and looking to develop LNG project in Gladstone using gas from Queensland coal basins In March 2010 – Shell and Petrochina made a bid to acquire Arrow, which was completed on 28 August - Arrow Energy is now owned 50/50 Shell/Petrochina Arrow Energy is continuing to grow with close to 500 staff in Moranbah – Dalby and Brisbane. We expect that as all the projects, upstream and downstream come on line Arrow Energy is a major coal seam gas (CSG) company; Exploring for gas since 2000 Producing gas since 2005 Experienced in all aspects of coal seam gas - exploration, production, power generation – and looking to develop LNG project in Gladstone using gas from Queensland coal basins In March 2010 – Shell and Petrochina made a bid to acquire Arrow, which was completed on 28 August - Arrow Energy is now owned 50/50 Shell/Petrochina Arrow Energy is continuing to grow with close to 500 staff in Moranbah – Dalby and Brisbane. We expect that as all the projects, upstream and downstream come on line

3. ARROW ENERGY Portfolio includes: Domestic gas supply Gas transmission pipelines Electricity generation Future projects Domestic consolidation Export supply of gas (LNG technology has enabled access to global markets)

4. 4 PROJECT UPDATE Nature of exploration is that work may change Part of reason for increase in exploration work is to better understand groundwater and the limits of potential field development. This is particularly important in the intensively farmed areas. One of the positives of the takeover is we now have a longer period of time to better understand. Not rushing. More exploration which will allow us to have more certainty in our development planning down the track. Will provide extra groundwater and EIS data. Nature of exploration is that work may change Part of reason for increase in exploration work is to better understand groundwater and the limits of potential field development. This is particularly important in the intensively farmed areas. One of the positives of the takeover is we now have a longer period of time to better understand. Not rushing. More exploration which will allow us to have more certainty in our development planning down the track. Will provide extra groundwater and EIS data.

5. 5 PROJECT LOOK AHEAD

6. 6 UPCOMING ACTIVITIES Exploration activities to confirm a viable gas supply for LNG production Exploration involves identifying: Presence, depth and extent of coal seams Whether coals seams contain gas – core holes Whether gas can be produced (brought to the surface) – pilots Red dots are indicative locations for exploration. We have commenced talking with landholders. Exploration wells are very flexible with regards to location. Should we mention reinjection trial here ? Carolyn to confirm. Red dots are indicative locations for exploration. We have commenced talking with landholders. Exploration wells are very flexible with regards to location. Should we mention reinjection trial here ? Carolyn to confirm.

7. 7 UPCOMING ACTIVITIES Target area for development between 2013 and 2023: approximately 2,000 wells Domestic wells (existing PLs): About 15 wells over next 12 months No update from previous presentation. Focus has been on working with community and alignment of Surat Gas Project with Curtis Island LNG project. Development area has been redefined to stay west of the western branch of the Condamine. No update from previous presentation. Focus has been on working with community and alignment of Surat Gas Project with Curtis Island LNG project. Development area has been redefined to stay west of the western branch of the Condamine.

8. Improved community and landholder engagement An open and honest dialogue about issues and opportunities with our stakeholders Engage with landholders at least six to 12 months prior to production drilling Adoption of a standard approach to compensation and land access No development on intensively farmed agricultural areas until concerns are properly addressed No construction of dams for coal seam gas water or brine on intensively farmed areas Use of surface tanks not pits when drilling production wells on black soil Development of a robust groundwater monitoring regime Prompt response to bore owners who report a reduced water supply Construction of “fit for purpose” dams to government standards Remove produced salt from the landscape Work with regional communities to maximise community benefits & opportunities for local businesses Locate wells and infrastructure away from homes in consultation with landholders (minimum 200m) No hydraulic fracturing (fraccing) in the area of the Surat Gas Project Purpose of today’s meeting is to give you an update on our activities, and where we are up to with regard to our commitments. Purpose of today’s meeting is to give you an update on our activities, and where we are up to with regard to our commitments.

9. New Land Access Code We have adopted the standard Conduct and Compensation agreement Best practice guidelines for communication Imposes mandatory conditions regarding the conduct of activities on private land Current status of land access activities: Completed agreements in Surat approx. 130 Agreements in negotiation approx. 40 Cases before Land Court zero Arrow believes good relationships make good business sense. New land access code – law October 2010. Arrow also recognises that in order to develop on cultivated land the development will need to be designed and managed in a different way to many of our previous projects, which includes: Placement of infrastructure Amount and timing of site access Methods of installation of pipelines. Deprivation of Surface area and severance of land Severance damage may occur in two ways. Firstly, it may occur where part of the land is taken, leaving the retained land as a single, but reduced entity. Secondly, it may occur where part of the land is taken bisecting it with the effect that the owner remains with two parcels of land. Apart from affecting the market value of retained land severance may cause loss to the owner in some other way. Injurious Affection Injurious Affection can be best described as the depreciation in the market value of the balanced land. Noise, smell, visual amenity, loss in privacy. Injurious Affection should not be confused with temporary loss but is permanent Disturbance Historically refers to the out of pocket expenses incurred by the owner in the formulation of a claim for compensation eg legal and valuation fees. Loss of Profit During the construction stage consequential loss needs to include any loss in profit due the inability to crop or run cattle on the affected land if applicable. New land access code – law October 2010. Arrow also recognises that in order to develop on cultivated land the development will need to be designed and managed in a different way to many of our previous projects, which includes: Placement of infrastructure Amount and timing of site access Methods of installation of pipelines. Deprivation of Surface area and severance of land Severance damage may occur in two ways. Firstly, it may occur where part of the land is taken, leaving the retained land as a single, but reduced entity. Secondly, it may occur where part of the land is taken bisecting it with the effect that the owner remains with two parcels of land. Apart from affecting the market value of retained land severance may cause loss to the owner in some other way. Injurious Affection Injurious Affection can be best described as the depreciation in the market value of the balanced land. Noise, smell, visual amenity, loss in privacy. Injurious Affection should not be confused with temporary loss but is permanent Disturbance Historically refers to the out of pocket expenses incurred by the owner in the formulation of a claim for compensation eg legal and valuation fees. Loss of Profit During the construction stage consequential loss needs to include any loss in profit due the inability to crop or run cattle on the affected land if applicable.

10. LAND ACCESS We accept our activities have an impact on landholders – we understand that your land is both your home and your livelihood. We recognise that development on land needs to consider: Where? – we place our infrastructure When and for how long? – amount and timing of site access How? – we conduct our drilling and construction activities Our compensation is based on: Landowners’ time Impact on operations and amenity (eg disturbance, loss of profit) Change in value and or/use of land Legal, valuation and accountant advice Define amenityDefine amenity

11. The Land Access Rules establishes clear, concise and non-negotiable rules for all employees, contractors and personnel to abide by when wishing to access any private property across all Arrow Energy operations and activities. Across the Group we intend to achieve a culture of compliance. The rules are not new. In many cases compliance with them is already high. Most of our staff and contractors adhere to them every day. Compliance with the Land Access Rules is mandatory for all Arrow employees and contractors while conducting Arrow Business. Land Access Rules are applicable to all operations under Arrow’s operational and/or governance control. Minority interest JVs will be encouraged to participate; it is, however, recognised that significant engagement will be required and any acceptance may not be achievable within the proposed timeline. Failure to comply with any Land Access Rule will result in discipline, up to and including termination of employment (in accordance with local law), or discharge in the case of contractors. If a supervisor fails to communicate the Rules, sets the conditions for rule breaking or fails to follow through if one is broken, maximum appropriate disciplinary action will also apply, in accordance with local law. Each reported non-compliance will be investigated thoroughly and on an individual basis in line with the appropriate local policy and practice. Procedural justice will be ensured.The Land Access Rules establishes clear, concise and non-negotiable rules for all employees, contractors and personnel to abide by when wishing to access any private property across all Arrow Energy operations and activities. Across the Group we intend to achieve a culture of compliance. The rules are not new. In many cases compliance with them is already high. Most of our staff and contractors adhere to them every day. Compliance with the Land Access Rules is mandatory for all Arrow employees and contractors while conducting Arrow Business. Land Access Rules are applicable to all operations under Arrow’s operational and/or governance control. Minority interest JVs will be encouraged to participate; it is, however, recognised that significant engagement will be required and any acceptance may not be achievable within the proposed timeline. Failure to comply with any Land Access Rule will result in discipline, up to and including termination of employment (in accordance with local law), or discharge in the case of contractors. If a supervisor fails to communicate the Rules, sets the conditions for rule breaking or fails to follow through if one is broken, maximum appropriate disciplinary action will also apply, in accordance with local law. Each reported non-compliance will be investigated thoroughly and on an individual basis in line with the appropriate local policy and practice. Procedural justice will be ensured.

12. 12 Arrow Surat Community Reference Group Arrow Intensively Farmed Land (AIFL) Committee Purpose: To provide a consultative forum that, with regard to Arrow Energy’s development of a coal seam gas resource on intensively farmed land within its tenements in the Surat Basin, can: Effectively identify issues Provide feedback Consider opportunities to co-create a plan for co-existence for coal seam gas development on intensively farmed land EIS Agricultural Study to assess: Current land uses and agricultural practices CSG methodologies what impacts and mitigations mean to agricultural activities Development of formal complaints management system Terms of Reference (ToR ASCRG: Purpose: To provide a consultative forum that, with regard to Arrow Energy’s development of a coal seam gas resource within its tenements in the Surat Basin, can: Effectively identify issues Provide feedback Consider improvement opportunities and initiatives ) are available on Arrow Energy web site. AIFL Committee has conducted farm visits on irrigated and dry land farming enterprises Currently working together on the issues and how CSG Exploration can be executed on intensively farmed land Development of formal complaints management system Arrow is committed to the following principles: Visibility and access – where and how to make a complaint: Responsiveness – acknowledgement within 48 hours of complaint Objectivity – complaints addressed fairly and objectively Corrective action and follow up Continual improvement – incorporate feedback from communityTerms of Reference (ToR ASCRG: Purpose: To provide a consultative forum that, with regard to Arrow Energy’s development of a coal seam gas resource within its tenements in the Surat Basin, can: Effectively identify issues Provide feedback Consider improvement opportunities and initiatives ) are available on Arrow Energy web site. AIFL Committee has conducted farm visits on irrigated and dry land farming enterprises Currently working together on the issues and how CSG Exploration can be executed on intensively farmed land Development of formal complaints management system Arrow is committed to the following principles: Visibility and access – where and how to make a complaint: Responsiveness – acknowledgement within 48 hours of complaint Objectivity – complaints addressed fairly and objectively Corrective action and follow up Continual improvement – incorporate feedback from community

13. Coal Seam Gas CSG – naturally occurring gas 95-98% methane, trace amounts of Nitrogen and Carbon Dioxide Petroleum Activity Water and gas pumped from the well CSG has been commercially produced in Qld for 15 years

14. ADDRESSING YOUR CONCERNS Arrow understands you may have concerns that drilling of numerous gas wells could interconnect aquifers or pollute them with chemicals. Arrow’s safeguards to prevent this from occurring include: Well construction – wells drilled to a detailed plan with strong focus on quality of casing and cementing aspects Drilling fluid management – proper management and use of drilling fluids and non-BTEX products “Zonal isolation” – ensures aquifers remain separate, and do not allow cross-contamination Well integrity – systems to keep check on the wells over their life Qualified drilling personnel – required to hold accreditation from Australian Drilling Industry Training Committee

16. ADDRESSING YOUR CONCERNS Wells drilled to a detailed plan Casing and cementing are extremely important Well must be water and gas tight At end of well life, well is plugged and rehabilitated to requirements set out in Petroleum Regulations (Schedule 3) Details of decommissioning recorded in report submitted to Government

17. 17 ADDRESSING YOUR CONCERNS 8 November: minute traces of benzene detected in three of 60 water samples from Arrow Energy gas wells in northern Bowen Basin Relevant authorities and neighbours were immediately notified Further independent testing confirmed initial results More research is being conducted to determine if the benzene detected is naturally occurring or introduced by other means Benzene is one of the group of BTEX* chemicals, recently banned by the Government in CSG processes Arrow does not use chemicals containing benzene (or other members of the BTEX group of chemicals in its fraccing fluids Water from these wells is managed in accordance with regulations governing coal seam water and is contained in lined, fenced ponds for treatment or removal. There are no registered water bores within 5km of the three wells and coal seam water is not used for feedstock. The secondary tests have confirmed similar or lower levels of the BTEX group chemicals in all three wells (between 1 and 3 parts per billion). Arrow has not used chemicals containing benzene (or any other members of the BTEX group of chemicals) in its fraccing fluids. More detailed testing is already underway to identify if the chemical is naturally occurring or introduced by another means. BTEX group chemicals can be present in oil based lubricants, diesel and petrol. Arrow has already advised the Department of Environment and Resource Management (DERM) that due to the very low levels detected and the isolation of the wells, any risk to public health is unlikely. The water from these wells is managed in accordance with regulations governing coal seam water and is contained in lined, fenced ponds for treatment or removal. There are no registered bores within at least five kilometres of the three wells, and coal seam water is not used for feedstock. However, as a precaution, Arrow will conduct testing of water from bores closest to the area. Fact sheet available How often do you test? Can we get a copy of results? Who do you report these results to? Water from these wells is managed in accordance with regulations governing coal seam water and is contained in lined, fenced ponds for treatment or removal. There are no registered water bores within 5km of the three wells and coal seam water is not used for feedstock. The secondary tests have confirmed similar or lower levels of the BTEX group chemicals in all three wells (between 1 and 3 parts per billion). Arrow has not used chemicals containing benzene (or any other members of the BTEX group of chemicals) in its fraccing fluids. More detailed testing is already underway to identify if the chemical is naturally occurring or introduced by another means. BTEX group chemicals can be present in oil based lubricants, diesel and petrol. Arrow has already advised the Department of Environment and Resource Management (DERM) that due to the very low levels detected and the isolation of the wells, any risk to public health is unlikely. The water from these wells is managed in accordance with regulations governing coal seam water and is contained in lined, fenced ponds for treatment or removal. There are no registered bores within at least five kilometres of the three wells, and coal seam water is not used for feedstock. However, as a precaution, Arrow will conduct testing of water from bores closest to the area. Fact sheet available How often do you test? Can we get a copy of results? Who do you report these results to?

18. 18 ADDRESSING YOUR CONCERNS Key points of difference: Movie based on extraction of gas from shale in the USA – not gas from coal seams Australian CSG industry is subject to strict Government regulation with regards to environmental impacts, including water Coal seam gas is almost pure methane and does not contain ‘condensate’ which are lighter hydrocarbons (like butane, propane and ethane) found in conventional gas or shale gas Where Arrow uses fraccing, we have historically used a range of 22 chemicals – no BTEX suite of chemicals – most recent frac wells use only two different types of chemicals; Sodium hypochlorite (pool chlorine) Acetic acid (vinegar) Don’t use BTEX in our fraccing so there has been no historical reason to test for this. DERM on Friday 19 November took a sample at Surat. BTEX is an emerging issue and testing will become more prevalent going forward. It will become part of our sampling analyses in the future. Don’t use BTEX in our fraccing so there has been no historical reason to test for this. DERM on Friday 19 November took a sample at Surat. BTEX is an emerging issue and testing will become more prevalent going forward. It will become part of our sampling analyses in the future.

19. GROUNDWATER Outline what the new provisions means to the landholders NOT describing the changes to legislationOutline what the new provisions means to the landholders NOT describing the changes to legislation

20. WATER AND SALT Outline what the new provisions means to the landholders NOT describing the changes to legislationOutline what the new provisions means to the landholders NOT describing the changes to legislation

21. WATER MANAGEMENT PROJECTS Monitoring Program Leakage detection systems for dams Developed a field layout for new bores Land access and approvals Resources for the extended program

22. WATER MANAGEMENT PROJECTS Dam upgrades Dam specifications for Arrow operations Work program for upgrade of existing dams Work to commence in 2011 Dam Remediation and Upgrade Study Currently all the dams (excl. CGPF oily water dams) in service on Daandine, Tipton, Kogan and Stratheden will need to be upgraded to comply with the newly imposed retrospective conditions if it is intended for them to remain in service. As of the 1 November 2011 all aggregation and brine storage dams will need to be compliant with the new conditions or it is likely we will have to apply for a TEP – the condition about the mechanism we use for managing the transition for compliance is still being negotiated with DERM in the DXP EA. We are currently working through a process to develop a set of standard dam design specifications after which we will engage a number of consultants to help us develop a methodology and budget estimate for upgrading the dams. This work will occur within the first half of 2011. From this point we can determine whether it is more economic and desirable to remediate and upgrade or rehabilitate and construct on new sites. Tipton RO Scheme: From 1 November 2011 evaporation dams are no longer a suitable means of water disposal. The original Field Development Plan included provision for a third evaporation dam to be built as required to facilitate continued production of the field for the current contracted sales. The RO scheme will replace this. A detailed concept select study was conducted to review several options – do nothing, utilisation of spare Daandine capacity via interconnecting pipeline and Tipton RO facility. The detailed analysis and select process was based firstly, on the six operational priorities, and secondly on the operational flexibility to transfer water for ops and to facilitate the dam upgrades in each PL. The RO plant will enable us to treat the water from the Tipton field, SIS well trial, extended pilot programs in Plainview and Meenawarra and facilitate the drawdown of the existing dams within the 3 year TEP period for retrospective compliance. The project will consist of a 12ML RO plant, 50ML utility dam, 960ML brine storage dam, 400ML feedwater dam, 400ML treated water dam (all dams constructed to the new brine dam / aggregation dam specifications), interconnecting piplines and export pipelines to take the treated water to Glenelg and another farm for irrigation (likely Grassdale at this point – starting negotiations). The treated water will be amended and used as a resource on the farms for beneficial use in irrigation. Currently the project is due to award an RO contract and begin detailed design of the plant, interconnecting pipelines and export lines. The dam design reports are due to be submitted to DERM at the end of November. BU applications are currently being developed and initial talks with Grassdale have commenced but are in very early stages. NOTE: the DXP EA is required for construction of this project to commence and we do not have a valid compensation agreement in place for Duntroon/Grassdale - the land owners are aware of our intent but this process has not been formalised. River Road / Glenburnie Pipeline.   A 20 km water pipeline is planned to be constructed to join two pilots at River Road and Glenburnie to the future water treatment plant at Tipton. This pipeline will connect to an existing pipeline west of Cecil Plains to allow the water to be pumped to the future Tipton West Reverse Osmosis plant for treatment. The pipeline is planned to run south along Wilkins road within the road reserve in so much as possible. Negotiations are ongoing with Council and landowners at present. A transfer dam and small pump station will be constructed on Arrow’s property to facilitate the pumping of water to Tipton West. Dam Remediation and Upgrade Study Currently all the dams (excl. CGPF oily water dams) in service on Daandine, Tipton, Kogan and Stratheden will need to be upgraded to comply with the newly imposed retrospective conditions if it is intended for them to remain in service. As of the 1 November 2011 all aggregation and brine storage dams will need to be compliant with the new conditions or it is likely we will have to apply for a TEP – the condition about the mechanism we use for managing the transition for compliance is still being negotiated with DERM in the DXP EA. We are currently working through a process to develop a set of standard dam design specifications after which we will engage a number of consultants to help us develop a methodology and budget estimate for upgrading the dams. This work will occur within the first half of 2011. From this point we can determine whether it is more economic and desirable to remediate and upgrade or rehabilitate and construct on new sites. Tipton RO Scheme: From 1 November 2011 evaporation dams are no longer a suitable means of water disposal. The original Field Development Plan included provision for a third evaporation dam to be built as required to facilitate continued production of the field for the current contracted sales. The RO scheme will replace this. A detailed concept select study was conducted to review several options – do nothing, utilisation of spare Daandine capacity via interconnecting pipeline and Tipton RO facility. The detailed analysis and select process was based firstly, on the six operational priorities, and secondly on the operational flexibility to transfer water for ops and to facilitate the dam upgrades in each PL. The RO plant will enable us to treat the water from the Tipton field, SIS well trial, extended pilot programs in Plainview and Meenawarra and facilitate the drawdown of the existing dams within the 3 year TEP period for retrospective compliance. The project will consist of a 12ML RO plant, 50ML utility dam, 960ML brine storage dam, 400ML feedwater dam, 400ML treated water dam (all dams constructed to the new brine dam / aggregation dam specifications), interconnecting piplines and export pipelines to take the treated water to Glenelg and another farm for irrigation (likely Grassdale at this point – starting negotiations). The treated water will be amended and used as a resource on the farms for beneficial use in irrigation. Currently the project is due to award an RO contract and begin detailed design of the plant, interconnecting pipelines and export lines. The dam design reports are due to be submitted to DERM at the end of November. BU applications are currently being developed and initial talks with Grassdale have commenced but are in very early stages. NOTE: the DXP EA is required for construction of this project to commence and we do not have a valid compensation agreement in place for Duntroon/Grassdale - the land owners are aware of our intent but this process has not been formalised. River Road / Glenburnie Pipeline.   A 20 km water pipeline is planned to be constructed to join two pilots at River Road and Glenburnie to the future water treatment plant at Tipton. This pipeline will connect to an existing pipeline west of Cecil Plains to allow the water to be pumped to the future Tipton West Reverse Osmosis plant for treatment. The pipeline is planned to run south along Wilkins road within the road reserve in so much as possible. Negotiations are ongoing with Council and landowners at present. A transfer dam and small pump station will be constructed on Arrow’s property to facilitate the pumping of water to Tipton West.

23. WATER MANAGEMENT PROJECTS Injection Seeking approval for trial Treated water Into Precipice at Glenelg Irrigation Trials Theten, Glenelg and Moranbah Research to understand sustainable application Water balance Objective to keep water within the local area Exploring opportunities and approvals necessary to substitute entitlements Dependent on: Injection trial Irrigation trial Approval framework Dam Remediation and Upgrade Study Currently all the dams (excl. CGPF oily water dams) in service on Daandine, Tipton, Kogan and Stratheden will need to be upgraded to comply with the newly imposed retrospective conditions if it is intended for them to remain in service. As of the 1 November 2011 all aggregation and brine storage dams will need to be compliant with the new conditions or it is likely we will have to apply for a TEP – the condition about the mechanism we use for managing the transition for compliance is still being negotiated with DERM in the DXP EA. We are currently working through a process to develop a set of standard dam design specifications after which we will engage a number of consultants to help us develop a methodology and budget estimate for upgrading the dams. This work will occur within the first half of 2011. From this point we can determine whether it is more economic and desirable to remediate and upgrade or rehabilitate and construct on new sites. Tipton RO Scheme: From 1 November 2011 evaporation dams are no longer a suitable means of water disposal. The original Field Development Plan included provision for a third evaporation dam to be built as required to facilitate continued production of the field for the current contracted sales. The RO scheme will replace this. A detailed concept select study was conducted to review several options – do nothing, utilisation of spare Daandine capacity via interconnecting pipeline and Tipton RO facility. The detailed analysis and select process was based firstly, on the six operational priorities, and secondly on the operational flexibility to transfer water for ops and to facilitate the dam upgrades in each PL. The RO plant will enable us to treat the water from the Tipton field, SIS well trial, extended pilot programs in Plainview and Meenawarra and facilitate the drawdown of the existing dams within the 3 year TEP period for retrospective compliance. The project will consist of a 12ML RO plant, 50ML utility dam, 960ML brine storage dam, 400ML feedwater dam, 400ML treated water dam (all dams constructed to the new brine dam / aggregation dam specifications), interconnecting piplines and export pipelines to take the treated water to Glenelg and another farm for irrigation (likely Grassdale at this point – starting negotiations). The treated water will be amended and used as a resource on the farms for beneficial use in irrigation. Currently the project is due to award an RO contract and begin detailed design of the plant, interconnecting pipelines and export lines. The dam design reports are due to be submitted to DERM at the end of November. BU applications are currently being developed and initial talks with Grassdale have commenced but are in very early stages. NOTE: the DXP EA is required for construction of this project to commence and we do not have a valid compensation agreement in place for Duntroon/Grassdale - the land owners are aware of our intent but this process has not been formalised. River Road / Glenburnie Pipeline.   A 20 km water pipeline is planned to be constructed to join two pilots at River Road and Glenburnie to the future water treatment plant at Tipton. This pipeline will connect to an existing pipeline west of Cecil Plains to allow the water to be pumped to the future Tipton West Reverse Osmosis plant for treatment. The pipeline is planned to run south along Wilkins road within the road reserve in so much as possible. Negotiations are ongoing with Council and landowners at present. A transfer dam and small pump station will be constructed on Arrow’s property to facilitate the pumping of water to Tipton West. Dam Remediation and Upgrade Study Currently all the dams (excl. CGPF oily water dams) in service on Daandine, Tipton, Kogan and Stratheden will need to be upgraded to comply with the newly imposed retrospective conditions if it is intended for them to remain in service. As of the 1 November 2011 all aggregation and brine storage dams will need to be compliant with the new conditions or it is likely we will have to apply for a TEP – the condition about the mechanism we use for managing the transition for compliance is still being negotiated with DERM in the DXP EA. We are currently working through a process to develop a set of standard dam design specifications after which we will engage a number of consultants to help us develop a methodology and budget estimate for upgrading the dams. This work will occur within the first half of 2011. From this point we can determine whether it is more economic and desirable to remediate and upgrade or rehabilitate and construct on new sites. Tipton RO Scheme: From 1 November 2011 evaporation dams are no longer a suitable means of water disposal. The original Field Development Plan included provision for a third evaporation dam to be built as required to facilitate continued production of the field for the current contracted sales. The RO scheme will replace this. A detailed concept select study was conducted to review several options – do nothing, utilisation of spare Daandine capacity via interconnecting pipeline and Tipton RO facility. The detailed analysis and select process was based firstly, on the six operational priorities, and secondly on the operational flexibility to transfer water for ops and to facilitate the dam upgrades in each PL. The RO plant will enable us to treat the water from the Tipton field, SIS well trial, extended pilot programs in Plainview and Meenawarra and facilitate the drawdown of the existing dams within the 3 year TEP period for retrospective compliance. The project will consist of a 12ML RO plant, 50ML utility dam, 960ML brine storage dam, 400ML feedwater dam, 400ML treated water dam (all dams constructed to the new brine dam / aggregation dam specifications), interconnecting piplines and export pipelines to take the treated water to Glenelg and another farm for irrigation (likely Grassdale at this point – starting negotiations). The treated water will be amended and used as a resource on the farms for beneficial use in irrigation. Currently the project is due to award an RO contract and begin detailed design of the plant, interconnecting pipelines and export lines. The dam design reports are due to be submitted to DERM at the end of November. BU applications are currently being developed and initial talks with Grassdale have commenced but are in very early stages. NOTE: the DXP EA is required for construction of this project to commence and we do not have a valid compensation agreement in place for Duntroon/Grassdale - the land owners are aware of our intent but this process has not been formalised. River Road / Glenburnie Pipeline.   A 20 km water pipeline is planned to be constructed to join two pilots at River Road and Glenburnie to the future water treatment plant at Tipton. This pipeline will connect to an existing pipeline west of Cecil Plains to allow the water to be pumped to the future Tipton West Reverse Osmosis plant for treatment. The pipeline is planned to run south along Wilkins road within the road reserve in so much as possible. Negotiations are ongoing with Council and landowners at present. A transfer dam and small pump station will be constructed on Arrow’s property to facilitate the pumping of water to Tipton West.

24. 24 Questions & Answers

25. CONTACT DETAILS Freecall:1800 038 856 Email: suratgas@arrowenergy.com.au