Galilee Energy Ltd (Eastern 68%)

• Exploring for coal seam methane and petroleum in the Galilee Basin of central Queensland
• The Galilee Basin contains extensive coal measures
• In joint venture with AGL Energy Limited, a leading Australian energy company
• Area also prospective for conventional petroleum

Galilee Energy holds exploration permits ATP 529P and ATP 799P in central Queensland. The tenements combined cover an area of approximately 10,000 square kilometres and are located 80km northwest of the Barcaldine gas-fired power station which has a gas pipeline connection to Moomba and Brisbane.

In January 2005 a comprehensive technical review was completed by an independent expert confirming the prospectivity of these leases for coal seam methane and conventional petroleum. In July 2007 an additional exploration hole was drilled in the Rodney Creek area in the southern part of tenement ATP 529P. Following encouraging test results, Galilee developed plans to drill a 5 spot production pilot and further exploration wells in and around the Rodney Creek area aimed at establishing a commercial CSG resource.

In July 2008, a $37 million investment by AGL Energy Limited in the project was announced.

Under a farmin agreement AGL will acquire 50% of ATP 529P.

AGL is providing the capital to build on Galilee Energy’s exploration and test work. As one of Australia’s leading integrated energy companies, AGL is also bringing to the project its expertise in exploration, development, production and marketing.

AGL will be the operator and will lead a two stage program under a Joint Operating Agreement. Stage 1 will involve the Rodney Creek production pilot in ATP 529P, and Stage 2 will involve an exploration and appraisal work program. Work on Stage 1 is expected to commence before November 2008. The parties have also entered into a 10 year gas marketing agreement.

Consultants JR Holland & Associates concluded in a preliminary Exploration & Well Completion Report for the Rodney Creek 8 well in ATP 529P that

• the gas resource is substantial
• is characterised by 24 metres of gassy coal measures (considered thick enough to enable coal seam gas production)
• coal seams are dull, low in ash and exhibit strong cleating (fracturing), and
• gas composition is of pipeline quality with 97-98% methane.

The Rodney Creek area has a Gas in Place estimate of >20TCF based on the observed coal thicknesses and the measured gas contents of the coals in Rodney Creek 8.

With AGL engaged in ATP 529P, Galilee Energy will focus on capital raising to fund further exploration and development in ATP 799P.

Presentation to Shareholders

Galilee Energy Shareholder Presentation

Conventional Petroleum

Expert advice suggests that the Galilee area is also prospective for conventional hydrocarbons. A desktop study has indicated the possibility for conventional oil and gas to exist in a structure known as Bromvil which occurs over both ATP 529P and ATP 799P. The next stage of the study will be undertaken once the current CSG exploration programme has been finalised.

A total of six petroleum exploration and two deep stratigraphic wells have previously been drilled within the permit areas. Most encountered significant hydrocarbon shows and minor oil and gas recoveries have been made from subsequent testing. Other petroleum wells to the south, east and west of these permits have also encountered significant hydrocarbon shows.