DAANDINE

LOCATION
Immediately to the south of the Kogan project in the Surat Basin, approximately 30km west of Dalby in southeast Queensland, Australia.

EQUITY
Although Arrow is the 100% owner and operator of the Daandine field.

FIRST GAS

The Daandine Project produced first gas in September 2006.

GAS CONTRACTS

The gas produced from Arrow’s Daandine field is currently supplied to the Daandine Power Station, located in close proximity to Arrow’s operations at Kogan North and Daandine.  Arrow has a Gas Tolling Agreement with a subsidiary of the Australian Pipeline Trust which provides for the ownership and operation of the 27.4 MW Daandine Power Station.  The agreement establishes a commercial mechanism for Arrow to feed coal seam gas from the Daandine project into the power station and to off-take electricity for sale by Arrow to New South Wales Government-owned retailer Country Energy under a long term Power Purchase Agreement.  First electricity was generated in December 2006.

Any available but unused ramp-up gas from the Daandine field is being sold to CS Energy.

Arrow also has a commercial agreement to supply gas from the Daandine field to AGR Group company, Liquegas Energy, for use as a feedstock to their proposed LNG Plant.  Our agreement with Liquegas is initially for two petajoules (PJ) per annum over a period of 15 years.  First gas supply is expected in 2009.

GAS PRODUCTION
Total gas production for the year from September 2006 to 30 June 2007 was 0.5 PJ.  Arrow is targeting a gross production target of 2.148 PJ in fiscal 2008. 

ELECTRICTY SALES

Total electricty sales for the year from December 2006 to 30 June 2007 were 17,233 MWh.

RESERVES

Reserve certifiers Malkewicz, Heuni and Associates have confirmed a sizable reserves base at the Daandine field with the certification resulting in 1P, 2P and 3P gross reserves of 8 PJ, 120 PJ and 196 PJ respectively.

PRINCIPAL EXPLORATION TARGETS
Walloon Coal Measures CSG