KOGAN NORTH PROJECT

LOCATION
The Surat Basin, 40km west of Dalby in southeast Queensland, Australia.

EQUITY
Arrow is the operator and Queensland government-owned CS Energy has earned 50% by funding $13.1 million towards the initial appraisal and development of the project.

FIRST GAS

First gas was sold from field under contract to CS Energy (Queensland's largest electricity generator) on 23 January 2006.

GAS CONTRACTS
Arrow is under a 15 year contract to supply 4 PJ/year to CS Energy (total gas supply 60 PJ).  CS Energy takes ownership of the gas at the inlet to their gas processing facility, located in close proximity to Arrow’s production fields at Kogan North and Daandine.  The gas is transported via the Roma to Brisbane Pipeline to CS Energy’s Swanbank ‘E’ power plant near Ipswich for use in electricity generation.

GAS PRODUCTION

Gross field production for the year to 30 June 2007 was 1.949 PJ.  Arrow is targeting a gross production target of 4.416 PJ in fiscal 2008.

RESERVES

In 2004, reserve certifiers Malkewicz, Heuni and Associates confirmed a reserves base at the Kogan North field with the certification resulting in 2P and 3Pgross reserves of 84 PJ and 240 PJ respectively.

PRINCIPAL EXPLORATION TARGETS
Walloon Coal Measures CSG

CENTRAL GAS PROCESSING FACILITY
The Central Gas Processing Facility (CGPF) at Kogan North is owned and operated by the Australian Pipeline Trust (APT).  APT charges a tolling fee to process the raw gas from the Kogan North field under a usage agreement. The initial layout of CGPF consists of 3 gas compressors to compress the gas to Roma to Brisbane Pipeline (“RBP”) operating pressure, and a dehydration unit to dry the gas to sales gas specification. The facility is designed for future expansion with minimal additional cost when required.