Electricity Sales.

Arrow Energy is committed to extracting the maximum value from its great resource base - integration of our business across the entire coal seam gas value chain enables us to secure higher overall gas realisations. The company has investments in 145 mega watts (MW) of electricity generating capacity. By the end of 2009 we will have 370 MW of generating capacity.

Arrow Energy sold 615,368 MWh for the year ended 30 June 2008.

Daandine Power Station

Arrow has a Gas Tolling Agreement with a subsidiary of the APA Group 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.

Electricty sales for the year to 30 June 2008 were 233,788 MWh.

Yabulu Power Station

Arrow and AGL Energy share the right to dispatch the electricty generated from the 230 MW Yabulu Power Station in Townsville under a long term agreement with Transfield Services.

Gross electricity sales for the year to 30 June 2008 were 763,160 MWh (381,580 MWh net to Arrow).

Braemar 2 Power Station

Arrow Energy has partnered with ERM Power to jointly develop the 450 MW Braemar 2 Power Station and high pressure gas pipeline. Arrow will take a half share in the estimated $545 million power station to be located approximately 40km southwest of Dalby in southern Queensland and completed in early 2009. It will be adjacent to the Braemar 1 power station.