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MARRACOONDA 2 OIL EXPLORATION WELL

COOPER BASIN ATP 752P W

Well Proposal

NOVEMBER 2006

Circulation:

Bow Energy - RON PREFONTAINEBow Energy - PETER O’NEILL Bow Energy - KEITH MARTENS Victoria Petroleum – CHAS LANE Avery Resources – PAUL LIPSKIDepartment of Mines and Energy – ANDY KOZAK

PO Box 5244 Brisbane QLD 4001 Australia

℡Tel: +61(07) 3303-0650 Fax: +61(07) 3303-0651

Prepared by: Peter O’Neill, Operations Manager

Cecilia D’Ercole, Geologist

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TABLE OF CONTENTS

1. WELL DATA SUMMARY SHEET............................................................................................................3

2. SUMMARY....................................................................................................................................................4

3. INTRODUCTION.........................................................................................................................................5

4. REGIONAL GEOLOGY..............................................................................................................................8

4.1 BASIN STRATIGRAPHY...........................................................................................................................................................84.2 PROSPECT GEOLOGY............................................................................................................................................................114.3 SEISMIC SURVEYS.................................................................................................................................................................124.4 RESERVOIR POTENTIAL.......................................................................................................................................................134.5 SEAL ASSESSMENT...............................................................................................................................................................134.6 REFERENCE WELLS..............................................................................................................................................................13

5. POTENTIAL PETROLEUM RESOURCE..............................................................................................14

6. WELL DESIGN...........................................................................................................................................15

6.1 DRILL BITS AND DRILLING FLUIDS................................................................................................................................156.2 CASING DETAILS...................................................................................................................................................................156.3 CEMENTING DETAILS..........................................................................................................................................................166.4 TIME-DEPTH CURVE............................................................................................................................................................17

7. FORMATION / WELL EVALUATION...................................................................................................18

7.1 DITCH CUTTINGS...................................................................................................................................................................187.2 MUD LOGGING.......................................................................................................................................................................187.3 CORING.....................................................................................................................................................................................187.4 WIRELINE LOGGING.............................................................................................................................................................197.5 SIDEWALL CORING...............................................................................................................................................................197.6 TESTING AND FLUID SAMPLING.......................................................................................................................................19

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LIST OF TABLES AND FIGURES

TABLES

Table 1 Predicted TopsTable 2 Casing DesignTable 3 Cementing ProgrammeTable 4 Sample RequirementsTable 5 Sampling Intervals

FIGURES

Figure 1 Location Map for Marracoonda 2Figure 2 Enlarged map of Marracoonda 2 Drillsite Location Figure 3 Stratigraphy Table of the Cooper-Eromanga Basin Figure 4 Birkhead TWT (Near Hutton)Figure 5 Well logs from Marracoonda 1 – Top Hutton Figure 6 Time-depth curve

APPENDICES

Appendix 1 Emergency Contacts Appendix 2 Contractors ContactsAppendix 3 Bow Energy and JV partner Contacts Appendix 4 Government ContactsAppendix 5 Landowner Contacts Appendix 6 Mud Map

Well Name Designation Permit Basin OperatorJoint Venture Participants(Post Farm-In)

:Marracoonda 2:Exploration:ATP 752P:Eromanga:Bow Energy Ltd:Victoria Petroleum NL (25%) Avery Resources (50%Bow Energy Limited (15%) Ocellaris Oil Pty Ltd (10%)

Location :Latitude28° 11’ 52.9” SLongitude141°47’26.1” EEasting0577592 mENorthing6880607 mN

Seismic Reference :

Elevation GL (provisional) RT Height (provisional) Spud DateDrilling Contractor RigHunt Rig #2 RT to GL: Hunt Rig #2 KB to GL: Primary Objectives Secondary ObjectiveDepth to Primary Objective

AMG Zone 54, Datum: GDA 94 Line 90-GFW, SP 363;Approx. 30m North West of Marracoonda 1:77.1m:80.9 m ASL:January 2007:Hunt Energy & Mineral Co. Aust. P/L:Hunt Rig 6:3.8 m:4.16 m:Hutton Formation: Westbourne:1687 mRT

Estimated Total Depth (“TD”):1900 mRT

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1. WELL DATA SUMMARY SHEET

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2. SUMMARY

Marracoonda 2 is a re-drill of Marracoonda 1. Marracoonda 1 was drilled in 1993 by

Santos and plugged and abandoned as an uneconomical Hutton oil well.

Marracoonda 1 had shows from cuttings of 90% bright to moderately bright, solid pale

yellow white fluorescence with pale crush cut and thin patchy oil film. Log analysis

has interpreted 3m of oil pay at the Top Hutton with porosities averaging 15%.

A DST carried out over this zone and the interpreted oil water contact, reported flows

of 75 bopd and 75 bwpd turning to 150 bwpd with trace oil. An in-house review

suggests the reservoir is capable of producing at much higher flow rates. The oil was

44.3 degree API.

The objective is to penetrate the top of the oil zone and prove commercial oil flow

rates by a DST and then case the well as a Hutton oil producer.

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3. INTRODUCTION

The stratigraphic prognosis for Marracoonda 2 was made using tops from Marracoonda 1.

Marracoonda 2 will be located approximately 30 metres northwest of Marracoonda 1 on the Naryilco Station property (details below).

Property Name: Naryilco Station Owner: S Kidman CompanyManager: Teddy Brown

Travel approximately 158km west from Eromanga along the Cooper Developmental Road, then the Bulloo Developmental Road towards Thargomindah [or travel approximately 123 km west of Thargomindah towards Eromanga along the Bulloo Developmental Road]. Then take the Noccundra Hotel / Nockatunga Station turn off. From the turn off, travel approximately 19 km to Noccundra Hotel, then a further 85 km to the Santos / Epsilon / Tickalara turn off on the right. Take the right hand turn and travel approx. 25 km from the turn off, to the Marracoonda turn off on the right. Marracoonda 2 is approx. 4 km in on the right.

Refer mud map in Appendix 6.

Marracoonda 2

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Figure 1: Location Map for Marracoonda 2

Marracoonda 2

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Figure 2: Enlarged map of Marracoonda 2 Drillsite Location

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4. REGIONAL GEOLOGY

4.1 Basin Stratigraphy

Cooper Basin (late Carboniferous to late Triassic)

The Cooper Basin extends in a northeast direction from South Australia, pinching out against the Canaway Ridge (although seismic suggests it drapes the ridge at the Marracoonda 2 drill location). The basin was probably continuous with the age equivalent Galilee Basin across the Canaway Ridge, prior to uplift and erosion along that structure at the end of the Triassic.

The Cooper Basin overlies the Warrabin Trough, and is in turn completely overlain by the Eromanga Basin.

Basin formation was initiated in the late Carboniferous by downwarping of the craton during an extensional phase. This was followed by a complex tectonic history involving three major phases of deposition, two in the early Permian and one from the late Permian to end of deposition in the Triassic.

Many fault-controlled structural trends that originated in pre-Cooper Basin rocks were reactivated during deposition of the Cooper Basin. The basin filled with a succession of fluvio-lacustrine sandstones, shales and coals up to 1,800m thick in the south and up to 600m thick in north. The depocenter shifted from the southern basin in the Permian to the northern basin during the Triassic.

Considerable seismic surveying and petroleum drilling has been undertaken within the Cooper Basin, which holds significant established gas, gas liquids and oil reserves. Extensive Permian coals and dispersed organic matter are the main source of hydrocarbons which are trapped locally in sandstone reservoirs.

Eromanga Basin (early Jurassic to late Cretaceous)

The Great Artesian Basin is divided for convenience into several lobes, of which the Eromanga Basin is one. It is continuous with the Carpentaria Basin to north and across the Nebine Ridge with the Surat Basin to east, and there are lithological similarities with rocks in adjoining basins.

The Eromanga Basin overlies older basins including the Cooper Basin (completely), most of Galilee Basin, the Adavale Basin and Warrabin Trough, and the southern part of the Georgina Basin.

Basin formation was initiated in the early Jurassic with deposition in series of downwarps in older basins. Structural trends reflect those of the older basins – where the Eromanga Basin sits directly on basement, major structures are lacking.

The succession is up to 2,500m thick in south-west Queensland, consisting of alternating fluvial and lacustrine sandstones and siltstones (Jurassic), transgressive

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shallow marine mudstones and sandstones (Early Cretaceous) and regressive paralic, lacustrine and fluvial deposits (Late Cretaceous).

Established oil, gas and gas liquids reserves occur in the southwestern part, commonly in multiple vertically stacked reservoirs, the largest oil field being Jackson with 6,485 megalitres initial primary recoverable reserves, and the largest gas field Chookoo with 516 x 106m3 initial recoverable reserves

Extensive Permian coals and dispersed organic matter in the underlying Cooper Basin are considered the main source hydrocarbons, while several finer-grained Eromanga Basin units in lower part of the succession are also potential sources in selected areas.

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Figure 4: Stratigraphy Table of the Cooper-Eromanga Basin

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TABLE 1: PREDICTED TOPS

Formation Depth – RT Depth - Subsea Thickness(mRT) (mSS) (m)

Winton 3.8 77.1 624Mackunda 627.6 -546.7 117Allaru Mudstone 744.3 -663.4 176Toolebuc 920.2 -839.3 384Cadna-owie 1304 -1223.1 83Murta Mbr 1387.2 -1306.3 42Base Murta Sst 1429 -1348.1 25Namur 1453.6 -1372.7 92Westbourne 1546 -1465.1 113Adori Sst 1659.2 -1578.3 9Birkhead 1667.9 -1587.0 23Hutton Sst 1690.7 -1609.8 40Basal Jurassic 1730.4 -1649.5 15Permian 1745.6 -1664.7 127Basement 1872.4 -1791.5 31

TD 1900.0

Surface Elevation of GL = 77.1 m ASL; RT = 80.9 m ASL

4.2 Prospect Geology

Marracoonda 2 is the central north south trending closure in southwest-northeast trending anticlinorium.

A 127m section of Permian sediments overlies a local Pre-Permian paleo high. A much thicker section of Permian onlaps this high. Triassic sediments terminate ~10km to the northwest by non-deposition and/or erosion.

The Eromanga Jurassic sections were deposited on a rugose topography creating drape and compaction features. The area was structured again in Tertiary time enhancing pre-existing structures and creating the almost north-south fault immediately to the west of Marracoonda 1.

Marracoonda 2

Birkhead Time Structure Map

2ms contour

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4.3 Seismic Surveys

Seismic recorded in 1986 and 1990 form the bulk of the local data. All lines germane to the prospect were reprocessed by Bow Energy through Velseis in 2006.

Time mapping of the area shows a number of closures at Hutton level including the Marracoonda 1 structure.

Figure 4: Birkhead TWT (Near Hutton)

3 m

Marracoonda 1 Hutton

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Figure 5 : Well logs from Marracoonda 1 – Top Hutton

4.4 Reservoir Potential

The Hutton Sandstone has a calculated porosity of 15% and many wells in the area have flowed oil at greater than 1,000 bopd.

There are other potential oil zones in Marracoonda 1 in the Adori, Namur and Murta. Unless

the shows and/or logs in Marracoonda 2 are more definitive, these zones would not be

considered for testing until after the Hutton oil zone is depleted.

4.5 Seal Assessment

The Birkhead is a thick and competent seal in Marracoonda 1.

4.6 Reference Wells

Marracoonda 1 (30m south-west)

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5. POTENTIAL PETROLEUM RESOURCE

Within the primary Hutton sand reservoir the resource potential is an estimated 0.3 to1.0 MMBBLS oil.

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6. WELL DESIGN

6.1 Drill Bits and Drilling Fluids

For the 12-1/4” hole section of Marracoonda 2 the proposed bit will nominally be a Varel CH1GMS (IADC 117). This hole section will be drilled using a gel based mud system.

For the 8-1/2” hole section the proposed bit will nominally be a 5-blade 19mm cutter PDC type bit. This hole section will be drilled using a KCl Polymer based mud system.

6.2 Casing Details

STRING DETAILS CONDUCTOR SURFACE CASING PRODUCTION CASING

Hole Size 450 mm 311 mm (12¼”) 216 mm (8½”)Casing Size 406 mm (16”) 245 mm (9-5/8”) 178 mm (7”)Setting Depth 6 mGL 330 mRT (nominal) 1900 mRT (nominal)Designation 36# K55 BTC R3 23# K55 BTC R3Weight 53.57 kg/m

(36 lb/ft)34.16 kg/m (23 lb/ft)

Connection BTC BTCRange 3 3Optimum Torque BTC Marks BTC MarksFloat Equipment Float shoe, NR float

collar one joint off bottom

Float shoe, float collar one joint off bottom

Wiper Plugs Top Top and BottomCentralising At mid 1st joint and at

2nd and 4th collars above shoe

At mid 1st joint, 2nd and 4th collars and

each collar 20 m above and below any

potential pay zonesAccessories 11" 3K x 9⅝" casing

head7" slip and seal

assemblyThreadlock Shoe through to

1st connection above float collar

Shoe through to 1st connection above

float collarBOP Test Pressure 3,000 psi 3,000 psi

Table 2: Casing Design

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6.3 Cementing Details

SURFACE CASING PRODUCTION CASINGHole / Casing Size 12¼” / 9-5/8” 8½” / 7”Setting Depth 330mRT nominal 1900 mRT nominalCement Type Class A + 1% CaCl2 Lead – Class G with 16% Gel

Tail – Class G, Fluid Loss Additive

Cement Top Class A to surface Lead to 50m inside Surface Casing Shoe

Tail to 200m above Cadna- owie

Excess 100% in Open Hole 15% in Open HoleYield Class A: 1.18 cu ft/sack Class G + Gel: 2.87 cu ft/sk

Class G: 1.16 cu ft/skSlurry Density 15.6 ppg Lead: 11.8 ppg

Tail: 15.8 ppgAdditives TBA: Subject to lab tests TBA: Subject to lab tests

NB: If cementing services are carried out ex Moomba Class G cement may be used in lieu of Class A for surface casing cement.

Table 3: Cementing Programme

MARRACOONDA EAST 1 - ATP 752P Exploration WellDepth-Time curve

0

Drill 311 mm hole

Run & cement 245 mm casing, nipple up BOPs, run FIT

500Drill 216 mm hole

1000

1500

2000

0 2 4 6 8Days from spud

10 12 14 16

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6.4 Time-Depth Curve

The time-depth curve prognosed for Marracoonda 2 is shown in the following Figure 10.

Figure 6: Time-Depth Curve for Marracoonda 2

Dep

th m

KB

Run

DST

#1

Dri

ll 21

6 m

m h

ole

Run

DST

#2

Dri

ll 21

6 m

m h

ole

Run

wire

line

logs

Run

plu

gs o

r cas

ing

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7. FORMATION / WELL EVALUATION

7.1 Ditch Cuttings

In order to meet legislative and internal requirements drill cutting samples are to be taken as per Table 4 and Table 5 below.

Set Size Number Type In ForA 250g 1 Washed

& air dried

Minigrip bag Qld NRM&W

B 1 Washed SamplexTray

Bow Energy

Table 4: Sample Requirements

Sample Interval From To10m Conductor Shoe 1000m3m 1000m TDNote1 - if requested by Bow– samples may be circulated and taken at one metre intervals Note2 - samples are to be circulated on the first drill breaks from the primary and secondary objectives – results are to be given immediately to Bow to determine if testing is required.

Table 5: Sampling Intervals

7.2 Mud Logging

Mud logging services will be used from spud to total depth, to provide continuous 24 hour surveillance, and digital recording at 0.5 m intervals, of drilling operations including:

o Measured deptho Rate of penetrationo WOBo RPMo Mud pit levelso Pump stroke rateo Pump pressureso Torqueo Total gas detectiono Chromatographic gas analysis

7.3 Coring

No coring is planned for this well.

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7.4 Wireline Logging

No logs are programmed for the 12 ¼” hole section.

A normal logging suite consisting of Resistivity, Micro-Resistivity, Density, Neutron, Gamma Ray and Compressed Sonic will be run in the 8 ½” hole section (HALS-MCFL-LDL-CNL- GR-BHC).

7.5 Sidewall Coring

30 Side Wall Cores (SWC) equivalent to one run/gun are to be taken post logging.

7.6 Testing and Fluid Sampling

An on-bottom on-penetration DST is planned for on penetration of 1m into the Hutton Sandstone contingent on hydrocarbon shows.

A contingent open hole DST may be carried out on any of the secondary targets dependent on hydrocarbon shows (see Note2 on sampling in section 7.1) and wireline log response.

If crude oil is recovered during any DST, four 5 litre can samples will be taken for analysis. The cans must be new and free of any contaminants. Preliminary analysis of the API gravity and pour point of the oil will be made at the wellsite. One 500ml oil sample in a glass bottle Teflon sealed with a screwed top must be taken for Qld NRM&W purposes from each DST.

If formation water is recovered during any DST, four 1 litre plastic bottle samples will be taken for analysis. One 500ml water sample in a glass bottle Teflon sealed with a screwed top must be taken for Qld NRM&W purposes from each DST. Sample bottles must be new and free of any contaminants. Preliminary analysis of water resistivity will be made at the wellsite.

One 1 litre plastic bottle sample of drilling mud will be taken and preserved with biocide immediately prior to each DST and prior to logging.

One 1 litre plastic bottle sample of make up water used for drilling mud will be taken during drilling of the well.

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APPENDIX 1

EMERGENCY CONTACTS

Organisation Phone NumberAll Emergencies 000

For all emergencies 000 shall be used. “Triple-zero” (000) operators will co-ordinate the response of ambulance, hospital, and other services including RFDS as required once initial emergency notification has taken place.

Local support numbers below are for administrative use and local “non-emergency” related issues.

Organisation Contact DetailsQld Ambulance Service (QAS) & Quilpie HospitalToni Murray – Director of Nursing

Tel: (07) 4656 0100Fax: (07) 4656 0102VHF Channel 85UHF Channel 5

QAS Charleville Office In Charge

Tel: (07) 4654 1970Fax: (07) 4654 2195

Charleville Hospital Tel: (07) 4654 4300Quilpie Doctor Tel: (07) 4656 1158Royal Flying Doctor Service – 24 hour medical support

Tel: (07) 4654 1443

RFDS – Charleville Tel: (07) 4654 1233RFDS – Moomba Tel: (08) 8088 1188

Local Gravel Airstrips:o Naryilco Station Airstrip (near Naryilco Homestead) - approximate 42 km in a

straight SSE of Marracoonda #2. NB: Contact Naryilco landowner regarding use of airstrip (refer Appendix 5 for landowner contact details).

o Tennappera Outstation Airstrip – approximately 16 km in a straight line NE of Marracoonda #2. NB: Contact Naryilco landowner regarding use of airstrip (refer Appendix 5 for landowner contact details).

o Airstrip at Noccundra Hotel approx 114 km via road NE of Marracoonda 2.

Local Helicopters:o 3 Rivers Helicopters, Nockatunga Station – Simon Cobb. Tel: (07) 4654 6991; Fax:

(07) 4655 4543; Direct: (07) 4655 4542.

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APPENDIX 2

CONTRACTORS CONTA CTS

Organisation Contact DetailsHunt Energy and Mineral Company (Drilling contractor)

Tel: (08) 8322 7511Fax: (08) 8322 7533Chris Brown: 0429 838 202

Halliburton – Moomba (Cementing)

Tel: (08) 8675 6610 & (08) 8675 6611Fax: (08) 8675 6662Service Coordinators: James Collins / Rick Stevenson

Halliburton – Roma (Cementing)

Tel: (07) 4622 4588Fax: (07) 4622 3674Paul Larkins

Schlumberger – Moomba (Wireline logging)

Tel: (08) 8675 6608Fax: (08) 8675 6638Herdy Nizar – Mobile: 0401 710680

DST Australia P/L (Drill stem testing)

Phone: (07) 4622 2655Fax: (07) 4622 1150Craig & Sue Thorn

Bill PeglerEarthmoving, Water Trucks etc

Phone: (07) 4656 4885

RMN Drilling Fluids Andre Skujins(Mud engineer)

CDMA: 0428 833 872Mobile: 0409 833 872Work: (08) 8338 7266

Collin Higgins & Associates (Mud-Logging)

Phone / Fax: (08) 9364 6165Mobile: 0418 911 446

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APPENDIX 3

BOW ENERGY AND JV CONTACTS

Bow Energy:

Level 5, 60 Edward Street,Brisbane, QLD 4000.PO Box 5244, Brisbane QLD 4001.

Main Switch: (07) 3303 0675Facsimile: (07) 3303 0651

Name & Position Work MobilePeter O’Neill – Operations Manager poneill@bowenergy.com.au

(07) 3303 0676 0427 000 630

Keith Martens – Exploration Manager keith@bowenergy.com.au

(08) 9481 4118 0411 461 953

Ron Prefontaine – Managing Director ron@bowenergy.com.au

(07) 3303 0647 0439 033 351

Joint Venture Participants:

Name & Position Work MobileVictoria PetroleumChas Lane – Exploration Manager chas@elstree.com.au

Tel: (08) 9220 9800Fax: (08) 9220 9801

0417 185 319

36th Floor, Exchange Plaza, 2 The Esplanade, Perth, WA, 6000.PO Box Z5441, St Georges Terrace, Perth, WA, 6831.Avery ResourcesPaul Lipski – Managing Director plipski@averyresources.com.au

Tel: (07) 3012 9220Fax: (07) 3012 9411

0412 042 217

11th Floor, 144 Edward Street, Brisbane, QLD, 4000GPO Box 5238,Brisbane, QLD, 4001

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APPENDIX 4

GOVERNMENT CONTACTS

DNRMW:

Qld NRM&W Gas & Petroleum Emergencies Incident Notification - 24 hours

0419 888 575

Qld NRM&W – SE Region Mines Regional Inspector Petroleum & Gas Brendan Galloway

(07) 3238 37810419 720 501

Qld NRM&W – SE Region Mines State Petroleum EngineerAndy Kozak andy.kozak@nrm.qld.gov.au

Tel: (07) 3238 3739Fax: (07) 3405 5349

Department of Natural Resources, Mines & Water Cnr Main & Vulture Streets,Wooloongabba

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APPENDIX 5

LANDOWNER CONTACTS

Naryilco Station

Property Description: Lot 1 on CN1

Owners: S Kidman & Co Ltd; Tel: (08) 8334 7100

Manager: Teddy Brown; Tel: (07) 4655 4362

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APPENDIX 6 – MUD MAP