State Gas Limited advised that the first lateral of the Rougemont-3 horizontal well has reached its full target length of approximately 1,300 metres with 97.8% (1,263.3 m) within the target coal seam. Excellent gas shows were observed throughout the drilling of the lateral, with gas peaks of up to 29.5% and an overall average throughout the lateral of 24%, of which 99% was methane. The lateral has passed in close proximity to the Rougemont-2 vertical well, enabling easy connection between the two wells to connect the full nearly 1,300 metres of the lateral with the gas production well bore in Rougemont-2. The first lateral will be cased for production, prior to commencement of drilling of the second lateral some 30 m below the first. Once the second lateral has been completed and cased the Rougemont-2 vertical well will be combined with the Rougemont-3 horizontal well, and the pair
will be placed on production. The Rougemont-3 horizontal well is being drilled to confirm the gas potential of the Rougemont area within State Gas' 100%-owned Rolleston-West Project (ATP 2062) and to provide gas for a future pipeline to connect the project area with the east coast gas pipeline network. The well is being drilled laterally through the coals of the Bandanna Formation (in commercial production at the Arcadia Valley to the south-east) to meet the vertical Rougemont-2 well. State Gas will provide further updates as drilling progresses. This announcement was approved for release by Mr. Richard Cottee, Executive Chairman.