Objectives and Strategy

Pure Energy is an exploration and appraisal focused company. Our ultimate objective is to become a leading coal seam gas (“CSG”) producer in Queensland and the primary CSG producer in Tasmania.

To achieve these objectives, Pure Energy’s business strategy is as follows:

• Progress our most promising prospects into pilot and commercial production as quickly as possible, in order to accelerate revenue generation
• Maintain a balanced portfolio of exploration, appraisal, and developmental assets, so that Pure Energy can continue to grow while generating revenue
• Use appropriate technology, whilst keeping costs low
• Modularize developments wherever possible, to reduce capital exposure and accelerate revenue generation
• Share costs, by leveraging existing infrastructure, and through appropriate joint ventures

Our implementation plan has three phases:

• Phase 1 – Appraisal and Delineation (while securing Market MOU’s)
• Phase 2 – Pilot Project(s), Certification, and Contracts
• Phase 3 – Modular Development

If Phase 1 & Phase 2 are successful, Phase 3 would see Pure Energy develop its CSG fields into producing assets. It is proposed that a raising of capital on the market and / or joint ventures would likely fund this phase.

Pure Energy has access to what it believes are prospective concessions, has a rigorous business plan, and an experienced team to ensure effective implementation. The Company is targeting fast-track reserves certification in both Tasmania and Queensland.

Overview of the Assets

The Company has the following Coal Seam Gas (CSG) interests in two main areas:

• Queensland’s Bowen Basin
  • A 93% interest in the CSG rights in tenements ATP758P, ATP759P, ATP 806P (granted 17 Novemer 2006) and 100% interest in both the CSG and Conventional Rights in tenement ATP831P (granted 6 November 2006), a total area covering approximately 15,990 km2.
  • A 93% interest in the CSG Rights in tenement applications ATP756P(A), area covering approximately 2,186 km2.
• A 93% interest in the CSG Rights in Tasmanian tenement SEL 32/2003, covering 11,295 km2

The Company believes that these two project areas constitute a balanced portfolio of exploration, appraisal, and quickly developable assets.

Pure Energy has entered into a Farmin Agreement with Arrow Energy NL(Arrow). Under the agreement Arrow will have an option to earn up to 50% interests in the CSG rights in one of the two granted Queensland Permits, and one of the three application permits within 30 days of the permit being granted.

On the 12 October 2006 Arrow announced its election to farmin into the CSG rightsof tenement ATP 759P. Read more (pdf file)

Under the Farmin Agreement, Arrow has an option to earn up to 50% interest in the CSG rights in the tenement.

On the 6 November, the Queensland Government advised the Company it is the preferred bidder for permit ATP852 P.The permit block covers an area of approximately 1050 km2 of highly prospective acreage, and has been acquired primarily as a coal seam gas (CSG) exploration permit.

The permit further expands Pure’s already extensive CSG acreage, and moves it into the Walloon CSG Play Fairway which is proven to be productive and prolific in nearby fields and close to existing infrastructure and markets. Pure will hold 100% interest in both the CSG and conventional rights in this permit. Read more (pdf file)

On the 7 December 2006 Arrow announced its election to farmin to the CSG rights of tenement ATP 831P Read more (pdf file).

See figure on the right: Arrow/CH4/Pure Combined tenements