SGL - Sydney Gas

Move on Knight gathers strength
By Jamie Freed
SMH December 1, 2005

A COLOURFUL group of Sydney Gas shareholders could soon tip former Olympics minister Michael Knight out of his chair.

Following a failed vote to oust Mr Knight as chairman at the company's annual meeting last week, some are understood to be calling for an extraordinary general meeting to air concerns about his management.

The Australian Stock Exchange yesterday allowed the company to suspend trading for up to 12 more days while it investigated whether a bloc of large shareholders might be acting in concert. The company might take the fight to court to collect evidence in the form of affidavits from these parties.

The ordeal began when a few shareholders speaking for substantial parcels cast votes against the company's proposed name change to Wollemi Energy and booted out a non-executive director, former Woodside Petroleum chief financial officer Robert Carroll last Friday.

It is understood that at least some of these shareholders plan to call an extraordinary meeting but deny they are acting as associates.

The rebellious shareholders include mining identity Peter "Talkie" Newton, Chimaera Capital's Ian Pattison and controversial Malaysian-born businessman Lee Ming Tee, but not all voted the same way on every resolution at last Friday's meeting.

Sydney Gas had long been a troubled company known for paying out large executive salaries and for fights with landowners in the Hunter Valley.

As part of a reform program, Mr Knight took the helm in July, signed a $93 million joint venture deal with AGL in September and agreed to cease operations in the Hunter.

The company has also made more timely and accurate disclosure a priority during Mr Knight's tenure but some of this has disappointed the market and the shares have fallen 18 per cent since July.

Some shareholders have been angered by the deal with AGL, arguing that it would give all coal-seam gas production to a single retailer cheaper than if it had been sold to the open market.

But chief executive Andrew Purcell countered: "This company was in a very bad situation toward the end of the financial year. We had very limited choices going forward and the AGL deal we believe was absolutely crucial on a number of fronts."

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MEDIA RELEASE
CAMDEN GAS PROJECT
SURFACE TO IN-SEAM (SIS) DRILLING PROGRAM UPDATE
5 December 2006

Sydney Gas Ltd is pleased to advise that the Camden Joint Venture has successfully
completed drilling the main branch of a second SIS well, Glenlee 15 (GL15), at Camden
on 1 December 2006. The well intersected the Upper Permian Bulli seam at the
measured depth (MD) of 871m with an average thickness of approximately 4m. Total
length of the well is approximately 2,032m of which approximately 1,161m has been
drilled horizontally through the coal seam. Earlier, the first SIS well GL14 was completed
on 2 November 2006 after drilling 1,160m in-seam through the Bulli seam.

Both GL14 and GL15 SIS wells were drilled from the same surface location where a
previous vertical well, GL10, is located. It is anticipated that further application of this
technique will allow commercial exploitation of gas reserves that would otherwise be
difficult to access because of land use constraints.

GL15 has been drilled to test the horizontal production performance of the Bulli seam;
nearby vertical wells have already demonstrated good production potential. A higher flow
rate and hence higher ultimate recovery is expected from a SIS well compared to a
vertical well due to a larger drainage area to be swept by a SIS well. Reservoir simulation
studies indicate well performance of 2-6 times that of a vertical well depending on
reservoir heterogeneity.

To reduce overall cost per GJ and optimise the productivity of the nearby area, the Joint
Venture plans to drill a new lateral of up to 500m for GL15 that will increase the in-seam
length of the well and potentially remove the need for drilling an additional vertical well in
the area.

Both the above wells along with earlier drilled directional wells LB11, GL16, GL12 and
GL13 will be dewatered and production tested before being tied into the gas gathering
system to produce gas to the Rosalind Park Gas Plant. The Joint Venture is planning to
drill additional SIS wells during this financial year, and is identifying locations where we
believe the technology will be applicable.

AGL Energy Ltd is the operator of the Camden Gas Project in a 50-50 joint venture with
Sydney Gas Ltd.

For further information please contact:
Sydney Gas Ltd
Dr Philip Moore
Managing Director
(02) 9253 5555

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