Geodynamics Acquires Lightning Rig To Power Hot Rocks Drilling

Sydney, Feb 21, 2007 (ABN Newswire) - The company has decided to purchase a new drilling rig, one of the most advanced drilling rigs of its type and ideally suited for geothermal drilling in the Cooper Basin.

Over the last three to six months, we’ve been planning Habanero 3 and all of the preparations are ready for us to be drilling by mid-year.

The rig that we’ve purchased is called a Lightning Rig for lots of good reasons. And that’s manufactured in Huston by Le Tourneau. They might be known to a lot of people in Australia in the mining industry - they provide dump trucks and excavators and the like.

They are well set up in Australia with a head office in Brisbane. And that clearly is an advantage to us because they will maintain their spare parts and other support services for this rig in Brisbane.

Modern drilling rigs are not cheap. The new rig will cost us just over $30 million. Initially, we will be funding that out of equity.

But we don’t intend to keep that rig on our balance sheet. We have several options to refinance that rig and that’s what we’ll be doing quite quickly.

We’ve entered into a contract with Easternwell Group to operate the rig for us. They will crew it, they will maintain it and they’ll operate it.

We’ve chosen Easternwell Group because they have a good reputation as an expert drilling contractor. They have over 300 staff, they’re operating nine rigs at the moment and they’re also operating mainly in the Cooper Basin, and of course that’s exactly our area of interest.

So we are absolutely excited by that contract and I believe it will be a long-term relationship that develops between Geodynamics and the Easternwell Group.

Habanero 3 may well turn out to be the most significant onshore well ever drilled in Australia.

Why? Because it will first of all prove the concept of generating power from hot rocks, and it will launch a whole new industry in this country.

By the end of the year, we will have completed drilling Habanero 3, we will have completed doing a circulation test between Habanero 3 and Habanero 1, and we will have formally proven reserves - the first time that Australia will have formally proven its geothermal hot rock reserves.

And as I’ve said, once we launch into the 40 megawatt commercial development, that will enable us to be delivering power into the national grid by the end of 2010.

And that in itself will be a very important milestone because once that’s done, there is no stopping us.