QUARTERLY REPORT FOR THE PERIOD ENDING SEPTEMBER 30, 2002

HIGHLIGHTS FOR THE QUARTER

1. Significant new oil field discovery at Jingemia-1, with 29 to 33 metre oil column and 4000 barrels per day oil flow potential in first target zone Dongara Sandstone with Jingemia Prospect target potential of up to 12 million barrels of recoverable oil.
2. Continuing drilling at Jingemia-1 targeting potential 27 billion cubic feet recoverable gas resource in High Cliff Sandstone.
3. Oil production testing at Jingemia No. 1, planned for mid November 2002.
4. Commencement of 2002 offshore Carnarvon Basin drilling with scheduled November 2002 drilling of Argos-1 in WA-254-P adjacent to the Legendre Oil Field targeting up to 11 million barrels of oil, if oil is present.
5. Continuing offshore Carnarvon Basin drilling program with scheduled mid November 2002 drilling of Ceres-1 in WA-261-P targeting up to 22 million barrels of oil, if oil is present.
6. Continuation of fracture stimulation and testing of good oil show zones in Vacqueros and Monterey Formation of up to 283 metres in San Antonio-1 in California in late October/early November 2002 targeting up to 106 million barrels of oil.
7. San Joaquin Basin, California Monterey horizontal fracture stimulation testing activity at Sunrise Gas discovery adjacent to Kingfisher, Raven and Condor Prospects with gas-in-place potential of up to 1.2 trillion cubic feet of gas.
8. Potential for strong industry interest in the Kingfisher, Raven and Condor Prospect Monterey horizontal drilling farmout opportunities resulting in drilling in first half 2003 with success at adjacent Sunrise Monterey horizontal drilling and fracture stimulation.
9. Planned early 2003 drilling in Queensland, Surat Basin permit ATP 574P of North Giligulgul-1 targeting up to 16 million barrels of oil, if oil is present, following farmout.
10. Net oil and gas production for the six months ending 30 June 2002 of 57 million cubic feet of gas and 5,103 barrels of oil equal to 166 barrels of oil equivalent per day for 16%-owned Kestrel Energy, Inc., a US NASDAQ public company (Code: KEST)
11. Continuing oil and gas production development activities in USA to increase oil and gas production in the USA producing properties in Louisiana, New Mexico, Oklahoma and Wyoming, to increase June 30, 2002 proved reserves of 2.3 million barrels of oil equivalent with a future undiscounted net cash flow of A$35 million and net present value of A$17 million at a discount rate of 10%.
12. Planned participation in a drilling program of up to ten wells in the next eight months.

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