norman marshall executive director & cfo leeanne bond non

SUMMARY

Liquefied Natural Gas (LNG Ltd) is the only independent

player developing a Gladstone LNG project that is yet to secure coal seam gas (CSG) supply for the initial stage of its US$720 million Fisherman’s Landing (FL) LNG project (i.e. 1.5mtpa capacity for 1st train). Current discussions centering on securing gas supply to the FL LNG project are crucial - securing gas supply would allow LNG Ltd to attract

LNG offtake, project financing and construction to recommence. Concurrently, LNG Ltd continues to seek a strategic partner and LNG buyer for its Fisherman’s Landing project, with a view to developing a more integrated gas-to-LNG project.

We envisage that LNG Ltd would look to select a partner that will endorse the company’s technology, take an equity

stake in the project in order to help fund capital costs and buy LNG product from Fisherman’s Landing. Six potential strategic partners are under confidentiality agreements and a further two parties are undertaking

detailed due diligence on the OSMR® LNG process technology with a view to becoming strategic partners in both the marketing of the OSMR® technology and in the development of Fisherman’s Landing. We have not made any assumptions as to who the interested parties may be, as it is difficult to speculate on how and when such arrangements would eventuate.

Once a gas supplier/s and strategic partner/s has been finalised (expected to be resolved within 3-5 months), the

company is then in a position to move to final investment decision (FID) and recommence construction.

FL project compares well with other Gladstone LNG players Of the five LNG projects at Gladstone, Fisherman‟s Landing

appears to be the most progressed on the downstream side, with first LNG sales expected in early 2014, subject primarily to the approvals for the upstream gas supplier.

Continued over page

LIQUEFIED NATURAL GAS (LNG)

PPrrooggrreessssiinngg ttoowwaarrddss FFIIDD oonn FFiisshheerrmmaann’’ss LLaannddiinngg

SPECULATIVE

19 November 2010

Share Trading Info

ASX Code LNG

Current Share Price (cps) 57.0

Trading Low /High (Rolling Year) 30c - 133c

Mkt Captalisation (diluted) $m 126.5

Net Cash Sept 2010 $m 14.8

Issued Capital (m)

Total Ordinary Shares 213.3

Unlisted Options 8.5

Total Diluted Securities 221.9

Board of Directors*

Phillip Harvey Non Executive Chairman**

Richard Beresford Non Executive Director

Paul Bridgw ood Executive Director

* Further details on 8

** To retire on 22 November 2010

Major Shareholder

Copulos Group 12.7%

Dart Energy 7.5%

Paul Bridgw ood 6.2%

Sasigas Nom. (M Brand Family Acc) 6.0%

Norman Marshall Executive Director & CFO

Leeanne Bond Non Executive Director

Maurice Brand MD & CEO

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LNG 6-month Price Chart

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Total capital expenditure (downstream) for Fisherman‟s Landing compares favourably with other planned LNG projects on a cost-per-mtpa basis. The cost for two LNG trains (3mtpa)

at Fisherman‟s Landing is estimated at $400/t. In comparison, the downstream cost for GLNG (including developing the Greenfield site at Curtis Island and two LNG trains) is estimated at $9.5 billion for two trains (7.2mtpa), or ~$1,300/t. For QCLNG, the total downstream capital cost is

estimated at $9.0 billion for two trains at Curtis Island (8.5mtpa), which is equivalent to ~$1,000/t. (Please refer to Table 4 on page 13).

The Fisherman’s Landing site is located around

established infrastructure, whereas the other four Gladstone LNG projects are located on Curtis Island (which is

a greenfield development) and will require significant capital to connect supporting infrastructure (i.e. pipes) and to prepare shipping channels.

Fisherman‟s Landing is likely to require less wells and less

reserves for its initial capacity. This significantly lowers the operational risk in regard to maintaining constant CSG supply.

Technology Advantages over Traditional Methods

The company‟s OSMR® technology is an enhanced LNG liquefaction process developed by LNG Ltd that is more simple, cost-effective and efficient than traditional LNG processes. Its

advantages over traditional methods include better plant efficiency (that leads to a +30% saving in processing costs compared with traditional methods), a faster plant start up, a smaller required site and better plant availability (i.e. less down time).

Corporate Appeal Hypothetically, an alliance with Metgasco that will be the only independent, vertically integrated LNG player in Gladstone. We believe that such a scenario is likely to greatly increase LNG Ltd‟s corporate appeal, in particular:

1. The major energy companies who are currently developing large-scale Gladstone LNG projects looking for a smaller scale (i.e. less capital intensive) LNG facility.

2. LNG customers looking to reduce their reliance on supply from the majors.

Adequate Funding With a cash balance of $14.845 million as at 30 September 2010, and cash levels at the end of the March 2011 quarter to be supported by an expected reduction in operational cash burn (to ~$0.5-$0.7 million per month), LNG Ltd (in the absence of

securing a strategic partner) should have sufficient funding to

meet working capital requirements for at least two years.


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11.. CCOOMMPPAANNYY OOVVEERRVVIIEEWW 1.1 Background

The company was incorporated on 15 August 2002 as Kimberley LNG P/L (KLPL), with its main business activity being the development of a business model for the production and sale of liquefied natural gas (LNG), utilising gas as feedstock for LNG plants and R&D into

innovative LNG production, storage and transport technology, including the technology patents.

KLPL changed its name to Liquefied Natural Gas P/L in January 2004 and after securing two acquisitions (including LNG International P/L) and raising capital, the company listed on the ASX on 14 September 2004.

The company has filed two domestic patent applications in approximately 20 countries and regions around the world as part of its international patent program. The 1st patent is titled “A method and system for production of liquid natural gas” and the 2nd patent is titled “Boil-off gas treatment process and system”.

The patents cover an improved process called the Optimised Single Mixed Refrigerant (OSMR®) process developed by LNG Limited. At the core of the process is a very simple single mixed refrigerant cycle

enhanced by the addition of ammonia refrigeration. Subject to approval, the patents will be in effect for 20 years.

1.2 Organisational Structure

Gladstone LNG (LNG Ltd: 100%) is the entity responsible for the Fisherman‟s Landing Project. GLNG is responsible for the proposed

planning, construction and operation of the LNG plant, including treatment and liquefaction facilities, storage tanks and jetty/ship loading facilities.

LNG Technology Ltd (LNG Ltd: 100%) is the LNG technology and development entity within the group and the owner of the company‟s LNG process technology called OSMR®.


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22.. FFLLAAGGSSHHIIPP PPRROOJJEECCTT –– FFIISSHHEERRMMAANN’’SS LLAANNDDIINNGG

2.1 Overview

Fisherman‟s Landing, located in the Port of Gladstone, QLD is a mid-scale LNG project with a planned LNG production of 3mtpa. LNG Ltd are targeting commencement of operations in 2012 and first LNG sales in early 2014, subject primarily to the approvals for the upstream gas supplier.

The company has planned the Fisherman‟s project in two stages, with

the first stage consisting of operating a single processing train (Train 1), which will provide a guaranteed capacity of 1.5mtpa. A second train (Train 2), will follow, which will double the operational capacity of the plant to a guaranteed 3mtpa. The expected life of the project is 25 years.

Due to the mid-scale production rate of the plant, LNG carriers will enter the port once every three weeks with the operation of Train 1. This frequency will double when Train 2 is installed. During the LNG loading process, the LNG carrier will be berthed for approximately 24 hours.

Figure 1: Artistic Impression of Gladstone LNG Project Figure 2: Aerial Illustration of Gladstone LNG Project

The plant capacity is very scalable, from a single-train capacity range from 0.5mtpa to 2.2mtpa of LNG, to multi-train plants that can compete with larger LNG trains that are typically of a capacity of ~4.5mtpa. Trains can be easily added as additional gas is proven or

discovered.


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2.1.1 Site Infrastructure and Approvals

Access to existing infrastructure and services available include: A natural deepwater harbour with dredging approvals for a larger

Targinie Channel in place. Power and road access directly to the site; The project site is situated on the edge of the harbour, thereby

minimising the distance to the load-out facility;

An existing jetty can be used to move product on and off the LNG ship.

A low cost trestle jetty will be constructed to connect LNG storage

tanks with load-out facilities. The port authority, Gladstone Ports Corporation is also undertaking

structural modifications and extensions to the existing Fisherman's Landing Wharf and dredging of the berth pocket and nearby channel. Early site works, including civil works and deep soil mixing to prepare LNG tank foundations, have commenced and an Environmental Authority has been granted, based on the benefits of the company‟s OSMR technology, which is 30% more efficient than traditional LNG

processes, thereby consuming 30% less fuel in the LNG plant and producing 30% less CO2 emissions. LNG Ltd has now obtained all environmental approvals for its downstream requirements.

2.1.2 Differentiating Factors

Table 1: LNG Ltd Advantages over Conventional Development Strategy

Source: LNG Ltd Presentation, 29 June 2010

Project Aspect LNG Conventional

Development Strategy Development Strategy

Economic Viability 1.5mtpa required for FID 4-8mtpa required for FID

Securing Gas Supply Minimum 1.5 tcf Minimum 5 tcf

Accessing LNG Markets Partnerships or Direct marketing to users

direct marketing to users or internal trading

Short term contracts possible 15-25 year contracts required

Key Project Characteristics Established sites Greenfield sites

Low capital cost High capital cost

High eff iciency Low er eff iciency

Low emissions Prolonged Dev. Schedule

Reduced time-to-market

Liquefaction Technology Proprietary Licensed

Mid-scale trains Large-scale trains

Storage Technology Membrane/full containment Full containment tanks

tanks


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2.2 OSMR® Technology

The OSMR® technology is an enhanced LNG liquefaction process developed by LNG Ltd that is more simple, cost-effective and efficient than traditional LNG processes. The technology was the foundation of the completed Front End Engineering and Design (FEED) for the Fisherman‟s Landing project.

OSMR® has received satisfactory peer reviews from companies including Foster Wheeler, Shell, CH·IV International and CB&I. One of the proposed engineering contractors appointed by LNG Ltd (SK Engineering & Construction) provided a performance guarantee on the

OSMR® process.

2.2.1 How OSMR® Works

The OSMR® process, outlined in Figure 3 below is based on a simple single mixed refrigerant cycle. Performance is significantly enhanced by the addition of conventional combined heat and power technology and conventional industrial ammonia refrigeration.

Figure 3: LNG Ltd’s OSMR

® Process (Source: LNG Ltd)

Pre-Treatment Feedgas enters the LNG plant where it is sweetened in a conventional amine plant in order to remove CO2 and H2S. The warm saturated gas exiting the amine contactor is cooled using ammonia refrigerant to

remove the bulk of the water prior to being dehydrated in a conventional molecular sieve plant.

Liquefaction and BOG Sweet dry gas enters the cold box where it is liquefied at low temperature. The LNG exits the bottom of the cold box and flows to the LNG tank where it flashes to low pressure. No flash vessel or LNG

pumps are needed. LNG is sprayed into the vapour return-line from the ship during loading to maintain constant vapour temperature


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entering the LNG tank and therefore constant suction (-150oC) and constant discharge (-60oC) temperature on the two BOG compressors.

Refrigeration Refrigeration for the cold box is principally provided by the single mixed refrigerant supplemented by ammonia refrigeration at the warm end (top) of the cold box. The ammonia refrigerant is firstly applied to cooling wet gas from the

amine contactor, secondly applied to cooling inlet air to the gas turbines to increase power and the remainder is used in the cold box for pre-cooling the mixed refrigerant. The result is a substantial

increase in plant capacity and a substantial improvement in fuel efficiency.

2.2.2 Traditional LNG Methods

The major stages of the LNG value chain, excluding pipeline operations between the stages, consist of the following:

Exploration to find natural gas in the earth‟s crust and production of the gas for delivery to gas users.

Liquefaction and storage to convert natural gas into a liquid state so that it can be transported in ships.

Shipping the LNG in special-purpose ships.

Regasification to convert the LNG stored in specially-made storage tanks from the liquefied phase to the gaseous phase, ready to be moved to the final destination through the natural gas

pipeline system.


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2.2.3 OSMR® Advantages over Traditional Methods

Better plant efficiency A key indicator of plant efficiency is the portion of LNG loaded on to the ship compared to the feed gas entering the plant. The OSMR®

process consumes around 6.5% of the feed gas on an energy basis which is a +30% saving compared to traditional processes which use around 9%. The OSMR® process that generates total energy efficiency

improvement of 30% over conventional LNG processes results from the gas turbine inlet air cooling improving plant capacity by 15% and supplementary cold-box cooling that improves plant capacity and

efficiency by 25%. In addition, ammonia cooling (of both the gas turbine and the mixed

refrigerant) causes an increase in LNG plant capacity of around 40% without increasing the size and cost of the major components of the liquefaction plant (cold box, gas turbine and mixed refrigerant compressor) and at the same time, contributes towards the reduction in plant cost per unit of LNG produced.

Faster start-up OSMR® technology allows for the use of a lower amount of equipment,

which lowers construction costs and allows for easier installation, operation & maintenance and faster shutdowns and start-ups (24 hours vs 72 hours for alternative processes).

LNG Ltd plan a 30-month construction period (from recommencement of foundation works to first LNG) for Gladstone‟s Fisherman‟s project. The company contends that this is much faster than traditional LNG

projects (~40 months) and at a much lower construction cost (~50%), due to the application of membrane LNG tank technology provided by Kogas and approved by the relevant authorities in Queensland.

Technically simple Direct cooling of GT inlet air using ammonia is successfully used in a

number of power plants and has technical and economic advantages over the more traditional method using chilled water. Pre-cooling the mixed refrigerant down to around 0oC using ammonia is not technically challenging. Pre-cooling has been used successfully in a small-scale LNG plant in Karratha, WA.

Smaller land required The required plot plan is substantially less than that needed for

traditional LNG plants. This provides the potential to strategically locate LNG project sites close to gas supply and existing infrastructure.

Better reliability Using the OSMR® process, the overall plant availability exceeds 96%,

as compared to 90-92% for traditional processes. This is mainly due to the fact that, if one gas turbine is down for maintenance, the plant will still run at half capacity. Also, if an ammonia compressor fails, the plant capacity simply reduces slightly. With traditional technology such as Propane-Mixed Refrigerant, the loss of one gas turbine causes a total train shutdown.


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2.3 Gas Supply Agreements Following termination of the sale agreement with Arrow Energy, the company undertook a review of all gas supply alternatives and determined a strategy to have greater influence or control over potential gas supply, in order to enhance overall project structure and delivery.

Subsequently, LNG Ltd acquired a strategic substantial interest in Oil Basins Ltd (7.3%) in August 2010, to jointly investigate the development of the Kimberley LNG Project. Then, in September 2010, the company acquired a substantial interest in Metgasco Ltd (5.03%)

and also entered into a non-exclusive agreement with Metgasco to undertake a feasibility study for a gas-to-LNG project.

As part of a signed lease agreement with Gladstone Ports Corporation, LNG Ltd must procure a gas supply plan for the Fisherman‟s Landing project by 1 July 2011. The agreement is significant as it provides potential gas suppliers (and strategic partners) with confidence in the site‟s deliverability.

2.3.1 Metgasco Ltd

The feasibility study will assess the viability of supply and transport of gas from Metgasco‟s coal seam gas reserves and resources in the Clarence Moreton Basin to LNG Ltd‟s Fisherman‟s Landing project as

well as the liquefication and sale of LNG from Fisherman‟s. The study will also evaluate the option of gas supply to a potential LNG project at the Port of Brisbane. Metgasco‟s Lion Way gas pipeline will deliver gas from its gas fields in the Clarence Moreton Basin to south east Queensland. A potential benefit for Metgasco arising from the agreement with LNG Ltd is that

this pipeline may be extended to enable gas supply to the Port of Gladstone, or alternatively, the Port of Brisbane. Metgasco currently has 2,239 PJ of certified 3P reserves in 50% of one of the tenements (PEL 16) and an estimated overall contingent resource of 14,285 PJ. Metgasco estimate that its gas resources within

its three northern NSW tenements may be sufficient to supply an LNG

plant of up to 3mtpa over a 20-year gas supply contract term, which would require approximately 3,600 PJ of gas feedstock. Table 2: Metgasco Gas Reserves

Petajoules

(PJ)Reserves to 16 February 2010

3P (Proven, Probable & Possible) 2,239

1P (Proven) 2.7

2C Contingent Resource 1,177

2P (Proven & Probable) 397


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The table below highlights the gas reserves that are as yet uncommitted (i.e. independent) – Metgasco is one of three CSG companies in this category.

Table 3: Comparable Reserves - CSG Companies

Source: Company Reports

The majority of CSG supply is secured by the major companies involved in Gladstone LNG projects, in particular Arrow Energy (Shell Australia LNG Project), BG Group (Queensland Curtis LNG Project), Origin Energy (Australian Pacific LNG Project) and Santos (Gladstone LNG Project).

2.3.1.1 Gas Supply Options under Metgasco study

The Clarence Moreton Basin stretches from southeast Queensland to Casino, in northeast NSW, and is joined, and geologically equivalent to, the Surat Basin. The main coal measure common across both the Surat

and Clarence Moreton Basins are the Walloon Coal Measures, which are

the source of gas that have underpinned major energy developments in The Surat Basin. The Clarence Moreton Basin in NSW represents the southern extension of these coals. Geographically (i.e. on the map), the Clarence Moreton Basin is over 750 kilometres from Gladstone. LNG Ltd‟s initial assessment shows that the extra gas pipeline distance

(around 400 kilometres) from SE Queensland to Gladstone would not have a material impact on the overall cost of the project. The economics of such a project are driven mainly by the decline rate per well. To illustrate, if the decline rate for a 1.5mtpa operation was 15% as opposed to 7%, it is estimated that an additional capital cost of $1 billion would be required for additional CSG wells.

Metgasco are planning to supply gas into the grid in Ipswich, Brisbane. A pipeline easement could be built from Ipswich to Fisherman‟s Landing

at Gladstone Port, possibly through Gympie. It is unlikely that the pipeline extension would run through the Surat Basin, given that there will shortly be four different pipelines built in the Surat Basin (Shell, BG, Santos & Origin).

2P 3P 2C

(PJ) (PJ) (PJ)

Bow Energy (BOW) Bowen Basin 114 2,574 2,014

Eastern Star Gas (ESG) Gunnedah Basin 988 1,818 2,285

Metgasco (MEL) Clarence Moreton Basin 397 2,239 1,177

LocationCompany


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Figure 4: Map of Metgasco Tenements and Surrounding Pipelines

Source: Metgasco

2.3.2 Other Gas Supply Options Aside from Metgasco, LNG Ltd is in discussions with other potential

mid-scale and large-scale gas suppliers and hope to make a decision on

gas supply partner/s in early 2011, after which LNG Ltd‟s selected partner/s would need to obtain upstream licensed and approvals. These include a petroleum facilities license that would permit field development and water disposal, as well as a pipeline license to transport gas to Gladstone. The company‟s gas supply plans involve exploring all gas supply

options including a direct or indirect equity interest, joint ventures, farm-in or a gas sales agreement. In terms of potential mid-scale suppliers, there are a number of coal-seam-gas producers who may be interested in securing long-term contracts to supply gas at prices in line with LNG.


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2.4 Expected Capital Costs The fixed-price engineering, procurement and construction (EPC) proposal prepared by the company‟s contractors SKEC and Lang O‟Rourke (Australia) Construction P/L has estimated the capital cost for the Fisherman‟s Landing project at US$720 million for the first 1.5mtpa LNG train, including a 180,000m3 LNG storage facility and associated site infrastructure.

In addition to preparing the EPC proposal, SKEC have taken joint responsibility for the process design and process guarantee along with LNG Technology (100% subsidiary of LNG Ltd).

The nameplate LNG production capacity for each train is 1.75mtpa,

however the EPC has assumed capacity at 1.5mtpa in order to take into account the nature of the proposed CSG supply arrangements and guaranteed take or pay obligations for both LNG gas supply and LNG offtake. Based on the FEED for the first LNG train of 1.5mtpa (nameplate capacity of 1.75mtpa), the Fisherman‟s site may have sufficient area

for four LNG trains totaling a guaranteed 6mtpa (nameplate capacity of 7mtpa). Note that under the lease agreement with Gladstone Ports, the LNG projects site is to accommodate two LNG trains, but the final site plan may allow for two further LNG trains and an additional LNG tank.

The EPC estimates that the capital cost of the 2nd and 3rd LNG trains is US$300 million each, resulting in a total capital cost of US$268/tpa for

three LNG trains each at 1.75mtpa nameplate LNG capacity1.

1 Approximately 60% of the capital costs are in A$, which have been converted to US$ at an exchange rate of 0.90.


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33.. CCOOMMPPEETTIINNGG GGLLAADDSSTTOONNEE LLNNGG PPRROOJJEECCTTSS

3.1 Outline Aside from the Fisherman‟s Landing LNG project, there are six other LNG projects proposed for development at or near the Gladstone Port. Each of the proposed developments is at varying stages of approval, capital construction and final investment decision.

According to the Queensland Government, if all projects (including Fisherman‟s Landing) receive approval and reach full capacity,

approximately 3,250 PJ per annum of coal seam gas, or 59mtpa of LNG, would be produced. The Gladstone LNG developments are dominated by the large global

energy companies and the Fisherman‟s Landing project is the only independent LNG project in Gladstone. Table 4 below summarises the key details for the five competing LNG projects. The main difference between the major players and LNG Ltd is that all four majors have secured both gas supply and offtake agreements.

Table 4: Gladstone LNG Players

Source: Company Reports, Alpha Securities Estimates * Subsidiary of BG Group

#Assuming exchange rate of AUD: 0.90

3.2 Advantages of Fisherman’s Landing’s over majors We highlight a number of areas where the Fisherman‟s Landing project has advantages over its peers (large scale Gladstone LNG projects).

Leading the race to first LNG Of the five players, Fisherman‟s Landing appears to be the most progressed on the downstream side, with first LNG sales expected in early 2014, subject primarily to the approvals for the upstream gas supplier. FL was also the first Gladstone LNG project to be granted an Environmental Authority.

Lower capital costs The expected capital cost of US$720 million referred to earlier is for the LNG project only and does not include the upstream gas supply and pipeline facilities and other costs. The EPC estimates that marine works (not included on the US$720 million) will be US$85 million, including ship loading structures, dredging and reclamation.

Project Companies FID 1st LNG

# Trains x Mt/train # Trains x Mt/train (A$m)# (A$/t) Sales

Queensland Curtis LNG BG Group/ 2 x 4.25 3 x 4.25 9000 1059 Nov 2010 2014

(QCLNG) QGC Ltd*

Gladstone LNG Santos 2 x 3.6 3 x 3.6 9500 1319 end 2010 2014

(GLNG) Petronas

Australian Pacific LNG Origin/ 2 x 4.5 4 x 4.5 N/A N/A end 2010 late 2014

(APLNG) ConocoPhillips

Shell Australia LNG Shell/ 2 x 4.0 4 x 4.0 N/A N/A

(SALNG) Arrow Energy

5

Initial Capacity Planned Capacity

x 1200 early 20142011

Awaiting EIS approval in

2011/12

1.5 x 400

Est Downstream CAPEX

Fisherman's Landing LNG Ltd 1 4 1.5


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Total capital expenditure (downstream) for Fisherman‟s Landing compares favourably with other planned LNG projects on a cost-per-mtpa basis, as detailed on page 2.

More established site As discussed earlier in the report, the Fisherman‟s Landing site is located around established infrastructure, whereas the other four Gladstone LNG projects will require significant capital to connect supporting infrastructure (i.e. pipes) and to prepare shipping channels.

For example, the APLNG project will require a marine crossing to be constructed to connect to Curtis Island (at present, a Greenfield site).

APLNG hopes to use horizontal directional drilling to complete the crossing, but is also considering joining with other Gladstone LNG developers in a „bundled‟ crossing to minimise the environmental impacts of multiple crossings.

Figure 5 highlights the location of the five Gladstone LNG projects. The distance from the edge of the Fisherman‟s Landing site to the QCLNG site is approximately 3 kilometres.

Lower reserves required Fisherman‟s Landing is likely to require less wells and less reserves for

its initial capacity. This significantly lowers the operational risk in regard to maintaining constant CSG supply.

Table 5 below estimates the reserves (2P) required for each of the Gladstone LNG projects. This analysis assumes that 60 PJ pa is required per 1mtpa LNG train (full initial capacity from 2015/16) and

that the reserves required are over a 20-year contract.

Other advantages Other advantages over other Gladstone LNG players include better plant efficiency (30% lower CSG-to-LNG conversion costs) and a faster start-up period as a result of the use of OSMR® technology (discussed in Section 2.2.3).


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Figure 5: Location of Competing Gladstone LNG Projects

Source: Google Earth, Alpha Securities Estimates

Table 5: Est. Reserves for Gladstone LNG Players

Source: Bow Energy, Alpha Securities Estimates

Initial Est Reserves

Capacity Required

(mtpa) (PJ)

QCLNG 8.5 10,200

GLNG 7.2 8,640

APLNG 9.0 10,800

SALNG 8.0 9,600

Fisherman's Landing 1.5 1,800

Project


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44.. FFIINNAANNCCIIAALLSS

4.1 Funding

The cash balance as at 30 September 2010 was $14.845 million, compared with $22.61 million as at 30 June 2010. Cash use during the September 2010 quarter included operating cashflow burn of $3.18 million and purchase of listed shares (in Metgasco & Oil Basins) totalling $6.29 million.

The company estimate cash operating outflows for the December 2010

quarter to be $3.7 million (average ~$1.23 million per month). For the March 2011 quarter, management expect that cash outflows will come down to ~$0.5-$0.7 million per month. The balance sheet is presently debt free. The present value of LNG Ltd‟s investments in Metgasco and Oil Basins

is $7.36 million2 (Metgasco:$6.74 million) and it is worth noting that LNG Ltd would have access to additional funds should it decide to divest some or all of these interests. Table 6: LNG Balance Sheet

2 Prices as at 5 November 2010

Metgasco: $6.74m (12.6m shares @ 53.5c) Oil Basins: $0.62m (19.28m shares @ 3.2c)

Year Ended June ($m) 2010 2009

Assets

Cash 22.61 13.46

Receivables 0.75 0.68

Other financial assets 1.79 1.02

Prepayments 0.06 0.07

Non-current assets held for sale - 1.85

Total Current Assets 25.21 17.08

Receivables 0.00 0.00

Property, Plant & Equipment 0.44 0.14

Total Non Current Assets 0.44 0.14

TOTAL ASSETS 25.65 17.22

Liabilities

Payables 2.95 1.66

Short term borrowings 0.01 0.01

Long term borrowings 0.01 0.02

Current Provisions 0.37 0.31

Non Current Provisions 0.13 0.08

Liabilities associated with assets held for sale - 0.78

TOTAL LIABILITIES 3.46 2.86

NET ASSETS 22.19 14.36


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4.2 Capital Structure

LNG Ltd has a tight capital structure. The top four shareholders control ~32% of the ordinary shares on issue and include the Copulos Group as the major shareholder, with the balance comprising ASX-listed company Dart Energy (ASX Code: DTE) and Executive directors.

As at 28 September 2010, there were 7,210 shareholders, with only 1,310 shareholders holding an unmarketable parcel of shares. Table 7: LNG Capital Structure

Million Expiry

Date

Total Ordinary Shares 213.3

Unlisted Options

- Exercise Price 38c 0.76 16-Feb-11

- Exercise Price 40c 0.35 30-May-11

- Exercise Price 62.1c 1.75 30-Apr-12

- Exercise Price 65c 1.38 31-Dec-10

- Exercise Price 66.7c 2.49 10-Dec-12

- Exercise Price 68c 0.06 30-Nov-12

- Exercise Price 84c 0.15 17-Sep-13

- Exercise Price 88c 1.60 09-Sep-13

Total Unlisted Options 8.5

Total Issued Securities 221.9

Shares/Options on Issue


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55.. BBOOAARRDD OOFF DDIIRREECCTTOORRSS

DIRECTOR

INTEREST

IN LNG

BACKGROUND

Phillip Harvey Non Executive Chairman

~3.4m ord shares

Mr Harvey will retire from his role as non-Executive Chairman at the AGM on 22 November 2010 and will not seek re-election. The Board of directors have elected Richard Beresford as the LNG’s new non-Executive Chairman with this appointment to take effect following the AGM. In 1994, Mr Harvey was appointed the initial Chief Executive Officer of AlintaGas, during which time he oversaw the transition of AlintaGas from a WA Government-owned gas business to an ASX listed company. Phil retired from full time employment after AlintaGas listed in 2001. During his term as CEO of AlintaGas, Phil also served two years as Chairman of the Australian Gas Association.

Maurice Brand Managing Director & CEO

~12.77m ord shares

Mr Brand, the founder of the company, has extensive

experience in the global energy industry spanning over 25 years and having been responsible for energy related projects in Australia, Indonesia and India. He formed LNG International P/L, with the business model now adopted by the Company. Maurice has extensive experience in the global energy industry having been responsible for equity capital raisings of over $200 million, project financing of $800 million and closure of six IPPs with a total generation capacity of 545 Mega Watt (MW), in Australia, Indonesia and India.

Richard Beresford Non Executive Director

369,692 ord

shares

Mr Beresford has over 26 years experience in the international energy industry spanning research, technology commercialisation, strategic planning, operations, consultancy, business development, acquisitions, marketing and general management, His experience includes 12 years with British Gas plc, including three years in London managing a portfolio of downstream gas and power generation investments in Asia and four years in Jakarta as Country Manager. He joined Woodside Petroleum Ltd in 1996 as General Manager, Business Development, then Managing Director of Metasource, Woodside's green energy subsidiary, until 2001. Richard was Head of Gas Strategy and Development of CLP Power Hong Kong Limited from January 2005 to March 2007, and has subsequently been retained as an advisor. Mr Beresford has been a non-executive director of ASX listed Eden Energy Limited since May 2007 and a non-executive director of ASX listed Green Rock Energy Limited since September 2008.

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Paul Bridgwood Exec Director and Chief Technology Officer

13.29m ord shares

Mr Bridgwood is a mechanical engineer with over 30 years experience in the energy and resource industries, including offshore and onshore oil and gas, power generation, LNG and related energy projects. In the LNG field, he has developed techno-economic improvements to small and mid scale LNG production, transport and customer station facilities over a period of 20 years. This work included the development of innovative design improvements to LNG processes, storage, and LNG transport systems to reduce the delivered cost of LNG. Mr Bridgwood is the originator of the OSMR® liquefaction processes used by LNG Ltd for which international patent applications have been made. He

led the FEED process for the Gladstone LNG Project which resulted in a capital cost reduction of half compared to competing LNG Projects.

Norman Marshall Exec Director and Chief Financial Officer

~1.1m ord

shares; 2.25 unlisted

options

Mr Marshall has over 28 years experience in banking and finance, treasury management and contract negotiation, documentation and compliance work, including 20 years with the Commonwealth Bank, where he was Head of Institutional Banking for five years. He was previously the CFO and General Manager (Finance & Commercial) for Portman Mining Limited.

Leeanne Bond Non Executive Director

NIL

Ms Bond, a professional company director with directorships in the energy and water sectors, has 24 years experience across a broad range of industrial sectors including energy, minerals, infrastructure and water resources. Over a 10-year period to 2006, she held a number of management roles with Worley Parsons in Queensland including General Manager Hydrocarbons and Development Manager (Qld). Ms Bond is presentlya non-executive director of Tarong Energy Corporation (one of Queensland's most significant power generators) and a board member of the Queensland Bulk Water Supply Authority (Seqwater), a water service provider in the southeast Queensland region. She is the sole director and owner of Breakthrough Energy Pty Ltd, a private consulting firm.


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DIRECTORY – ALPHA SECURITIES Corporate

George Karantzias

[email protected]

0401 670 620

Research Analyst

John Haddad

[email protected] 0407 219 222

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