Adelaide Energy Limited (ASX:ADE) Chairman Address at 2010 Annual General Meeting

Adelaide, Nov 26, 2010 AEST (ABN Newswire) - Adelaide Energy Limited (ASX:ADE) is pleased to release Chairman's Address at 2010 Annual General Meeting.

On behalf of the Directors, I extend a welcome to all shareholders present for the 2010 Annual General Meeting of Adelaide Energy Limited. I am pleased to have the opportunity to report on the activities of the Company during the year ended 30 June 2010.

This period saw your Company achieve a number of important milestones including:

- a full year of production of gas and condensate from the Katnook Gas Fields;

- completion of extensions to the Katnook pipeline system; and

- connection of the Jacaranda Ridge - 2 gas discovery to that pipeline system.

In addition, the Company participated in the drilling of 3 exploration wells, one in the Cooper Basin (Wakefield - 1) and 2 in the 100% owned PEL 255 (Hollick and Patrick).

The Katnook Gas Plant continues to be operated profitably and efficiently. The plant is a strategic asset which underpins the Otway Petroleum Project and enables further exploration to be carried out in the region in the knowledge that any future discoveries will in all likelihood have the advantage of ready access to market.

During the Financial Year ended 30 June 2010, revenue from gas produced through the Katnook Plant amounted to $3.17m. Since then we have seen increasing production and expect this to continue during the year to 30 June 2011. This small but significant revenue stream enables the Company to cover its operating costs and to a limited extent fund further exploration and undertake other initiatives.

The extension of the existing pipeline system to the Jacaranda Ridge - 2 gas discovery has enabled the Company to carry out extended production testing. This additional source of gas provides the Company with the flexibility to better manage the various gas fields supplying the Katnook Gas plant.
The Board is pleased to report that the construction works associated with the extension of the pipeline system were completed during the year on time for a total cost of $4.55m.

In addition to Adelaide Energy now being well positioned to connect the Hollick and Patrick discoveries, the pipeline system also extends to connect the existing Wynn - 2 well in PRL 1 and enables the Company to undertake any production from this well, should further planned testing prove successful.

The Board believes that this investment in additional infrastructure will enable the Company to maximize production from the existing and new gas fields comprising the Otway Petroleum Project.

The Financial Year 09/10 also saw the commencement of drilling on the Company's PEL 218 prospect in the Cooper Basin.

The initial well (Wakefield - 1 - with Beach Energy Limited as operator) targeted multi zones to the top of the Permian strata. The operator reported potential multi zone hydrocarbons and the joint venture was sufficiently encouraged to see the well cased as a potential producer.

However, the Board believes that PEL 218 also offers the prospect for large shale gas discoveries in deeper zones. The drilling techniques required involve substantial expenditure and for this reason we completed a farmout to Beach Energy Limited under which we retain a 10% interest in the Permian strata and are free carried through the for the first $25M of gross expenditure.

Beach Energy Limited is currently drilling the Encounter -1 well on PEL 218. Our Managing Director will provide a comprehensive update on progress during his presentation which follows.

The Board is keen to undertake further testing of the Hollick and Patrick wells as part of our Otway Petroleum Project. Initial testing did not confirm gas flows of a magnitude consistent with indications during drilling. Details of the further testing program which is to commence in a few days, will also be given in our Managing Director's presentation.

The oil and gas sector appears to be undergoing a period of consolidation and we believe that your Company is well positioned to take advantage of any opportunities that may arise.

We have expanded the exploration portfolio of the Company by making acquisitions consistent with the financial capacity of the Company. The Board of the Company is keen to continue to pursue suitable acquisitions if circumstances permit.

During the year we under took a number of capital raisings and placements. We have recently completed a further rights issue which has raised $6.8m and with our continuing good revenue stream from gas/condensate sales, provides the Company with the capacity to move forward with its planned exploration and testing programmes.

Success with the further testing of the Hollick and Patrick wells has the potential to deliver a significant uplift in the value of the Company and undertaking that work will therefore be an immediate priority.

Although there are many positive things to look forward to, I have to acknowledge one significant area of uncertainty. The proposed extension of the Petroleum Resource Rent Tax (PRRT) to on shore petroleum production, raises a number of concerns. Admittedly, there is a lengthy process to be undertaken before the proposal becomes law however the new tax has the potential to impact upon current investment decisions. The initial lack of consultation by the Federal Government, the unclear interaction with State royalties and the impact of having a minority government in Canberra, make it difficult to assess the likely effect. But it does look as though there will be some impact upon small producers.

Finally I take the opportunity to thank our shareholders for their support, and acknowledge the continuing efforts of our Managing Director, our Commercial Manager (Mr Neil Young) and all staff at both the office in Adelaide and at the Katnook Gas Plant.

Contact

Carl Dorsch Managing Director Adelaide Energy Limited Mob:+61-0400-508-088 Email: c.dorsch@adelaideenergy.com.au Neil Young Chief Commercial Officer Adelaide Energy Limited Mob: +61-0417-850-245 Email: neil.young@adelaideenergy.com.au