Annual General Meeting 2008

19 N b 200819 November 2008

AGM Proxy Summary

For Open-ChairmanFor & Chair Open-Other Against Total

Holders Votes Holders Votes Votes Holders Votes Holders Votes Holders Votes

1. Adoption of the Remuneration Report 375 291,907,436 194 14,447,931 96% 13 432,544 112 11,998,399 694 318,786,310

2. Election of Mr Peter Lansom as a Director 496 306,013,215 195 14,454,694 97% 13 432,544 22 8,097,826 726 328,998,279

3. Election of Mr David Archer as a Director 494 312,222,106 195 14,454,694 99% 13 432,544 20 1,761,428 722 328,870,772

4. Approval of Issue of Shares to MD 281 286,783,245 186 14,298,948 94% 12 345,307 240 18,755,288 719 320,182,788

5. Approval of Issue of Shares to Chairman 269 293,410,637 185 14,294,948 94% 12 345,307 256 20,187,133 722 328,238,025 pp , , , , , , , , ,

Abstain

Holders Votes

1. Adoption of the Remuneration Report 51 10,431,875

2. Election of Mr Peter Lansom as a Director 18 219,906

3. Election of Mr David Archer as a Director 22 347,413

4. Approval of Issue of Shares to MD 24 1,035,397

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5. Approval of Issue of Shares to Chairman 22 980,160

A l G l M ti 2008Annual General Meeting 2008Project Update

19 N b 200819 November 2008

David CaseyM i Di tManaging Director

Introduction

Annual General Meeting 200819 November 2008

Setting the Scene - Gas Industry Fundamentals

Prerequisites for successPrerequisites for success ChallengesChallenges

• Must also have the capacity and capability

Reserves

(‘Corporate wherewithal’) to address the prerequisites.

• Prerequisites are interdependentReserves

Staged approach to manage interdependenciesStaged approach to manage interdependencies

q p- eg, cannot have Reserves without a market.

InfrastructureStaged approach to manage interdependencies Staged approach to manage interdependencies

Gas Reserves Certification

Market Gas Market Development

Infrastructure Development

5

Corporate Snapshot

Annual General Meeting 200819 November 2008

Corporate Snapshot

Present Financial PositionPresent Financial PositionStrategy, Structure and StatusStrategy, Structure and Status

Clear focus on Coal Seam Gas for NSW market.

Complementary involvement in power generation.

Shares on issue 761 million

Market Capitalisation1 A$278 million

World-class management team.

Programme underway to expedite upgrading of

Cash2 A$35.5 million

gas reserves.

Preliminary arrangements in place for marketing

Debt nil

Notes:Notes:

and transportation of gas. 1.1. Share price A$0.365 at close 18 November 2008Share price A$0.365 at close 18 November 2008

2.2. As at 30 September 2008As at 30 September 2008

“Eastern Star’s Visionis to be NSW’s leading supplier of natural gas”

“Eastern Star’s Visionis to be NSW’s leading supplier of natural gas”

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Corporate Snapshot - Tenements

Key Assets – Substantive CSG Position with Focus on Narrabri CSG Project Key Assets – Substantive CSG Position with Focus on Narrabri CSG Project

PEL 238PEL 2389,095 km2

(Narrabri CSG Project)ESG 65%

SA

PEL’s 433 & 43415,399 km2

ESG 65%NSW

SA

ESG 65%

Orion Petroleum(ESG holding 23%)

Victoria

Arckaringa Basin27 922 km2

(ESG holding 23%)Pursuing conventional

opportunities PELs 6, 427, 428

18 200 k 2

Location

Wilga Park Power StationExpandable to 40MW27,922 km2

25% to 50% CSG farm-in18,200 km2

40% - 50% - 75% farm-in Expandable to 40MW

ESG 65%

70 616 km2 operated 31 400 to 39 671km2 net interest70 616 km2 operated 31 400 to 39 671km2 net interest

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70,616 km2 operated, 31,400 to 39,671km2 net interest70,616 km2 operated, 31,400 to 39,671km2 net interest

Corporate Snapshot – Management Team

DAVID CASEY(Managing Director)

Over 17 years experience in CSG exploration and appraisal in Australia and overseas. Joined ESG in 2005 as Director of Operations and appointed Managing Director in 2007.

PETER LANSOM (Executive Director Operations)

Over 20 years experience in conventional and coal seam gas exploration and development. Previously Chief Petroleum Engineer for Origin Energy.

ASHLEY EDGAR 22 years experience in conventional and coal seam gas exploration and development. (General Manager Exploration & New Ventures) Previous roles included Coal Seam Gas Exploration Manager for Origin Energy.

ROLAND SLEEMAN(Chief Commercial Officer)

Involved in introduction of North West Shelf, Harriet and Tubridgi gas into Western Australia and in development of pipeline infrastructure. Author of Government and industry sponsored study into development of a gas industry in northeastern NSWindustry sponsored study into development of a gas industry in northeastern NSW.

IAN KIRKHAM(Chief Financial Officer & Company Secretary) Bachelor of Economics, Chartered Accountant, 15 years resource industry experience.

BRETT LANGLEY(Manager - Surface Engineering)

20 years oil and gas sector experience working in petroleum, operations and construction roles. Previously responsible for Origin’s CSG surface project management.

LINDA HEDGER 20 years oil and gas experience with emphasis on well planning, design and operations, i l di t i l t l CSG ll i P i l S i D illi E i f

World Class Management Team with Industry Leading Experience and Proven Track RecordWorld Class Management Team with Industry Leading Experience and Proven Track Record

(Manager - Drilling) including extensive lateral CSG well experience. Previously Senior Drilling Engineer for Santos Ltd.

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World Class Management Team with Industry Leading Experience and Proven Track RecordWorld Class Management Team with Industry Leading Experience and Proven Track Record

2007/08 - Year in Review

Annual General Meeting 200819 November 2008

2007/08 - Year in Review

2007/08 Highlights2007/08 Highlights

Arckaringa

Gas reservestarget increased

Sale 35%

Three-foldreserves upgradeannounced

Northern NSWfarm-in Wilga Park farm-in

Drilling rigt t d

Dewhurst-2t t di

Dec Jan Feb Mar April May June July Aug Sept Oct Nov

contracted

SPP: $22.47mfor expandedexploration Reserves

an outstandingsuccess Edgeroi-1

Successful

Rig mobilised

APA HoA

exploration

OIP floated

Reservesupgradeprogrammeunderway

Rig mobilised

82% reservesupgrade

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2007/08 - The Year in Review

Shares on IssueShares on Issue

800

Market CapitalisationMarket Capitalisation

400

400

600

ions

200lions

200

400

mill 200

$ m

il

02006 2007 2008

02006 2007 2008

(at 18 November 2008)

December 2007 Share Purchase Plan raised $22.473m to expand exploration programme.

Market capitalisation at 18 November 2008 close was $278m.

761 million shares now on issue.

Top 20 shareholders hold 61%.

Peak market capitalisation on 10 June 2008 of $708m.

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Global financial crisis has influenced share price.

2007/08 - The Year in Review

Share Price MovementsShare Price Movements

Share Price ($) Volume (m)

$0 80

$0.90

$1.00

12

15Mar 07: MOU signed with

MacGen (up to 500 PJ)

May 07: Cancellation of

Royalties & Major Project

Status with NSW Govt.

Sep 07: $26m capital raising at

$0.425

Aug 07: Sub- Nov 07:

Dec 07: $22.5m capital raising via

share purchase plan

Jan 08: Gas Reserves Upgrade

May 08: BG

May 08:Santos

PetronasAlliance

Jul 08: APA HoA

Sep 08: OriginConoco deal

Subprime crisisescalates

$0 60

$0.70

$0.80

9

12Aug 07: Sub-prime market

correction

Nov 07:MOU

withB&B

May 08: BG Group takeover of Origin announced Oct 08:

QGCBG

deal

$0 40

$0.50

$0.60

6

9

$0 20

$0.30

$0.40

3

6

$0.00

$0.10

$0.20

0

3

13

$0.00Nov-06 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08

0

2007/08 - The Year in Review

1400400

2P (Proven and Probable) Gas Reserves2P (Proven and Probable) Gas Reserves On track to meet 2P gas reserves targetOn track to meet 2P gas reserves target

700

1050

J200

300

J

Increasedtarget

350

700PJ

100

200PJ

Previoustarget

Actual

0 Sep 07 Dec-07 Sep-08 Dec-09

02007 2008

(Project reserves shown at date of AGM; ESG interest is 65%)

PEL 238 Certified Gas Reserves(ESG interest)

Dewhurst coreholes an outstanding success.

2009 reserves target increased to 1,300 PJ.(ESG interest)

1P 2P 3P

13.7 PJ 218 PJ 845 PJ

Reserves upgrade programme delayed but nonetheless meeting objectives.

Significant (82%) upgrade announced 17 Nov

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Significant (82%) upgrade announced 17 Nov.

Reserves Growth Comparison

2P Gas Reserves Certification - Comparative Performance2P Gas Reserves Certification - Comparative Performance

400

300

200PJ

100

200P

100

01 2 3 4 5 6 7 8 9 10 11 12 13

Months from first reserves certification

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ESG (NSAI) QGC (NSAI) Arrow (NSAI)

Narrabri CSG Project Update

Annual General Meeting 200819 November 2008

Narrabri CSG Project Update

Present OperationsPresent OperationsProject Location and ScopeProject Location and Scope

PEL 238 (inc. PPL 3 & PAL 2): 9,100 km2, 17 tcf GIPPEL 238 (inc. PPL 3 & PAL 2): 9,100 km2, 17 tcf GIP

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Narrabri CSG Project Update

Outstanding results so far from 2008/09 Reserves Upgrade ProgrammeOutstanding results so far from 2008/09 Reserves Upgrade Programme

Edgeroi Corehole Results

Confirmed permit-wide development of thick, gas saturated coal

Dewhurst Corehole Results

Total Coal Thickness: 33.5 to 42.5 metres

Bohena Seam Thickness: 16.2 to 21.7 metres

Bohena Coal Permeabilities: up to ~100 mD

170 km of new 2D Seismic acquired

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0 o e Se s c acqu ed

Narrabri CSG Project Update – Multi-lateral Wells

Advantages of multi-lateral WellsAdvantages of multi-lateral Wells Schramm TXD rig is now on siteSchramm TXD rig is now on site

Exploit coal architecture, maximise gas production.p , g p

Maximise return on investment.

Minimise environmental impacts.

Significant scope for future optimisation of wellSignificant scope for future optimisation of well design to enhance project economics.

Unique Architecture of Bohena CoalUnique Architecture of Bohena CoalUnique Architecture of Bohena CoalUnique Architecture of Bohena Coal

Typical Coal

BohenaCoal

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Narrabri CSG Project Update – Multi-lateral Wells

Schramm TXD Drilling Rig on site at NarrabriSchramm TXD Drilling Rig on site at Narrabri

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Outlook: Realising Project Upside

Annual General Meeting 200819 November 2008

Outlook – Industry Observations

Exponential, but Qld-centric, CSG industry growth Exponential, but Qld-centric, CSG industry growth ObservationsObservations

NSWOther Qld

CSG potential exceeds domestic market needs.8,000

6,000

4,000

Other QldSunshineAGLQGC/BGArrowCH4S

LNG exports key to value of Queensland CSG

- Multiple world-scale LNG projects proposed.

2,000

PJ (2P)

2000 2002 2004 2006 2008

SantosAngloTipperaryOriginBHP

Value of Australian CSG industry recognised:

- BG Group US$4B takeover of QGC.2000 2002 2004 2006 2008

NSW - dependence upon ‘imported gas’NSW - dependence upon ‘imported gas’

- ConocoPhillips US$8B for 50% of Origin Energy .

- Petronas US$2.5B for 40% of Santos CSG.

Shell US$0 6B for 30% of Arrow Energy acreage

120

80

- Shell US$0.6B for 30% of Arrow Energy acreage.

NSW needs a material indigenous gas source.

Location and gas-in-place potential of Narrabri

40

PJ

Location and gas in place potential of Narrabri CSG Project are well suited to:

- meeting NSW requirements; and

Consumption Production

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- securing high-value opportunities.

Realising Project Upside – Staged Development

Stage 1: Wilga Park Expansion by May 2009Stage 1: Wilga Park Expansion by May 2009 Stage 2: Early access to NSW marketStage 2: Early access to NSW market

Wil P kFlowline

Wilga ParkPower Station

Extension

GasProcessing

Lateral toAPA System

BibblewindiFlowline

ExistingPipeline

Stage 3: Major (MoU) NSW Markets Stage 3: Major (MoU) NSW Markets Stage 4: High value opportunitiesStage 4: High value opportunities

B&BPipeline

L t l tLateral toBayswater

Extension to

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Bayswater Power StationNewcastle

Disclaimer

This presentation may contain forward looking statements that are subject to risk factors associated with oil and gas businesses. It is believed that the expectations

fl t d i th t t t bl b t th b ff t d b i t freflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand c rrenc fl ct ations drilling and prod ction res lts reser e estimates lossdemand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions political risks project delay or advancement approvals andcountries and regions, political risks, project delay or advancement, approvals and cost estimates.

Investors should undertake their own analysis and obtain independent advice before i i i ESG hinvesting in ESG shares.

All references to dollars, cents or $ in this presentation are to Australian currency, unless otherwise stated.

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