The agreement between Comet's US subsidiary, St Helens and a large landowner gives St Helens the exclusive right to lease more than 420,000 acres covering a large part of the Grays Harbor Basin, about 100 miles (160.9km) southwest of Seattle in Washington State

The Grays Harbor Basin is northwest of the Chehalis Basin where Comet Ridge, via St Helens, and partner Cascadia Energy, a wholly owned subsidiary of US listed company Torrent Energy, have established a 130,000 acre lease option and leasehold position and are exploring for coal seam gas.

The terms of the agreement between St Helens and the landowner include: an upfront cash payment of $US400,000; a commitment to exploration work to the value of $US650,000 over the term of the option agreement and Comet Ridge (via St Helens) has the exclusive right to lease any of the 420,000 acres (subject to 4000 acre minimum and 10,000 acre maximum leases) on pre-negotiated terms.

The leases will have five-year terms and are subject to reasonable per acre bonus payments (cash up front), rentals (annual payments) and royalty rates (payable from production); the landowner has the right to participate up to a 15% interest in any drilling activities but has to pay its pro-rata share of prospect and drilling costs; and Comet Ridge has access, at no cost, to all relevant technical data held by the landowner, including 600 miles of 1980s vintage 2D seismic data.

The Grays Harbor Basin has been very lightly explored despite numerous and widespread oil and gas shows and flows on test. Only two out of the 45 wells drilled in the basin were drilled with the benefit of seismic data. One of those wells flowed gas at rates of 9 million cubic feet per day for a short time on test.

Virtually all other past drilling in the basin was shallow and was located using surface geology only. Comet Ridge said a major oil company, which it did not name, acquired 600 miles of 2D seismic data in the early to mid 1980s, which has not been reprocessed since that time.

Comet Ridge intends to initiate reprocessing of the dataset immediately and will evaluate the effectiveness of amplitude versus offset processing and other seismic attribute processing for direct oil and gas detection.

The option agreement comes with an inventory of mapped leads, access to an extensive technical database and the seismic data. While developing existing leads and acquiring new seismic data will be the focus of initial technical work, additional leads and prospects will likely result from a detailed exploration review incorporating all of the datasets.

A number of the identified leads have indicative reserve potential between 50 and 250 billion cubic feet of gas per lead. At current prices, each bcf is worth about $US6 million ($A8.1 million).

Comet Ridge said its aimed to work towards drilling in late 2007, with work starting immediately to develop an integrated geological, geophysical and engineering database, and reprocess existing seismic.

Upon completing this work, planning of a new seismic program will start. As Grays Harbor is distant from established operating areas for US drilling and service contractors, planning for a drilling campaign in late 2007 will start immediately.