STOCK EXCHANGE ANNOUNCEMENT

ATP 685P (TARDRUM) SANTOS FARM-IN AGREEMENT SIGNED

20 February 2003

Sunshine Gas Limited (SHG) is pleased to advise that a farm-in agreement has been signed for ATP 685P between SHG and Santos (ONT) Pty Ltd. The agreement is in 3 phases that will allow SHG to gain an interest of 100% after completion of all phases on a sole risk basis. Santos has the right to join the exploration program at each phase and retain a 50%, a 25% or a Rovalty interest in the ATP.

The full program involves 3 wells to a total depth of 1,300m and a re-completion of the Tardrum 1 well drilled by Santos in September 2001.

The results of the Tardrum 1 well were encouraging with hydrocarbon fluorescence and gas shows in the Rewan Formation between $230m$ and $742m$ (a gross interval of $512m$ ). Gas shows peaked at 800 units. Net coal thickness of 13.6m was encountered in the Baralaba Coal Seams. No commercial flow was achieved from Tardrum 1.

SHG engaged an independent expert (MBA Petroleum Consultants - MBA) to calculate a gas-in-place resource for the Tardrum structure. MBA estimate mean in-place volumes of 128 BCF in the structure. Production testing in Tardrum 1 and further drilling will be necessary to confirm whether any economically recoverable reserves are present.

SHG believes the ATP 685P farm-in represents a low risk appraisal and development play with early cash flows achievable for a modest capital outlay.

Funding

As previously announced, Westpac has signed a mandate letter to provide project funding to Sunshine Gas. Westpac is completing final due diligence on facilities for the Tardrum field which is expected to be completed within two weeks. The company is planning to raise \$2 million by way of Convertible Notes to fund Tardrum.

Sunshine Gas Limited ABN 44 098 563 563

Registered Office: Level 2 Waterfront Place 1 Eagle Street Brisbane GLD 4000 Tel: 617 3221 4400 Fax: 517 3221 4477 PO Box 7808 Waterfront Place Brisbane OLD 4001 Sydney: Level 5 BACA House 89 Macquarie Street Sydney NSW 2000 Tal: 612 9241 2838 Fax: 612 9241 5539 [email protected] www.sunshinegas.com.au

Tardrum 1

Sunshine Gas is expecting to start a recompletion program on Wednesday 26 February 2003.

Tardrum 2

Sunshine Gas is planning to drill Tardrum 2 which is a well to be located 1.5km due north of Tardrum 1 and is expected to spud mid March.

Chris Blamey Company Secretary

Sunshine Gas Limited ABN 44 098 583 663

Registered Office: Level 2 Waterfront Place 1 Eagle Street Brisbane OLD 4000 Tel: 617 3221 4400 Fax: 617 3221 4477
PO Box 7808 Waterfront Place Brisbane OLD 4001 Sydney: Level 5 BACA House 89 Macquarie Street Sydney NSW 2000 Tel: 612 9241 2838 Fax: 612 9241 5539 [email protected] www.sunshinegas.com.au