PEACE RIVER COALBED GAS

PROJECTNE BRITISH COLUMBIA

Hudson’s Hope Gas, Ltd

TOPICS COVERED Introductory key points Background / History Project partners Location / Setting Coalbed gas resource Technical/ Operational Approach Present status Stakeholder / First Nations aspects

KEY POINTS First commercial coalbed gas production

in BC Very large CBG resource in NE BC BC Government incentives very

important Hudson’s Hope community and

stakeholders play important role in project success

LOCATION & SETTING 50,000 + acre tenure position Western edge WCSB Gething Formation coal measures Near town of Hudson’s Hope & inside its

District Municipal Boundaries Land use – Mix of agriculture & forested

Crown land

Peace River CBG Project

From: Coalbed Methane Potential in British Columbia – BC MEMPR

PEACE RIVER CBG – TENURE HOLDINGS

Hudson’s Hope(Approx town area)

Drilling Licence

PNG Lease

Spectra Energy Pipeline

PROJECT STRUCTURE

JVA – Two partners, each holds 50% WI GeoMet, Inc. (NASDAQ: GMET)

E & P company - CBG primary emphasis Corporate HQ – Houston; Operations center- Birmingham CBG production & development programs in Alabama,

Virginia, West Virginia and British Columbia Operator of Peace River Project (through Hudson’s Hope

Gas, Ltd….GeoMet Canadian subsidiary) Under JV, GeoMet 50% WI includes natural gas rights

from surface to bottom of Gething coal measures

Canada Energy Partners (TSX-V: CE) Exploration & Development company – HQ in Vancouver Good land position in areas of multi-zone potential in NE

BC Participates in multiple JV projects

PROJECT HISTORY

Peace River Corp (PRC) –First Drilling Licences in 2001 PRC initiated exploration/testing and community, First

Nations Engagement Several test wells drilled by 2004; additional DLs JV with GeoMet in 2004 Hudson’s Hope Gas, Ltd (HHG) - Canadian subsidiary

of GeoMet, became Operator of Record PRC merged interests with Canada Energy Partners HHG drilled additional wells – Core, production test &

water disposal First commercial CBG production in BC –

December 08

Geologic Setting – Hudson’s Hope area at extreme western edge of W. Canadian Sedimentary Basin - Tenure located east of disturbed belt

Courtesy of: Barry Ryan

PEACE RIVER CBG PROJECT AT WESTERN BOUNDARY OF WCSB

Approx HHG Tenure

COALBED GAS RESOURCE – GEOLOGIC SETTING

Gething Formation – Lower Cretaceous cyclothemic coal measures

Numerous well-cleated, bright coal seams Predominately High-Vol A and Med-Vol bituminous Cumulative thickness – project average 15 m Typical Gething thickness of 200 to 300 m Shallowest coals at 300+ m; deepest < 1000m Average gas content – 400 scf/ton CO2 varies widely in Project area – Avg 10% in

producing area Gething overlain by 150 – 250 m marine

Moosebar Shale

GETHING COALS – WC BENNETT DAM

GETHING COALS AT WC BENNETT DAM

COALBED GAS RESOURCE

Exploration confirms very large gas resource Project Gross GIP – Estimated at > 1 Tcf

GeoMet Working Interest (From2/12/09 Press Release) The Peace River project is the first commercial coalbed

methane project in British Columbia, Canada and there are no other similar producing analogies in the region. As a result, initial proved developed reserves of only 4 Bcf were booked in 2008.

However, an additional 22 Bcf of probable reserves were estimated for the project by DeGolyer and MacNaughton.

Note: This does not take into account estimated reserves for at least 200 additional developable well locations.

COALBED GAS RESOURCE COAL CORE – CUT FOR DESORPTION MEASUREMENT

OPERATIONAL APPROACHExploration phase Wireline coreholes - geology / desorption testing Production test wells cased and fracced for extended

dewatering/production testing Several zones in various parts of tenure evaluated for

deep disposal potential 22 test wells drilled from 2002 – 2008 Most wells drilled on small pads – 100X100 m Production test wells

Surface casing set below fresh water zones 5 ½ “ production casing set below bottom coals Multiple zones perforated & fracced Frac types included slick water, nitrogen foam, x-link gels and

linear gels Wells equipped with down hole pumps and dewatered for

several months test gas & water volumes & quality

EXAMPLE HHG CBG WELL

HHG CBG WELL

OPERATIONAL APPROACHProduction Phase First production stage – Focus on SW part of tenure

Future wells to be drilled during Summer/Fall Reduces cost & provides Summer Drilling credit

Installed infrastructure for 8 production wells Electric power grid Low pressure gas gathering and produced water transport lines Gas and water – HDPE pipe buried in same trench Gas/water/electric power lines and access roads all installed inside

18 m permitted corridor Produced water piped to disposal well in south part of tenure Disposal zone – Baldonnel Formation

Constructed compressor/treatment plant in SW tenure 4-stage compression to meet Spectra Energy pressure specs Gas treatment – CO2 removal (Membrane system) High pressure steel line to Spectra Energy transmission line Plant and first of the 8 wells went on line late Dec 08

GAS & WATER LINE INSTALLATION

LOW PRESSURE GAS & WATER LINES

ACCESS ROAD/PIPELINE ROWROW RE-GRADED – READY FOR RESEEDING

18 m

ACCESS ROAD, PIPELINE ROW, POWER LINE

HHG COMPRESSOR/TREATMENT PLANT

PRESENT STATUS OF PROJECT Eight wells on Production-Active status Gas production in early April

Five wells: Production ranging 29 to 155 mcfd One well – Early peak of > 200 mcfdThree wells: Early dewatering stage – several

mcfd Water production in early April

All wells producing water Production ranges from 50 – 268 bpd

STAKEHOLDER / FIRST NATIONS

Local government / Community HHG works closely with District Municipality & community

to communicate plans and address concerns Public meetings & targeted engagement at all stages HH Mayor & Council and Custodians of Peace Country

provided effective forums for community engagement Community concerns at early project stages evolved into

better understanding of & much wider acceptance of project

Engagement continues as critical aspect of HHG’s presence in community

What are key components of HHG success in Hudson’s Hope? Community willingness to listen & give HHG chance to earn their

trust HHG listens to concerns and looks for ways to mitigate/reduce them Community recognition of economic growth & sense of fairness re

potential impacts

STAKEHOLDERS / FIRST NATIONS

Private Landholders Whether agreeable to use of property or not:

Concerns include interference with operations, loss in property value, impact on lifestyle and aesthetics

Bottom line – Want to be treated fairly How neighbors are treated is important

HHG listens and respond to concerns Consistent, documented approach to access agreements &

compensation Flexibility in location and construction of wells & infrastructure Looks for ways for landholder to benefit Responds to questions and problems immediately Looks at impact on community around landholder and works to

mitigate potential impacts

STAKEHOLDERS / FIRST NATIONS

Project Tenure in First Nations traditional lands West Moberly Saulteau Halfway River McLeod Lake (Project tenure south of Peace River)

HHG Engagement of First Nations Early in each project stage – solicits input into planning Follows OGC Consultation process & evolving provincial

policies Participant in Peace Moberly Tract ADR and SRMP

processes Recognizes concerns of First Nations and the need to

provide mitigating solutions

SUMMARY AND KEY POINTS Very large gas resource confirmed HHG applying CBG principles to new area Canada Energy Partners and GeoMet have

both played important roles in Project history

Gas and water production just beginning Effective stakeholder, community and First

Nations engagement is critical

POINTS TO TAKE AWAY WHETHER I SAID THEM OR NOT! Peace River Project has the first

commercial CBG production in BC The community of Hudson’s Hope has

been a large part of our success The tax credits and incentives the

Province has provided to industry are critical its continued growth

It’s colder up there than we thought.

Thank You