Marion Energy Limited (ASX:MAE) Quarterly Report For The Period Ending 30 September 2009

Melbourne, Nov 2, 2009 AEST (ABN Newswire) - The Directors of Marion Energy Limited (ASX:MAE)(PINK:MAEJF) present their Activities Report for the September 2009 Quarter.

OVERVIEW

Highlights

- Strategic operational review completed and commenced implementation of forward development plan during the Quarter.

- Positive results achieved with the first two Ridge Runner wells - indications that production should recommence in December 2009 Quarter.

- Oversubscribed A$6.5m Placement completed in October, 2009 with strong support for planned A$29m Rights Issue.

- Proceeds raised to be used to fully fund the Company into multiple well production operations, reduce bank debt, improve debt terms and provide working capital to support operations.

- Planned appointment of a highly experienced Chief Operating Officer (COO) to strengthen operational control and activities.

It is also pleasing that the above are all taking place at a time of significantly strengthening of USA gas prices with the price having increased by approximately 250% over the last 4 months. Coming into the Northern Hemisphere Winter, prices are expected to continue to strengthen.

OPERATIONS REPORT

As indicated in the previous Quarterly Report, the Clear Creek and some of the Helper wells have been shut in for most of the previous six months due to depressed gas market conditions and operational difficulties.

In conjunction with independent external industry consultants, the Company conducted a comprehensive review of these wells and has now developed an operational plan to manage issues previously experienced.

The plan aims to progressively bring back onto production 4 to 6 of what are believed to be the most productive wells over a six month period. Production from the first of these wells is targeted to recommence in December 2009 Quarter.

Activities during the Quarter focused on the Ridge Runner (RR) 11-17 and RR 2-19 wells. These wells production tested at flow rates of up to 7 million and 2-3 million cubic feet of gas per day respectively during the initial extended testing period in 2008 before being shut in mainly due to the gas pricing environment.

RR11-17

- Initial treatments of the RR 11-17 well have been successful.

- Considerable amounts of residual drilling, frac and other naturally occurring material have been recovered and it is believed the majority of this material in the reservoir has been recovered.

- No re-occurrence of the previous technical issues which restricted production following the successful implementation of improved operating and development practices by the Company.

- Significant gas flows have also accompanied these operations with gas flows scheduled to be freely sold into the production network during December 2009 Quarter.

RR2-19

- Initial operations on the RR 2-19 well also commenced during the Quarter with the first results indicating the work program will also be successful.

- Work on this well will be stepped up as the program on the RR 11-17 well is completed in November 2009.

RECAPITALISATION OF COMPANY: NEW EQUITY RAISING AND EXTENSION OF BANK DEBT

On October 21, 2009 the Company announced details of a A$35.5 million capital raising.

The first stage of this capital raising has been completed with an oversubscribed Placement to institutional and sophisticated Australian and overseas investors raising A$6.5 million. The Company is in advanced discussions with regards to finalising underwriting commitments for a A$29 million Rights Issue. Further details will be released as they become available.

In conjunction with the recapitalisation strategy, the Company's existing financiers have extended the current credit facility until March 2010 subject to completion of terms and finalisation of documentation. It is planned to use part of the capital raised from the Rights Issue to reduce the level of bank debt and to restructure the remaining amount of the facility on to a longer term fixed basis.

EXPIRY OF OPTIONS AND NEW OPTION ISSUE

During the Quarter 20,000,000 unlisted 25 cent and 20,000,000 unlisted 30 cent Supplementary Incentive options expired due to non exercise and 500,000 A$1.50 unlisted non executive director incentive options expired due to non exercise.

During the Quarter 10,000,000 unlisted options were issued to the company's bankers with an exercise price of 37.5 cents each and an expiry date of 1 July, 2012.

OUTLOOK FOR NEXT QUARTER

The focus for the next quarter will be on the following:

- Continued focus on operational plan to consolidate production and revenue generation

- Strengthen Balance Sheet through combination of equity capital raising and negotiation of restructuring of debt

- Appointment of Chief Operating Officer

The Board believes successful pursuit of these activities will position the company to achieve solid growth going forward into 2010 and beyond.

For the complete Marion Energy Quarterly Report for the period ending 30 September 2009, please click the link below:

http://www.abnnewswire.net/media/en/docs/61685-ASX-MAE-467274.pdf

Contact

North American Contact: Mr Jeff Clarke Managing Director & CEO Ph: +00111-214-244-7690 Email: jclarke@marionenergy.com Australian Contact: Mr Peter Collery Executive Director and Company Secretary Ph: +61-3-8862-6466 Email: peter@marionenergy.com.au