Cougar Energy Update by Bakers Investment Group

Cougar Energy Ltd (ASX: CXY) - Update

On January 28^th Cougar announced its Joint Venture with Australia Petroleum Ltd. to diversify their current business operations to include Methane as part of their UCG operations.

Bakers Group views this announcement as a positive step for CXY and the valuation remains unchanged with a price target of $0.14. The share is currently trading at 0.095

· CXY’s Kingaroy project is currently in preproduction with the pilot project on track to be commissioned in February 2010.

· The assessment of the potential for Methane production at CXY’s Wandoan site, with the potential to convert Methane to LNG, provides CXY with access to a third product and potential to access new markets from existing operations.

· Successful conversion of Methane gas to LNG, along with UCG power generation, provides CXY with a more diversified business model.

· The Joint venture with Australian Petroleum Limited assists in providing new opportunities for capital investment in the development of Methane to LNG at Wandoan.

· If successful, the Wandoan project will provide opportunities for CXY’s future expansion into global emerging energy markets through the potential for new UCG projects and export sales of LNG.

Our valuation for CXY remains as a Buy and we see future potential as the Kingaroy and Wandoan projects develop and new projects and opportunities for CXY are identified.

Read the company announcement: COUGAR ENERGY SIGNS TERMS SHEET FOR METHANE PRODUCTION JOINT VENTURE IN QUEENSLAND

To receive further information on CXY including our latest company coverage report, please feel free to contact me on the details below.

Kind regards,

Chandan Khemani

Analyst

Bakers Investment Group (Australia) Pty. Ltd.

17 Station Road, Indooroopilly

Queensland, 4068

GPO Box 2171

Brisbane Qld 4001

P: 1800 982 210

F: 1800 620 088