NGC HOLDINGS LIMITED

GAS WHOLESALING ACTIVITIES

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

FOR THE YEAR ENDED 30 JUNE 2007

a) Maui Gas

At 30 June 2007, the gas wholesaling activities has 4.8PJ (30 June 2006: 12.7PJ) of remaining historic Maui gas entitlements including 4.4PJ (30 June 2006: 11.6PJ) which is likely to be delivered with no further payment to the Crown except for payment of the energy resource levy. The remaining 0.4PJ (30 June 2006: 1.1PJ) can be uplifted at the previous contract prices. As part of the variations executed on 1 June 2004, the gas wholesaling activities also has a right of first refusal (ROFR) at market price along with Contact Energy over any additional gas found after first reserving 40PJ for Methanex New Zealand Limited. A series of ROFR contracts has been entered into with Maui Development Limited (MDL) for 105PJ to be delivered between 1 April 2007 and 31 December 2014. Of that quantity, 60PJ was contingent on being confirmed as economically recoverable. In May 2007 a confirmation was received that MDL had converted 23.3PJ of previously contingent gas to firm contracted entitlements for the gas wholesaling activities. The ROFR contracts contain annual take or pay provisions and the gas wholesaling activities has entered into back to back arrangements with other parties for the on-sales of ROFR gas to cover the gas wholesaling activities take or pay liability through to December 2009.

b) Kapuni Gas

The gas wholesaling activities currently has entitlement to 50% of the recoverable gas reserves of the Kapuni field as they were determined to be at 1 April 1997. At 30 June 2007, this is estimated to be approximately 64PJ (30 June 2006: 76.8PJ), of which, 50.3PJ (30 June 2006: 56.3PJ) is at current Kapuni gas contract prices while the balance will be at a price yet to be negotiated.

An agreement has been reached with Shell (Petroleum Mining) Company Ltd (Shell) to purchase Shell’s share of Kapuni gas, after Shell has met its pre-existing contract commitments, for the period from 1 January 2005 to 31 December 2013. Deliveries of this Kapuni gas will be dependent on the daily production from the field, but it is expected that approximately 45PJ of gas will be delivered under this contract. The maximum total quantity of gas to be delivered under the contract is 70PJ less any amounts credited to this contract from the Pohokura Gas contracts discussed below.

c) Pohokura Gas

The gas wholesaling activities currently purchases a portion of Shell’s entitlements to gas from Pohokura, which commenced in September 2006 and runs until 30 September 2007. The rates of gas able to be purchased under this contract vary over the term of the contract and the gas wholesaling activities may purchase a total amount of up to 35PJ of gas under this contract. The first 10PJ of gas purchased under this contract has been credited to the gas wholesaling activities entitlement to 70PJ of gas as described above under Kapuni Gas.

It has also been agreed with Shell to purchase a further portion of Shell’s entitlements to gas from Pohokura from 1 January 2007 until 30 June 2010. Delivery of such gas is dependent on Shell’s share of Pohokura’s daily production, but the gas wholesaling activities will have up to 30TJ/day available. The gas wholesaling activities may purchase a total amount of up to 38PJ of gas under this contract. Fifty percent of this gas will be credited to the gas wholesaling activities entitlement to 70PJ of Kapuni gas from Shell as described above.

Both of the above Pohokura contracts contain daily fixed quantity provisions.

d) Kahili Joint Venture

It was agreed with the Kahili Joint Venture (Kahili JV) in 2004 to purchase all the wet gas produced from the Kahili field. The Kahili JV comprises Austral Pacific Energy (NZ) Limited and Tag Oil (NZ) Ltd. The field is currently closed pending a re-drilling in 2008. The volume expected from any new well is uncertain but estimated to be 5PJ.

5. NOTIONAL RESERVES

The gas wholesaling activities is not a company and therefore has no share capital. A provision has been made for a notional dividend of $30 million payable for the current year.