Metgasco: Operations Update (Australia)

Metgasco is pleased to advise that good progress is being made on the current multi-lateral drilling program.

Harrier P01 spudded on 11 February 2011 and Harrier P02, spudded on 8 February 2011. The top hole sections of both of these wells have been drilled and cased to approximately 145 metres depth in preparation for the in-seam drilling activity.

Over the past week, Lucas Rig 25 has been drilling at Corella P18 to complete a singlein-seam lateral well. This well has now been completed at 861 metres (MD) and the rig is preparing to run liner. Once the liner is installed, Metgasco plans to complete Corella P18 for production.

The drilling rig will move to Harrier P01 this week where it will continue drilling this multi-lateral pilot well. The rig will commence drilling from the cased top hole section and drill at an angle to enter the Richmond coal seam. Two horizontal in-seam laterals will be drilled from the Harrier P01 top hole with a target length of 1,000 metres per lateral (resulting in 2,000 metres of in-seam exposure per well).

Background on the Harrier Pilot Wells

The Harrier multi-lateral pilot program has been located near Corella P11 where Metgasco has had its lead pilot production well on test for three years and during this time has produced gas at rates of between 160,000 – 200,000 scf per day.

All wells in the multi-lateral pilot program will be drilled into the Richmond coal seam reservoir in the Walloon Coal Measures. This is the first of up to four wells to be drilled. The Harrier wells have been designed to achieve increased in-seam exposure to the resource and thereby result in gas production rates above those currently being achieved from Corella P11, which has a single in-seam horizontal section of 680 metres.

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Source: Metgasco, March 1, 2011;