Metgasco: Operations Update (Australia)

Metgasco advises the following update on the Company’s current drilling and exploration program.

Kingfisher Stimulation Program (PEL 16)

Metgasco has continued to run flow cycles over the past week to clean up the Kingfisher E01 well and remove remaining liquid volume introduced during the stimulation treatment. Following completion of the clean up a production test will be carried out.

Thornbill E01 and Thornbill E02 (PEL 426)

Thornbill E01 and Thornbill E02 are vertical wells designed to explore and test the Walloon Coals Measures.

Thornbill E01 was drilled to a total depth (TD) of 846 metres in the area of the Banyabba surface anticline some 50 kilometres south of Casino. A successful flow test from the Richmond coal seam was conducted which achieved an average gas flow of 100 mscfd over 6 hours with no water production. The well was subsequently drilled to TD and logging operations identified that the well had intersected approximately 13 metres of coal and carbonaceous shale. The well was not designed to be placed on long term production test and has now been abandoned as planned and the rig moved to Thornbill E02. Metgasco will evaluate these results and develop a follow up program for this discovery.

Thornbill E02 was drilled to a total depth (TD) of 617 metres in the area north west of the Tullymorgan anticline approximately 42 kilometres north of Grafton. Production tests across the coal intervals yielded minor gas flows to surface. The well was subsequently drilled to TD and logging operations identified that the well had intersected approximately 20 metres of coal and carbonaceous shale. Although no water was observed while drilling the Walloon Coal Measures, the results from the production tests at Thornbill E02 were disappointing and Metgasco will further evaluate the significance of these results.

2010 MET10 2D Seismic Survey restarted (PEL 16, PEL 13 and PEL 426)

Metgasco recommenced the 2010 seismic acquisition program on November 13th following delays due to heavy rains and unsuitable ground conditions in the area. A total of 78 km of the planned 200 km has now been completed and the survey is continuing. The objectives of the 2010 MET10 2D seismic survey are described below:

PEL 16 – 110 line km

– define Kingfisher field limits (77 Bcf PMean, 284 Bcf P10)

– identify any linkages to the Mackellar prospect to the north (63 Bcf PMean, 688 Bcf P10)

– identify structural closure on the Mackellar North lead (146 Bcf PMean, 1,793 Bcf P10)

– clarify the structural relationships in the area surrounding the lead CSG inseam lateral, Corella P11.

PEL 13 – 50 line km

– identify structural closure on the Wedgetail lead (105 Bcf PMean, 1,160 Bcf P10)

– identify structural closure and any linkages to the Kingfisher discovery of the Shannon Brook and Rappville leads;

– assess structural closure and assist in further delineating the Eden Creek trend.

PEL 426 – 40 line km

– identify structural closure on the Coaldale lead (201 Bcf PMean, 2,273 Bcf P10).

[mappress]

Source: Metgasco, November 17, 2010