EMERALD RESOURCES NL — Capital/Financing Update 2007

Oct 24, 2007

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Level 2, 16 Altona Street West Perth WA 6005 Ph: 08 9482 0500 Fax: 08 9482 0505 Email: info@emeraldoilandgas.com www.emeraldoilandgas.com

25 October 2007

Centralised Company Announcements Platform Australian Stock Exchange 10[th] floor, 20 Bond Street Sydney NSW 2000

EXPLORATION WELL UPDATE - EP 104/R1 CANNING BASIN, WESTERN AUSTRALIA – THE STOKES BAY-1 WELL

Emerald Oil & Gas NL (ASX: EMR) wishes to advise that the EP 104/R1 Joint Venture has elected to run 7” (178mm) casing in the well bore to enable testing of the oil and gas shows observed in the Stokes Bay-1 well. The current operation is pulling out of the hole to run casing after stabilising mud losses in preparation for testing the Nullara formation carbonates.

Stokes Bay-1 was originally deepened to its current depth of 2,755 meters to evaluate seismic-interpreted reefal carbonates of the Nullara formation.

The interval of interest is from 2,737-2,755 meters where drilling fluids were lost in the well bore upon deepening the well to the Nullara Formation. This interval is called a lost circulation zone and is indicative of a very porous and permeable reservoir. Testing of the Nullara Formation lost circulation zone is designed to determine whether it is hydrocarbon bearing as it is in the Blina Oilfield, located along the Pinnacle Fault trend 100 kms south east. Emerald has contributed its 12.75% interest in this deepening exercise.

Testing of the Lower Anderson Formation sands, where several zones are interpreted to have oil saturations will follow testing of the Nullara formation. To date these have been no cuttings or mud returns from the Nullara therefore there have been no indications of fluid type present so far.

Please find attached a release on the progress of the Canning Basin exploration programme with the drilling of the Stokes Bay exploration well.

For more information please contact:

Emerald Oil & Gas NL Tel: +618 9482 0510 www.emeraldoilandgas.com info@emeraldoilandgas.com

JOHN HANNAFORD Executive Director – Finance jhannaford@emeraldoilandgas.com

BOB BERVEN Executive Director – Technical bberven@emeraldoilandgas.com

STOKES BAY-1 DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

Date:	25thOctober 2007
Permit:	R1
Well Location:	Lat : 17o08’ 23.46”S Long : 123o42’ 32.40”E
Directional offset to target:	1024 metres
Elevation:	Ground Level is 12.4mAMSL Rotary Table is 18.1mAMSL
Proposed Total Depth (measured KB):	2800 metres
Prognosed drilling time:	15 days
Spud Date:	0930 hrs, WST 3 October 2007
Present Depth at 0600 hrs:	2755m MD
Time of Reporting:	0600 hrs, WST 25thOctober 2007
Operations Since Last Report:	Since last report on Thursday October 18th, drill pipe conveyed logging has been conducted. Drillpipe conveyed logs rather than wireline logs have been run to TD due the angle of the well and hole condition. Preliminary interpretation of these logs indicates: a) The Anderson Sands have some zones with potential oil saturations. The commercial significance of those zones will require formation testing to evaluate. A joint venture decision on testing of these zones is yet to be taken. Any such testing would follow operations to evaluate the deeper Nullara Formation. b) The top of Nullara Formation has been interpreted at 2722m MD. Below 2732m MD, the log quality is severely degraded by interpreted large scale vugular porosity such that quantitative interpretation is not possible. In addition to earlier reported mud losses into the Nullara section there have been continued losses while conditioning the well for logging and preparing to case the hole. Because of the losses and subsequent lack of returns there is no indication of fluid content in the Nullaraporous section.,As of 0600 todaythe hole

	is now properly stabilised and the forward plan is to run 178mm (7”) casing prior to testing the Nullara Formation. As described in last week’s announcement, all JV partners are participating in the shallow part of Stokes Bay-1 (above 2589m MD). However, less than all parties are participating in the well below 2589m MD such that equity levels in this part of the Stokes Bay-1 well (below 2589m MD) are: • ARC Energy Limited – 69.25% (Operator) • Emerald Oil & Gas NL - 12.75% • Pancontinental Oil & Gas NL - 10.0% • First Australian Resources Limited - 8.0% Under the Joint Venture Operating Agreement, the non- participating parties in the deeper part of the well (Empire, Phoenix and Indigo) retain a future right to earn back into the well by the payment of penalties.
Current Operations:	POOH to run Casing
Hydrocarbon indications:	Mud gas and oil shows as noted in the Anderson Formation. No returns or shows from the Nullara Fm. due to mud loss.
Comment:	While the loss of mud to the Nullara Fm has created operational difficulties that have now been overcome, we are encouraged by the presence of both porosity and significant permeability in the Nullara reef section. Development of vugular porosity in this section is has been the target of previous exploration on the Nullara reef trend in the Basin, and we note that it is host to oil production at Blina some 100km to the SE. The planned test of the Nullara Formation will determine fluid type and flow characteristics of the reservoir. The Stokes Bay intersection of the Nullara Fm is 80m up dip of the Pt Torment 1 intersection which did not have the vugular porosity developed, but nevertheless tested gas at low rates.
Participants in the Permit (post earning):	ARC Energy Limited - 38.95% (Operator) Empire Oil and Gas NL - 14.8% Emerald Oil & Gas NL - 12.75% Pancontinental Oil & Gas NL - 10.0% Phoenix Resources PLC - 10.0% First Australian Resources Limited - 8.0% Indigo Oil Pty Ltd - 5.5%

About Emerald Oil & Gas NL

Emerald Oil & Gas NL (ASX: EMR; EMRO) was listed on the ASX in June 2006, raising $4 million. Emerald is an oil and gas exploration and production company with project interests in North Dakota and Texas in the USA and in the Canning Basin of Western Australia. Emerald’s focus is on conventional reservoir targets for oil and gas prospects and its primary objective is to achieve near term production and cashflow to build shareholder value and provide funds to fuel further growth. Emerald’s strategy is to take modest but meaningful positions in low risk exploration projects that can be swiftly brought into production.

Information in this announcement pertaining to exploration potential was compiled by Robert Berven, Emerald Oil & Gas NL’s Technical Director who is a Member of the Australasian Institute of Mining and Metallurgy and the American Association of Petroleum Geologists CPG # 2498.

Statements regarding Emerald’s plans with respect to its petroleum properties are forwardlooking statements. There can be no assurance that Emerald’s plans for development of its petroleum properties will proceed as currently expected. There can be no assurance that Emerald will be able to confirm the presence of additional petroleum deposits, that any discovery will prove to be economic or that an oil or gas field will successfully be developed on any of Emerald’s petroleum properties.