EMERALD RESOURCES NL — Capital/Financing Update 2007

Sep 24, 2007

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25 September 2007

ASX ANNOUNCEMENT AND MEDIA RELEASE

ACTIVITY UPDATE

Valentine-1, Onshore Canning Basin, Western Australia (FAR 8%) Preparing to run logs

FAR has been advised by ARC Energy Limited that final TD has been called at 3,430m MD based on lack of porosity in cuttings and the lack of significant hydrocarbon shows in the Virgin Hills Formation section. Current operations at the well comprise performing a wiper trip prior to logging.

A Drilling Report on the Valentine well is contained in the attached well summary sheet.

Stokes Bay 1 (FAR 8%)

The Stokes Bay 1 well will be drilled by sidetracking from the Valentine-1 wellbore after the completion of drilling operations at Valentine 1. Stokes Bay 1 is planned as a test of the extent and reservoir development of the gas accumulation intersected by the Point Torment 1 well and will be drilled as a deviated well with a total depth of approximately 2,500 metres. Point Torment 1 was drilled in 1992 and subsequently flowed gas at a rate of up to 4.3 million cubic feet of gas per day from the Carboniferous aged Anderson Formation sandstones. Subsequent tests of these sands produced ambiguous information on potential volumes and reservoir quality and the Stokes Bay 1 well is designed to provide a definitive test of the reservoir quality and extent of the accumulation.

The very strong gas shows and indications of porosity in the shallower intervals of the Anderson and Laurel Formations which were encountered as planned substantially down-dip in the Valentine-1 well bore are considered highly encouraging for the targets of the Stokes Bay 1 well.

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FAR ASX Release 25 Sept 2007 P.2

VALENTINE-1 DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

Date:	25 September 2007	25 September 2007
Permit:	R1
Well Location:	Lat : 17o08’ 23.46”S Long : 123o42’ 32.40”E
Directional offset to target:	0 metres
Elevation:	Ground Level is 12.4mAMSL Rotary Table is 18.1mAMSL
Prognosed Depths (measured KB):	Top primary objective	Total depth
	3,222 metres	3,407 metres
Prognosed drilling time:	25	days
Spud Date:	1230 hrs, WST 12 August 2007
Present Depth at 0900 hrs:	3430mMD
Time of Reporting:	0900 hrs, WST 25 September 2007
Operations Since Last Report:	Repaired the top drive hydraulic unit and directionally drilled from 3,377m to 3430mMD. Final TD has been called at 3430m MD based on lack of porosity in cuttings and the lack of significant hydrocarbon shows in the Virgin Hills Formation section.
Current Operations:	Performing a wiper trip prior to logging.
Hydrocarbon indications:	None
Comment:	The upper part of the clastic sediments of the target Virgin Hills Formation are interpreted to have been intersected with lithologies being predominantly tight sandstones and calcareous claystones. No significant indications of hydrocarbons or porosity were noted over this interval. Further evaluation of all intervals in this well will be undertaken with the wireline logging program. Following the logging program, the well will be plugged back and sidetracked to the Stokes Bay location. The very strong gas shows and indications of porosity in the shallower intervals of the Anderson and Laurel Formations is considered highly encouraging for the targets of the Stokes Bay 1 well which were encountered as planned substantiallydown-dipin the Valentine well bore.

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FAR ASX Release 25 Sept 2007 P.3

Participants in the well (post earning):	Empire Oil and Gas NL - 14.8% ARC Energy Limited - 38.95% (Operator) 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 PtyLtd - 5.5%

For information on FAR’s drilling activities visit our website at www.far.com.au

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