EMERALD RESOURCES NL — Capital/Financing Update 2007

Sep 9, 2007

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10 September 2007

ASX ANNOUNCEMENT AND MEDIA RELEASE

ACTIVITY UPDATE

Valentine-1, Onshore Canning Basin, Western Australia (FAR 8%) Intermediate logging of secondary objectives completed, well being drilled ahead to primary target

FAR has been advised by ARC Energy Limited that intermediate logging of secondary objectives over the interval 808m to 2,589m MD has been completed and that the well is now being drilled ahead to the primary target, Virgin Hills Formation. Current operations at the well comprise running in hole after trip for bit change at 2,695m MD.

Valentine 1 is located approximately 20 kilometres north of the township of Derby in northwest Western Australia’s Kimberley region.

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The primary reservoir objective is the Late Devonian aged Virgin Hills Formation. Valentine 1 is designed to intersect the interpreted Virgin Hills sandstones and carbonates near the structural crest of the prospect. The well will be drilled deviated to the 244mm (9 5/8”) casing point at approximately 800 metres measured depth, building to a maximum hole angle of 20[O] . The Valentine 1 well will then be drilled to return to vertical at the top of the main objective section at approximately 3,220 metres measured depth. The deviation at 800m will

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ASX Release 10 September 2007 P.2

accommodate the planned subsequent sidetracking operations required to drill the Stokes Bay 1 well, which will be drilled immediately after Valentine 1.

The Valentine prospect is a large lowside fault closure that is mapped in both the EP104 and R1 permits and extends over an area of some 66 square kilometres along the Pinnacle fault system. The Valentine reservoir objective is interpreted to be a slope fan / marine sand body which has a very distinctive seismic signature. The principal risk on the prospect is interpreted to be the stratigraphic updip seal mechanism, but the distinctive seismic signature of the objective section and the proven good petroleum source potential of the underlying Gogo Formation shales, together with the large potential hydrocarbon volumes, make it an attractive target.

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The Stokes Bay 1 well is planned to 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.

Final interests in R1 and EP104 post the Valentine 1 well farmin earning program are:

ARC Energy Limited (Operator)	38.95%
Empire Oil and Gas NL	14.8%
Emerald Oil & Gas NL	12.75%
Pancontinental Oil & Gas NL	10%
Phoenix Resources PLC	10%
First Australian Resources Limited	8%
Indigo Oil Pty Ltd	5.5%

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

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FAR ASX Release 10 September 2007 P.3

VALENTINE-1 DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

Date:	10 September 2007	10 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:	2,695mMD
Time of Reporting:	0600 hrs, WST 10 September 2007
Operations Since Last Report:	Intermediate logging of secondary objectives over the interval 808m to 2589m MD has been completed, and the well is now being drilled ahead to the primary target, Virgin Hills Formation.
Current Operations:	Running in hole after trip for bit change
Hydrocarbon indications:	Strong mud gas shows over the interval 2240m to 2470m MD have now been evaluated by wireline logging: see comments below.
Participants in the well (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 PtyLtd - 5.5%

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FAR ASX Release 10 September 2007 P.4

Several strong gas peaks were recorded from monitoring gas in drilling fluids (“mud gas”) over the interval 2240 to 2470m measured depth (MD). These were considered sufficiently material to warrant an intermediate wireline logging run over the gross open-hole interval 809m to 2589m MD, and this has now been completed. Preliminary analysis of the wireline log results indicates the presence of porous (15%) and permeable sandstones of the Lower Anderson Formation over the gross interval 2100 to 2260 m MD. A preliminary interpretation of the electric logs and MDT results indicates low hydrocarbon saturations, including the zones of strong mud gas shows at 2240 m to 2260m MD. These Lower Anderson sands and their lateral equivalents, are the primary target of the Stokes Bay 1 well, which will target them in a crestal location on the structure. Please note that at Valentine-1 the secondary reservoir objective Anderson Formation sands are not mapped within closure. This 160 metre gas show interval in Valentine-1 within the Anderson Formation enhances the prospectivity of these objectives in the updip location in the Stokes Bay-1 Comment: well. The Stokes Bay 1 well will be drilled following Valentine 1. The strong mud-gas shows in the deeper Laurel Fm (2400 m to 2470m MD) are interpreted as being associated with a series of organic rich tight carbonates and shales. The results to date at Valentine 1 are very encouraging for the prospectivity of the updip Stokes Bay well, and also for the regional prospectivity of the Basin as they confirm the presence of a significant hydrocarbon system in the Fitzroy Trough of the greater Canning Basin, and have confirmed the presence of reservoir quality sands and high quality shale seals. Since wireline logging, at 0600 hrs today, the well has been deepened by 106m (to 2695mMD) towards the Virgin Hills primary objective prognosed at 3222mMD. In drilling the additional 106m, further elevated gas readings have been recorded, and these have yet to be evaluated.

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

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