EMERALD RESOURCES NL — Capital/Financing Update 2007

Sep 9, 2007

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ASX RELEASE

Release Date: 10 September 2007 To: Australian Stock Exchange Ltd No of Pages: 3 From: Eric Streitberg Re: Valentine-1 Update

Please find attached an update on the Valentine-1 exploration well.

The attached release will also be available on the Company’s website at; www.arcenergy.com.au.

For inquiries please contact:

Eric Streitberg, Managing Director Telephone +61 8 9480 1300 Freecall 1800 337 330 Email eric@arcenergy.com.au

About ARC Energy Limited ARC Energy is one of Australia’s pre-eminent energy companies, owning and operating oil and gas interests in the Perth, Canning and Bass basins, and internationally. Listed on the Australian Stock Exchange with a market capitalisation of approximately A$450 million, ARC has an aggressive onshore and offshore exploration and development drilling program. It continues to drive increased shareholder value by the early adoption of innovative technical and commercial practices.

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Level 4, 679 Murray Street, West Perth, Perth Western Australia 6005 Freecall: 1800 337 330 Tel: 61 8 9480 1300 Fax: 61 8 9480 1388 Website: www.arcenergy.com.au, Email: arc@arcenergy.com.au, ASX Code: ARQ

VALENTINE-1 DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

D	ate:	10 September 2007	10 September 2007	10 September 2007
P	ermit:	R1
	Well Location:	Lat : 17o08’ 23.46”SLon : 123o42’ 3240”E
		g.
D	iil ff	0
	rectona oset to target:	metres
E	levation:	Ground Level is 12.4mAMSL
		Rotary Tab	le is 18.1mAMSL
P(	rognosed Depthseasured KB):
		Top primary objective		Total depth
		3,222 metres		3,407 metres
P
	rognosed drilling time:	25		days
S	pud Date:	1230 hrs, WST 12 August 2007
P	resent Depth:	2,695mMD
T	ime of Reporting:	0600 hrs, WST 10 September 2007
OR					ein
	perations Since Last	Intermediate logging of secondary objectives over theinterval 808m to 2589m MD has been completed, and th
	eport:	well is now being drilled ahead to the primary target, VirgHills Formation.
C	urrent Operations:	Running in hole after trip for bit change
H	ydrocarbon indications:	Strong mud gas shows over the interval 2240m to 2470MD have now been evaluated by wireline logging: seecomments below.			m
Participants in the well(post earning):		ARC Energy Limited - 38.95% (Operator)Empire Oil and Gas NL - 14.8%

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Several strong gas peaks were recorded from monitoring gas in the 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.

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