EMERALD RESOURCES NL — Capital/Financing Update 2007

Sep 3, 2007

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PANCONTINENTAL Oil & Gas NL ABN 95 003 029 543

Ground Floor 288 Stirling Street, Perth Western Australia 6000

P O Box 8260 Perth Business Centre Western Australia 6849

Tel: (61 8) 9227 3220 Fax: (61 8) 9227 3211 Email: mab@pancon.com.au Web: www.pancon.com.au

ASX Release

4[th] September 2007

Valentine-1 Exploration Well Drilling Update

Pancontinental Oil and Gas NL (ASX: PCL) wishes to advise that Joint Venture (JV) partner and operator of the EP 104 & R1 Onshore Canning Basin project, Arc Energy (ASX: ARQ), has announced that operations at the Valentine 1 exploration well are continuing at a depth of 2,589m.

Further drilling through the claystones and limestones of the Fairfield Group has revealed additional elevated gas readings at 2295m, 2354m, 2404m, 2415m and 2470m MD, each representing an interval of several metres. A wiper trip is presently being run to condition the hole prior to running an intermediate wireline logging suite to evaluate the significance of these hydrocarbon indications. The total measured depth of the Valentine-1 well is programmed to be 3,407mRT with the target Virgin Hills Formation at approximately 3,222mRT. Final interests in R1 and EP104, post the Valentine 1 well farm-in 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%

Pancontinental General Manager, Matthew Battrick said: “Drilling and evaluation operations are continuing; we are currently 23 days into the well and still around a week away from the primary target, if penetration rates remain the same as we near the total depth of this well”.

“The six zones of gas shows now recorded from around 2,250 to 2470mRT constitute a significant interval in a section of the stratigraphy that was not considered our primary target. This is very encouraging news and the entire interval is in need of urgent wireline log evaluation, prior to deepening the well to the primary target.” Matthew said.

Enquiries:

Matthew Battrick, General Manager Tel: 08 9227 3220, Fax: 08 9227 3211 Email: mab@pancon.com.au

The summary report on the oil and gas projects is based on information compiled by Mr M A Battrick, BSc, MAAPG, MPESA, MAICD, MPESGB, General Manager of Pancontinental Oil & Gas NL. Mr Battrick has the relevant degree in geology and has been practising petroleum geology for 26 years. Mr Battrick is a full-time employee of Pancontinental Oil & Gas NL and has consented in writing to the inclusion of the information stated in the form and context in which it appears.