EMERALD RESOURCES NL — Capital/Financing Update 2007

Aug 12, 2007

==> picture [563 x 58] intentionally omitted <==

==> picture [563 x 58] intentionally omitted <==

13 August 2007

ASX ANNOUNCEMENT AND MEDIA RELEASE

VALENTINE 1 EXPLORATION WELL SPUDS

FAR has been advised by the operator ARC Energy Limited that operations on the Valentine 1 exploration well, located in the onshore Canning Basin Permit R1, commenced at 1230 hours WST on 12 August 2007, using the Century 18 drilling rig. Current operations at the well are drilling ahead at 115mMD in a 444mm diameter hole.

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

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.

Technical details of the well are contained in the attached well summary sheet.

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

==> picture [596 x 48] intentionally omitted <==

FAR ASX Release 13Aug 2007 P.2

VALENTINE DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

	Date:	13 August 2007	13 August 2007	13 August 2007	13 August 2007	13 August 2007
	Permit:	R1
	Well Location:	Lat : 17o08’ 23.46”SLong : 123o42’ 3240”E
			.
	Directional offset to	0	metres
	target:
		Ground Lev	el is 12.1mAMSL
	Elevation:	Rotary Tabl	e is 17.8mAMSL
	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:	115 mMD
	Time of Reporting:	0600 hrs, WST 13 August 2007
	Operations Since LastReport:	N/A
	Current Operations:	Drilling ahead.
	Hydrocarbon indications:	N/A
	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%
	Comment:	N/A

==> picture [596 x 48] intentionally omitted <==

FAR ASX Release 13Aug 2007 P.3

Regional Location map

==> picture [425 x 278] intentionally omitted <==

Valentine 1 Well Location

==> picture [425 x 277] intentionally omitted <==

==> picture [596 x 48] intentionally omitted <==

FAR ASX Release 13Aug 2007 P.4

Century Rig 18 on location at Valentine 1

==> picture [426 x 320] intentionally omitted <==

In a release to the ASX made this morning Empire Oil & Gas N.L, a participant in the Valentine-1 well, advised an estimate of potential recoverable gas reserves to be up to 1200 billion cubic feet of gas (gas case) or up to 200 million barrels of recoverable oil if oil is present and the structure is filled to its spill point (oil case).

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

==> picture [596 x 48] intentionally omitted <==