EMERALD RESOURCES NL — Capital/Financing Update 2007

Aug 12, 2007

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EMPIRE OIL & GAS NL

ACN 55 063 613 730 SUITES 7 & 8 154 HAMPDEN ROAD NEDLANDS 6009 WESTERN AUSTRALIA TELEPHONE 61 8 6389 2687 FACSIMILE 61 8 9386 6812 EMAIL info@empireoil.com.au WEBSITE www.empireoil.com.au\

13 August 2007

ASX Limited Company Announcements Office Level 4 20 Bridge Street SYDNEY NSW 2000

Dear Sirs

RE: SPUDDING OF THE VALENTINE-1 WELL

Please find attached a release on the commencement of the Empire Oil & Gas N.L. Canning Basin exploration programme with the spudding of the Valentine-1 exploration well.

Regards

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J L CRAIG MARSHALL Managing Director EMPIRE OIL & GAS N.L.

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EMPIRE OIL & GAS N.L.

STOCK EXCHANGE RELEASE

13 August 2007

SPUDDING OF VALENTINE-1 WELL

The Directors of Empire Oil & Gas N.L. are pleased to advise that operations at the Valentine-1 exploration well, operated by ARC Energy 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:

Empire Oil and Gas NL	14.8%
ARC Energy Limited (Operator)	38.95%
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%

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Empire Oil & Gas N.L., pursuant to various farmout agreements previously announced, will be carried through the drilling costs and any completion costs of the Valentine-1 well with a carry through the cost of any completion of Stokes Bay-1 on a discovery should Valentine-1 not be completed as a discovery well. Empire has stated previously there is a potential for a similar amount of recoverable gas to ARC’s upside case at Valentine-1. Empire’s recoverable gas reserves are estimated at 1200 billion cubic feet of gas.

Empire has also previously stated it considers there is potential for the Valentine Structure to have entrapped up to 200 million barrels of recoverable oil if oil is present and the structure is filled to its spill point.

For further information, please contact:

Mr Craig Marshall BSc (Hons), F.Aus. IMM, CPGeo Managing Director Empire Oil & Gas NL Suite 7 154 Hampden Road NEDLANDS WA 6009 Phone: 61 8 6389 2687 Facsimile: 61 8 9386 6812 E-mail: cmarshall@empireoil.com.au

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VALENTINE DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

Date:	13 August 2007	13 August 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 12.1mAMSL Rotary Table 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:	115mMD
Time of Reporting:	0600 hrs, WST 13 August 2007
Operations Since Last Report:	N/A
Current Operations:	Drilling ahead.
Hydrocarbon indications:	N/A
Participants in the well (post earning):	Empire Oil & Gas N.L. – 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%
Comment:	N/A

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Regional Location map

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Valentine 1 Well Location

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Century Rig 18 on location at Valentine 1

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