EMERALD RESOURCES NL — Capital/Financing Update 2008

Apr 29, 2008

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Level 2, 16 Altona Street West Perth WA 6005 Ph: +618 9482 0500 Fx: +618 9482 0505 Email: info@emeraldoilandgas.com www.emeraldoilandgas.com

30 April 2008

Centralised Company Announcements Platform Australian Stock Exchange 10[th] floor, 20 Bond Street Sydney NSW 2000

90,000 ACRE GAS DEVELOPMENT PROJECT, KENTUCKY & WEST VIRGINIA, USA

Highlights

• Drilling and Operating Agreement to develop up to 90,000 acres in West Virginia and Kentucky USA

• Emerald to earn 80% working interest

• 130+ drilling locations already identified

• Several productive gas horizons from existing producing wells, deeper shale gas potential

• +1,000 well potential

• Regional Area of Mutual Interest for future projects

• Existing infrastructure in place and close to markets, premium gas prices (~US$11/mcf)

• Advanced negotiations to secure long term funding

Drilling and Operating Agreement

Emerald Oil & Gas NL (“Emerald”) is pleased to announce the signing of a Drilling and Operating Agreement with P&J Resources Inc (“P&J”) covering two 45,000 acre lease areas throughout the Big Sandy area of southern West Virginia and Eastern Kentucky. Under the agreement, Emerald, through a US subsidiary will have the right to earn an 80% working interest for payment of 100% of the drilling and completion costs of each well. Emerald will own a 90% interest in the subsidiary. Under the agreement Emerald will earn its interest in the well plus a 4,000 foot radius spacing unit which will include several additional drilling locations surrounding each well drilled. P&J as operator will undertake the drilling and completion on a turnkey basis for each well and has allocated two Ingersoll Rand drilling rigs for the program.

Wells are drilled on either 20 acre spacing (shallow zones up to 3,500 feet) or 40 acre spacing (deeper zones from 4,000 to 5,000 feet). Both areas have historical shallower production, plus some recent deeper producing wells. This agreement provides Emerald with exposure to over 1,000 well potential program once deeper development and infill of shallower zones is realized over the 10 year term of the agreement.

Emerald has committed to the first well of an initial five well program in the West Virginia leases. The Company has also committed to fund completion and hookup of an existing discovery well in Kentucky to earn an 80% working interest.

Under the agreement P&J have agreed to re-drill any non-commercial wells, solely at P&J’s cost, effectively ensuring a very high success rate for all Emerald wells. This underscores P&J’s and Emerald’s belief in the continuous nature of the productive formations across the acreage.

Appalachian Basin - Geology and Exploration History

The Appalachian Basin in Eastern USA has had a long history of hydrocarbon production, and contains many of the oldest oil & gas fields in the world. This Basin extends from New York State (Northeast) to Alabama (Southwest) a distance in excess of 1,000 kilometres. Much of the early production, which began in the mid-1800’s, has not been systematically recorded. Therefore, there are no independent commercial sources that record a complete production history for the over 1,000 named fields within the Basin. The Appalachian Basin still remains an important part of the USA domestic petroleum industry today, with thousands of oil & gas wells still producing and numerous new wells currently being brought on stream monthly. Rig activity has soared in recent times due to the current product price environment with both oil & gas prices at record levels. The main focus for many years in the Appalachian Basin has been for natural gas with the majority of wells targeting shallow, low risk, blanket-type pay zones above 5,000 feet depths. However, with suitable sedimentary rocks existing for several thousands of feet in various parts of the Basin, it will have many decades of remaining exploration & productive life. Some factors contributing to the continued interest & success in this Basin are:

• High success rate due to several thick & geographically extensive “blanket” formations throughout large portions of the basin which are productive.

• Geological diversity evidenced by reported production from over 100 statigraphically discrete intervals and formations, with most wells having several target pay zones.

• Proximity to large eastern USA population centers with high gas prices due to demand in part and low transportation charges.

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• Shallow depths to reservoirs means that the majority of production to date has come from reservoirs above 6000 feet, which results in short drilling times and lower costs.

• Premium pricing is obtained for most Appalachian Basin gas due high British thermal unit (BTU) content over most other gases, resulting in a 8-10 percent per MCF revenue increase over Henry Hub base pricing.

A recent article in the March edition of the American Association of Petroleum Geologists (AAPG) Explorer magazine highlights a whole new exploration play that is opening up in Appalachian Basin targeting the Devonian-aged “Marcellus Shale” potential reservoir. It is an “unconventional” fractured- shale play which is deeper than most previous wells but could have huge potential due to its thickness and area extent according to the AAPG article. Horizontal drilling is the key and a press release in the USA from Range Resources in December, 2007 reported gas flow rates between 1.4 & 4.7 mmcf/day from five horizontal wells it had drilled to the “Marcellus”. It is being compared to the famous “Barnett Shale” play in the Fort Worth Basin of Texas where 100’s of horizontal wells are currently being drilled and completed.

The exploration and production program being initiated by Emerald Oil & Gas NL covers a portion of the “Rome Trough”, a northeast-southwest trending tectonic unit, postulated as part of a major Precambrian “rift” system that covers northeastern Kentucky & southwestern West Virginia. The Rome Trough has since been filled with up to 20,000+ feet of sedimentary rocks ranging in age from Cambrian through Pennsylvanian, many of which now form the reservoirs and target zones for previous, current and future exploration and production efforts. Emerald will initially concentrate on natural gas drilling in eastern Kentucky and southern West Virginia where its partner, P&J Resources, holds most of its exploration and production leases. A number of independent Geological and Engineering consultants have reviewed the P & J Resources’ lease holdings in recent years and all have recommended further work programs. These would consist of field extensions and infill drilling, redrills, replacement wells, twinned wells and deeper exploration to target both conventional reservoirs (sandstones, carbonates), and unconventional reservoirs such as the “Marcellus Shale”. Emerald believes that the “Marcellus Shale” is present under P & J Resources leases in West Virginia.

P & J Resources is well advanced with the construction of new infrastructure facilities such as pipelines, treatment plants and terminals, which will give immediate access to gas markets and open up further acreage blocks to new exploration & development locations.

Potential Gas Resources

Several engineering & geological firms have made estimates of the gas resources that could potentially be developed under the P & J Resources (leases), in Kentucky and West Virginia. The methods used have been reservoir volumetrics and production histories & decline curve analysis. The numbers vary greatly since reservoir volumetrics are limited by data quality

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(ie logs, cores, sidewall cores, fluid analysis, PVT info, etc), and production histories are limited by lack of information from wells during early producing periods. However, given the size of the lease holdings (90,000 acres) and the multiplicity of potential reservoirs down to 6,000 feet (including the untested “Marcellus Shale”), it is not inconceivable that this area will eventually be drilled out on 40-acre spacing with multiple zone completions or twinned wells to tap various horizons. Potential producing zones include the Mississippian Berea Sandstone, the Devonian Shales including the “Marcellus”, the Silurian Big 6 sandstone and the Ordovician Trenton/Black River. This could potentially lead to over 2,000 wells on these leases. If we assume 80-acre spacing this would equate to over 1,000 wells. There are numerous wells in this Basin that have produced for up to 60 years and are still producing at economic rates. Most of these wells have produced a minimum of 0.5 Bcf gas over that period. Assuming an ultimate recovery of 0.5 Bcf gas for a minimum of 1,000 wells then the potential resource could be as much as 500 Bcf of gas.

Infrastructure

Both acreage blocks have pipeline infrastructure servicing existing production. P&J Resources has been extending its gathering line system during the past year including additional pipelines linking up to regional pipelines operated by Columbia Energy, Equitrans and Jefferson Energy.

P&J Resources is in the process of completing installation of an Amine plant on each of the Kentucky and West Virginia acreage areas allowing treatment of impurities including H2S and CO2. No water disposal equipment is required at each of the wells as the gas is dry.

Both wells in the initial program commencing this week can be hooked up to production lines immediately and may be flowing once the Amine plants have been successfully installed in the next few months.

Markets & Pricing

Gas is distributed through Tenneco’s major eastern USA distribution network. Gas is also sold to local communities in the immediate region, with a P&J subsidiary currently servicing approximately 700 retail customers in eastern Kentucky.

The gas produced in these project areas is of high BTU content of approximately 1,200 BTU per cubic foot receiving a premium to market prices. The reference price is the TICO gas price which is generally at a premium to the Henry Hub price due to its closer proximity to markets. Current TICO prices are in the region of $11.00 per Mcf of gas.

All wells will be hooked up to production progressively with gas to be sold under P&J’s existing contracts.

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Strategy

This project heralds a new direction for Emerald focusing the company’s activities on development of a cashflow generating production base and establishment of a significant resource/reserve inventory. Emerald is very excited by this uniquely structured opportunity to enter into a highly prospective area with exposure to a potentially huge project area.

Recent activity in the area by Appalachian leaders such as Range Resources (NYSE:RRC, US$9.1Bn), Equitable Resources (NYSE:EQT, mkt cap US$7.0 Bn) and Chesapeake Energy (NYSE:CHK, mkt cap US$24 Bn) highlights the use of horizontal and lateral completions as well as fracture stimulation techniques in the region leading to higher production rates and better recoveries.

Emerald’s strategy is to work together with P&J Resources and funding partners to establish gas development projects with associated “Proven Developed” (PDP, 1P) reserves and ~200 un-drilled locations that can be awarded “Proven Undeveloped” status (PUD, 2P). Once the production has settled and reserves estimated the well package may be on-sold with undrilled locations to regional utilities.

Drilling Program

P&J Resources as Operator anticipates completing the first Kentucky well this week, following which they will commence drilling the first West Virginia well.

Emerald is in advanced discussions with several parties in relation to funding a long term drilling program. P&J are in the process of permitting additional drilling locations.

For more information please contact:

Emerald Oil & Gas NL

Tel: +618 9482 0510

JOHN HANNAFORD Executive Director – Finance jhannaford@emeraldoilandgas.com

BOB BERVEN Executive Director – Technical bberven@emeraldoilandgas.com

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About Emerald Oil & Gas NL

Emerald Oil & Gas NL (ASX: EMR; EMRO) was listed on the ASX in June 2006, raising $4 million. Emerald is an oil and gas exploration and production company with project interests in North Dakota and Texas in the USA and in the Canning Basin of Western Australia. Emerald’s focus is on conventional reservoir targets for oil and gas prospects and its primary objective is to achieve near term production and cashflow to build shareholder value and provide funds to fuel further growth. Emerald’s strategy is to take modest but meaningful positions in low risk exploration projects that can be swiftly brought into production.

Information in this announcement pertaining to exploration potential was compiled by Robert Berven, Emerald Oil & Gas NL’s Technical Director who is a Member of the Australasian Institute of Mining and Metallurgy and the American Association of Petroleum Geologists CPG # 2498.

Statements regarding Emerald’s plans with respect to its petroleum properties are forwardlooking statements. There can be no assurance that Emerald’s plans for development of its petroleum properties will proceed as currently expected. There can be no assurance that Emerald will be able to confirm the presence of additional petroleum deposits, that any discovery will prove to be economic or that an oil or gas field will successfully be developed on any of Emerald’s petroleum properties.

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