EMERALD RESOURCES NL — Interim / Quarterly Report 2009

Oct 29, 2009

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Level 2, 16 Altona Street West Perth WA 6005 Ph: 08 9482 0510 Fax: 08 9482 0505 Email: info@emeraldoilandgas.com www.emeraldoilandgas.com

29 October, 2009

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

QUARTERLY ACTIVITIES AND CASHFLOW REPORT – SEPTEMBER 30, 2009

Please find attached the Quarterly Activities Report and Appendix 5B Quarterly Cashflow Report for the quarter ended September 30, 2009.

Yours sincerely,

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MIKE KRZUS Chief Executive Officer mkrzus@emeraldoilandgas.com

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ASX Release

29 October 2009

EMERALD OIL & GAS NL

Level 2, 16 Altona Street West Perth WA 6005 Tel: +61 8 9482 0510 Fax: +61 8 9482 0505

Contact:

MIKE KRZUS

Managing Director mkrzus@emeraldoilandgas.com

BOB BERVEN

Technical Director

bberven@emeraldoilandgas.com

JOHN HANNAFORD

Director

QUARTERLY ACTIVITIES REPORT FOR THREE MONTHS ENDED 30 SEPTEMBER 2009

Highlights

USA

• Appalachian Basin Gas Development Project , Kentucky – well operations completed on 7 wells in the 8 well recompletion program. Well productivities currently being assessed.

• Area Gas Infrastructure Initiative, Working to commission existing 8 inch gathering line linking Emerald's Amine plant to Columbia gas sales point, providing access to more favourable gas sales terms and potential tariff revenue stream from Emerald's Amine plant.

jhannaford@emeraldoilandgas.com

MORGAN BARRON

Company Secretary

• NW Alice Project, Jim Wells County, Texas. 170 acres acquired around RJ Hunter discovery well.

mbarron@emeraldoilandgas.com

E-MAIL:

info@emeraldoilandgas.com

WEBSITE:

www.emeraldoilandgas.com

Canning Basin WA

• EP104 JV, Stokes Bay #1 well – Awaiting advice in relation to forward plan from Buru (Operator) on Stokes Bay well- no further activity anticipated until mid 2010.

Directors/Officers:

Jeremy Shervington - Chairman John Hannaford - Director Bob Berven – Director Mike Krzus – Managing Director

Corporate

• Mike Krzus appointed to Board of Directors as Managing Director.

Issued Capital:

115,481,534 Shares (EMR) 6,486,639 Unlisted options

Market Capitalisation:

Undiluted $5.7m (@ 4.9 cents)

Cash on hand 30.09.09

$2.02million

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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USA Projects

Appalachian Gas, Kentucky and West Virginia (Emerald earning 80% Working Interests; Operator: P&J Resources Inc)

OVERVIEW

During the quarter P&J Resources, operator of Emerald's 8 well recompletion program in Magoffin County Kentucky, completed well operations on 7 of the 8 wells. The wells are currently in various stages of cleanup (to produce back nitrogen used in the fracturing treatment), well hookup and initial post-frac production rates.

Status as at the date of this report:

Kentucky

• Well operations complete on 7 of 8 gas well re-completions in Magoffin County, Kentucky.

• Post re-completion well productivities being assessed, with unsuccessful wells to be replaced under the agreements with P&J Resources.

• Further wells to be selected for re-completion under similar terms from the 100+ shut in P&J gas wells in Magoffin County, Kentucky, based on well performance from initial 8 well program and sub-surface studies underway.

• Working to commission an existing 8 inch gathering line linking Emerald's (50% owned) Amine plant with a Columbia gas tie-in point in Martin Kentucky, providing access to more favourable gas sales terms and potential tariff revenue stream from Emerald's Amine plant.

West Virginia

• Completion and testing program for 2 gas wells in Wayne County, West Virginia on hold pending consolidation of gas production in Kentucky

LOCATION

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P&J Resources’ acreage is located in Magoffin County, Kentucky and Wayne County, West Virginia.

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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OPERATIONS

- Kentucky Magoffin County

Gas Well Recompletion Program

Improved weather in September, after heavy rainfall through most of Q2 permitted P&J to complete well operations on 7 of the 8 wells in the gas well re-completion program. The 7 wells are currently in various stages of well clean up (to produce back nitrogen used in the hydraulic fracturing operations), well connection to the gathering system and initial production rates.

The one well remaining to be treated requires an open hole bridge plug to be bypassed before fracture stimulation. This is expected to be completed and the well fractured and hooked up during Q4.

Well potential is currently being assessed for the treated wells. Initial indications are that 2 of the well stimulations may not have been successful. Under the agreements with P&J Resources, these wells will be replaced at no cost to Emerald if they prove to be unsuccessful. Stable production from the successfully treated wells is expected to be achieved within the next few weeks, at a combined production rate of up to 1 million cubic feet gas per day.

Based on well performance from the first 8 wells and results from ongoing sub-surface studies, wells will be selected from the 100+ shut in gas wells on P&J's acreage for a second gas well recompletion program.

Under the new agreements, Emerald’s wells are tied in to BTU Energy’s gathering system, which connects to the Jefferson Gas LLC gas pipeline. Emerald has been granted free access to the gathering system. BTU Energy then sells the gas on Emerald’s behalf under a gas sales agreement between BTU and Jefferson.

Area Gas Infrastructure Initiative

Emerald is currently working with P&J and other gas operators in the area to commission an existing 8 inch gathering line linking Emerald's (50% owned) Amine plant with a Columbia gas tie-in point in Martin Kentucky. This is expected to provide some 9 MMcfd of pipeline capacity to a sales point presenting more favourable gas sales terms. In addition, this opens potential for Emerald to extract gas processing revenue from the Amine plant it owns 50/50 with P&J Resources, capable of processing 5 MMcfd of sour gas.

Once this system is operational it will provide a sales outlet for the significant volumes of sour gas (gas containing H2S), which was previously been uneconomic to produce. Gas processing tariffs will be negotiated with other gas operators to use Amine Plant gas processing capacity surplus to Emerald's requirements, which will provide another revenue stream for Emerald.

Environmental permit applications for the Amine plant are being prepared for submission in November. The Amine Plant and 8 inch pipeline system are planned to be operational by end Q1, 2010.

The wells in the initial 8 well re-completion program were intended to produce only sweet gas from Big Six formation, therefore gas treatment to remove sulphur is not required. However, multiple pay zones exist in all the wells in this area, some containing gas with H2S. Commissioning the Amine Plant will allow Emerald to complete these sour gas zones in its existing wells and produce them comingled with currently producing zones.

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Appalachian Drilling Plans

The objective of the above activity is to rapidly increase Emerald’s Appalachian production base and revenue stream at a fraction of the cost of drilling new wells. However, Emerald has a drilling agreement in place covering P&J areas in both Kentucky and West Virginia.

The intention now is to concentrate efforts on maximizing production in the short term through existing well projects in Kentucky to demonstrate production potential and establish a secure revenue stream. Further drilling will be guided by this outcome, with the ongoing sub-surface studies providing the technical insight required to optimally locate new wells.

- West Virginia Wayne County

Plans for completion and fracture stimulations for the two Emerald wells drilled in Wayne County, West Virginia during 2008 have been temporarily suspended to allow P&J Resources to focus and concentrate efforts on maximising steady state gas production.

North West Alice, Jim Wells County, Texas (Emerald 14% Working Interest; Operator: Noble Energy Inc.)

Earlier in 2009, the Operator, Noble Energy, completed processing and interpretation of the 3D seismic data covering the large, 100 Bcf anticlinal structure discovered by the RJ Hunter #1 well in March 2007. Based on the seismic, Noble identified three new drilling locations within the AMI area and acquired additional leases in the Area of Mutual Interest (AMI) to consolidate the position of the joint venture.

Noble has temporarily suspended further drilling plans pending studies to determine the potential for horizontal wells to significantly improve productivity and recovery from the areally extensive, gas bearing, Lower Yegua sands which lie across the AMI area. Results of this study are expected during Q4 2009.

During the quarter, Emerald acquired leases with oil and gas rights at 100% Working Interest over 170 acres containing and surrounding the RJ Hunter#1 discovery well. These leases will be offered back to the joint venture as they fall within the AMI area defined in the joint venture agreements. Joint Venture partners may then elect to participate in these new leases in proportional interests.

New Projects – USA

The Company continues to review and assess new oil and gas exploration project opportunities in the USA which have been sourced through current partners and other industry participants.

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Australian Projects

EP104/R1, Canning Basin WA

(Emerald 12.75% Working Interest; Operator: Arc Energy Ltd)

The Stokes Bay well was drilled in October, 2007 in the EP 104/R1 Permits located in the Canning Basin, near the town of Derby, Western Australia. The well was suspended after large volumes of drilling mud were lost in what is believed to be a cavernous reef system in the Nullara Formation. Since then, two attempts were made by the Operator, Buru Energy Limited, to induce flow in the well and to obtain a gas sample. Both attempts failed, however wellhead pressures of around 1200 psi and gas accumulation in the well bore reoccurred after each attempt.

Emerald is currently awaiting advice from operator Buru Energy regarding further well activities to determine if the Stokes Bay well is a potentially commercial gas discovery. Emerald intends to work with Buru and other joint venture participants during 2009 to clarify a way forward for this potential gas discovery.

EPA 4/05-6 Canning Basin, WA

(Emerald 100% Working Interest and operator)

Emerald’s application EPA 4/05-6 lies immediately to the west of the EP104 permits and, is currently proceeding through the Native Title process. The permit covers a significant extension of the Pinnacle Fault to the west of the EP104/R1 permit and includes several structures similar to that intersected at Stokes Bay mapped from existing seismic data.

EP463 & TP24 (Lacepede Islands) AND WA-419-P (Offshore) Canning Basin, WA (Emerald 100% Working interest, Operator)

During the quarter, Emerald progressed in-house work to characterise leads and prospects in its strategic holdings along the structurally significant Pinnacle Fault zone and its projection offshore. The Pinnacle Fault is a key structural element between the Fitzroy Sub-Basin and the Lennard Shelf. It is believed to be the conduit for oil and gas migration from the Fitzroy Sub-Basin into structural and stratigraphical traps on the adjacent Lennard Shelf to the north.

In view of the successful discovery of porous Devonian “reefal” reservoir rocks in the Stokes Bay 1 well at EP104/R1, Emerald believes there is significant potential to discover several similar prospects along the western extension of the Pinnacle Fault (see map below).

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Canning Basin showing Emerald’s EP104 / R1 (pale yellow, Emerald 12.75%) and EPA 4/05-6 (green, Emerald 100%) interests, and mapped prospects and leads. The new EP 463 / TP 24 (Lacapede Islands) and WA-419-P blocks (Emerald 100%) are shown in yellow. The main feature on all leases is the Pinnacle Fault, the conduit for much of the previous hydrocarbon production on the Lennard Shelf portion of the Canning Basin.

Emeralds current tenement holdings in the Canning Basin are:

Exploration Permit/Retention Licence/Applications Emerald Net Working Interest	Permit Size (approx sq km)
EP 104 (R5) 12.75% Retention Lease R1 12.75% Application L98-1 (option) 12.75% Application EP 4/05-6 100% EP463 100% TP24 100% WA-419-P 100% Total	700 290 200 4,600 200 400 8,000
	14,390

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Corporate

During the quarter, Mike Krzus was appointed to the board of Directors as Managing Director. Mr Krzus had been Chief Executive Officer of Emerald since joining the Company in February 2009.

At 30 September 2009 the consolidated entity had $2.02 million cash on hand.

The Company made the following announcements during the quarter and up to the date of this quarterly report:

Date	Headline
20/10/2009	Notice of Annual General Meeting/Proxy Form
25/09/2009	Annual Report to shareholders
31/08/2009	INITIAL RESERVES ESTIMATE
14/08/2009	Audio Broadcast - Emerald Oil and Gas US Assets
14/08/2009	APPOINTMENT OF MANAGING DIRECTOR - APPENDIX 3X
31/07/2009	Quarterly Activities and Cashflow Report

For more information please contact:

Emerald Oil & Gas NL

Tel: +618 9482 0510

MIKE KRZUS JOHN HANNAFORD Managing Director Director mkrzus@emeraldoilandgas.com jhannaford@emeraldoilandgas.com

About Emerald Oil & Gas NL

Emerald Oil & Gas NL (ASX: EMR) was listed on the ASX in June 2006. Emerald is an oil and gas exploration and production company with project interests in Kentucky, West Virginia, North Dakota and Texas in the USA and in the Canning Basin of Western Australia. Emerald’s focus is on both conventional and non-conventional reservoir targets for oil and gas prospects. 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 exploration projects that can be swiftly brought into production.

Information in this report 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 forward-looking 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.

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Appendix 5B

Mining exploration entity quarterly report

Name of entity Emerald Oil & Gas NL

ABN 009 795 046 Consolidated statement of cash flows		Quarter ended(“currentquarter”)	Quarter ended(“currentquarter”)
		30 September 2009
Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for: (a) exploration and evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net Operating Cash Flows		Current quarter $A’000	Year to date (3 months) $A’000
		(139) (11) (327) 54	(139) (11) (327) 54
		(423)	(423)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carriedforward)
		-	-
		(423)	(423)

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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1.13 Total operating and investing cash flows (brought forward)	(423)	(423)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other - Capital Raising Costs 1.20 Other
Net financing cash flows	-	-
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end of quarter	(423) 2,439 -	(423) 2,439 -
	2,016	2,016

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		195
		Nil
1.25	Explanation necessaryforanunderstanding ofthe transactions
	The amount above includes payments to directors and to companies associated with John Hannaford and Jeremy Shervington for this quarter and previous quarters. The payments to Ventnor Capital, accompany associated with John Hannaford relate to the provision of consulting fees, company secretarial services, accounting and bookkeeping, secretarial services and the provision serviced offices on commercial terms. The payments to Jeremy Shervington Legal Practice relate to the provision of legal services oncommercialterms.

Non-cash financing and investing activities

2.1 2.2	Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows Details of outlays made by other entities to establish or increase their share in projectsin whichthereporting entityhas an interest
	N/A

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount available $A’000	Amount used $A’000
	-		-
	-		-
Estimated cash outflows for next quarter
4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration			$A’000
			280
			100
			-
			370
Total			750

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to therelateditemsinthe accountsis asfollows.	Current quarter $A’000	Previous quarter $A’000
5.1 Cash on hand and at bank 5.2 Deposits at call 5.3 Bank overdraft 5.4 Other (provide details)	2,016	2,554
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	2,016	2,554

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning of quarter	Interest at end of quarter

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (cents)	Amount paid up per security (cents)
7.1 Preference+securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy- backs,redemptions
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases through issues (b) Increases through conversion of options (c) Release from escrow (d) Decreases through returns of capital, buy- backs	115,481,534	115,481,534
7.5 +Convertible debt securities(description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted	-	-
	-	-
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	661,638 2,000,000 1,500,000 325,000 2,000,000 5,000,000	- - - - -	Exercise price 17.68 cents 30 cents 25 cents 25 cents 25 cents 10 cents	Exercise date 23/01/11 31/12/09 28/02/10 31/12/09 31/05/11 31/03/14
	-	-
	-	-
7.11 Debentures (totals only)	-	-
7.12 Unsecured notes(totals only)	-	-

EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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Compliance statement

1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does ~~/does not~~ * give a true and fair view of the matters disclosed.

Sign here:

Date: 29 October 2009 (Director)

Print name: Mike Krzus

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Cash Flow Statements apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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EMERALD OIL & GAS NL – SEPTEMBER QUARTERLY REPORT 2009

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