EMERALD RESOURCES NL — Interim / Quarterly Report 2010

Aug 1, 2010

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Suite 2, 12 Parliament Place West Perth WA 6005 Ph: 08 9482 0510 Fax: 08 9482 0505 Email: info@emeraldoilandgas.com www.emeraldoilandgas.com

2 August, 2010

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

QUARTERLY ACTIVITIES AND CASHFLOW REPORT – JUNE 30, 2010

Please find attached the Quarterly Activities Report and Appendix 5B Quarterly Cashflow Report for the quarter ended June 30, 2010.

Yours sincerely,

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MIKE KRZUS Chief Executive Officer mkrzus@emeraldoilandgas.com

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QUARTERLY ACTIVITIES REPORT FOR THREE MONTHS ENDED 30 JUNE 2010

ASX Release

Highlights

31 July 2010

EMERALD OIL & GAS NL

Suite 2, 12 Parliament Place West Perth WA 6005 Tel: +61 8 9482 0510 Fax: +61 8 9482 0505

Contact:

MIKE KRZUS

Managing Director mkrzus@emeraldoilandgas.com

USA

• NW Alice Project, Jim Wells County, Texas.

• 35% Working Interest in 4500 lease acres and 27 square miles of 3D seismic data

• Large gas bearing structure with Possible reserves likely to exceed 100Bcf gas and 2.5 million barrels oil

• Initial discovery RJ Hunter#1 well drilled in 2007

• Planning underway to drill follow up well in Q3 2010

MORGAN BARRON

Company Secretary mbarron@emeraldoilandgas.com

E-MAIL: info@emeraldoilandgas.com

• NOXXE

• NOXXE parties breached obligations to Emerald under various agreements

• Emerald commenced immediate legal action against all relevant parties

WEBSITE:

www.emeraldoilandgas.com

Directors/Officers:

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

Issued Capital:

132,803,764 Shares (EMR) 19,322,754 Unlisted options

Market Capitalisation: Undiluted $2.6m (@ 2 cents)

Cash on hand 30.6.10 $169,000

• Appalachian Basin Gas Development Projects , Magoffin County, Kentucky

• 2000 acres leased with 14 potentially productive gas wells drilled

• EMR Appalachian gas operations consolidated under KEP operatorship

• 650 Mcfd gas flowrates tested from EMR wells awaiting gathering lines and hookup with an additional 300 Mcfd tested from other wells being considered for acquisition

AUSTRALIA

• Canning Basin, WA

• Evaluating 1600km 2D seismic data over offshore exploration permits, seeking farmout partner

• Awaiting Operator (Buru) recommendations on Stokes Bay #1 well test and well workover proposal for oil producer West Kora #1.

EMERALD OIL & GAS NL – JUNE QUARTERLY REPORT 2010

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USA Projects

North West Alice, Jim Wells County, Texas

(Emerald 35% Working Interest; Operator: OSO Exploration)

Highlights

• Emerald acquired a 35% Working Interest in 4500 lease acres and a total of 27 square miles of 3D seismic data over NW Alice Project

• large gas bearing structure discovered by the RJ Hunter#1 well drilled in 2007, with Possible reserves likely to exceed 100Bcf gas and 2.5 million barrels oil

• Planning underway to drill follow up well in Q3 2010

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Project location in Duval and Jim Wells Counties, South Texas

The anticipated transaction for Oso Exploration (“ Oso ”) and Emerald to purchase all of Noble Energy Inc interests in the NW Alice project area closed during the quarter.

Emerald now holds a 35% Working Interest in 4500 acres of oil and gas leases and has access to 27 square miles of high quality 3D seismic data over the gas bearing anticlinal structure near the town of Alice in Jim Wells County, Texas.

Emerald paid $US350,000 for its additional interests and its share of the 3D seismic data to complete the acquisition.

Oso and Emerald now plan to drill a well during Q3, 2010 on one of several drilling locations identified from interpretation of the 3D survey data. The well will target the same gas bearing Yegua sands intersected in the RJ Hunter #1 gas/condensate discovery well drilled in 2007.

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Regional Geology:

The RJ Hunter Gas discovery is the northern extension of a NE-SW Yegua gas trend containing several Yegua Gas Fields such as Ben Bolt, Braman, Starr Brite, Los Rubios and Four Sevens. These fields, in Jim Wells and Duval counties, have produced gas and condensate from several Yegua sands, but the two primary producing reservoirs are known locally as the Y-15 (Middle Yegua) and the Y-21 (Lower Yegua) sands. These sands are areally extensive, low-energy, shelf deposits having an average thickness of fifteen feet.

Shallow gas plays are also present in the Frio, Vicksburg and Stillwell sands over this area.

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3D Survey location showing proximity to other producing fields in Yegua Trend

NW Alice Field

In 2007, Emerald farmed into a 10% WI in a 12mi[2] Area of Mutual Interest (AMI) containing 2500 lease acres located over an undrilled section of the anticline structure to the north of the producing Yegua fields.

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The discovery well, RJ Hunter #1 was drilled in March 2007 to a total depth of 8500 feet. The well intersected 50 feet of net pay containing gas/condensate in two main gas bearing zones and smaller intervals in the Middle and Lower Yegua sands, as well as shallower gas sands. Unfortunately, highly over-pressured Lower Yegua gas sands caused the wellbore casing to collapse on perforating the sand, so no flow test was possible. A subsequent flow test from the Middle Yegua sand was not definitive, producing gas and fresh water volumes. The well was then suspended.

Using well data from the RJ Hunter well and offset well data, P3 reserves in the 12 mi[2] Northwest Alice AMI area were estimated at approximately 100 BCF gas and 2.5 million barrels of condensate.

Based on the results from the RJ Hunter #1 well, Noble Energy (Operator), acquired, processed and interpreted 50mi[2] of 3D seismic data, which included the NW Alice AMI and the extension of the anticline structure to the North. Noble identified seven drilling locations based on the 3D seismic interpretation and acquired a number of additional leases both inside and outside the AMI area to consolidate its position around the most prospective areas.

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NW Alice project area, current lease holdings and 3D survey area.

Early in 2010 Noble took a corporate decision to focus on recent large international discoveries. Oso and Emerald then offered to purchase Noble’s interests and facilitate their exit from the NW Alice area.

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Separately, during 2009, Emerald acquired 100% WI in the RJ Hunter #1 Discovery well and surrounding 178 acres. Plans are being considered to re-drill the well to a position higher on the structure and complete the new well as a gas/condensate producer. Plans are also underway and to acquire up to an additional 1000 acres of contiguous lease acreage, either as part of the new NW Alice joint venture with OSO or separately at 100% WI.

Emerald net Reserves attributed to the RJ Hunter well @ 100% WI are:

Middle Yegua Proved Undeveloped 2.2 Bcf gas, 55,000 bbl oil Lower Yegua Possible* 2.0 Bcf gas, 50,000 bbl oil

• The Lower Yegua reserves are categorised as possible reserves, due to the inability to test due to collapsed casing.

The main targets for the planned NW Alice drilling are these same Middle and Lower Yegua sands. Both sands contain similar gas with a gas to condensate ratio of 20 to 30 bbl/MMscf. Both sands will be targeted in every well. Gas and condensate recoveries from these sands are expected to be similar and each successfully drilled Yegua sand on this structure could be expected to show characteristics similar to:

• 2 MMcfd average initial production rate

• 2.0 Bcf gas & 50,000 Bbl condensate recovery

• Approximately 15 year production life

NOXXE LLC, Harris County and Galveston County, Texas (Emerald 31.5% Equity Interest)

On March 11, Emerald announced execution of a Memorandum of Understanding securing an option to acquire 31.5% foundation equity interest in a newly formed company, NOXXE LLC, which holds interests in producing oil and gas leases in Harris and Galveston counties, Texas USA.

Subsequently, the NOXXE parties breached their obligations to Emerald under various agreements and Emerald instructed attorneys in the US to commence legal action against all relevant parties to seek appropriate remedies for such breaches.

EMR will advise regarding future developments as and when appropriate.

Appalachian Gas - Magoffin County, Kentucky Emerald 75% Equity Interest in Kentucky Energy Partners LLC)

Highlights:

• 2000 lease acres with 14 potentially productive gas wells already drilled

• EMR Appalachian gas operations consolidated under KEP to include wells from P&J recompletion program

• 650 Mcfd gas production demonstrated from EMR wells awaiting gathering lines and hookup

• additional 300 Mcfd tested from other wells being considered for acquisition

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LOCATION

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In 2008, Emerald entered into several dealings with P&J Resources (P&J), a local operator based in Eastern Kentucky, to drill, recomplete and operate production from gas wells in Magoffin, County Kentucky and Wayne County, West Virginia in the USA.

P&J did not conduct operations to a standard acceptable to Emerald and recently filed for Chapter 11 bankruptcy.

Emerald is now initiating actions to selectively acquire title to necessary leases and to rebond several of Emerald's 8 affected wells in Kentucky, with Kentucky Energy Partners (KEP) as operator. These wells will then be incorporated into KEPs development plans and operations.

In November 2009, Emerald formed Kentucky Energy Partners (KEP) with Slone Production LLC, a competent local gas field operator and engineering consultant. Emerald holds a 75% interest, with Slone owning the remaining 25% in KEP. To date KEP has secured approximately 2000 acres of leases, containing 14 potentially productive existing gas wells in Magoffin County, Kentucky.

KEP is concurrently progressing three separate gas projects to build Appalachian gas production as part of Emerald's objective to achieve a sustainable operating cash surplus during 2010. The Emerald wells previously operated by P&J will now contribute to this objective.

Emerald is initially targeting sweet gas to establish gas production to underpin investment in its first projects. However, the sour gas potential of the area is much greater than that of sweet gas, and will be targeted subsequently.

Gas from most of the existing wells in the area contains varying levels of Hydrogen Sulphide (H2S), which must be removed prior to sale. Where H2S levels are low, the H2S

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can be economically removed from the wellhead gas with dry chemical scrubbers (sweet gas). Gas with higher H2S which cannot be produced economically with wellhead treatment (sour gas), requires a gas processing plant to remove the sulphur compounds including H2S. KEP is holding discussions with other parties to unlock the sour gas potential of the area.

A well assessment program is ongoing to assess the condition, production potential and gas quality of wells on KEP's current leases and on leases prospective for future acquisition.

To date potential sales gas flowrates of 650 Mcfd has been demonstrated from well tests in KEP lease areas. These wells are currently awaiting installation of gathering lines and sales gas connections. During the reporting period, an additional 300 Mcfd has been tested from additional wells close to KEP project areas, which are being considered for acquisition.

Australian Projects

EP104/R1, Canning Basin WA (Emerald 12.75% Working Interest; Operator: Buru Energy Ltd)

The Stokes Bay #1 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 re-occurred after each attempt.

The Operator, Buru Energy has commenced technical planning for definitive well operations, to acquire reservoir fluid samples and obtain indicative gas flow rates to determine if Stokes Bay #1 is a potentially commercial gas discovery. These operations will be conducted as part of Buru's extensive multi-well program planned for the 2010 dry season. A successful operation on Stokes Bay #1 could confirm a substantial commercial gas accumulation located in close proximity to the planned LNG hub at James Price Point.

Production Licence L15, Canning Basin WA (Emerald 12.75% Working Interest; Operator: Buru Energy Ltd)

The WA Department of Mines and Petroleum granted Production Licence L15 over an area including the West Kora oil discovery during the quarter. Emerald holds an option to farm in to the West Kora Production Licence by paying 13% of West Kora #1 work over costs to earn a 12.75% WI.

The licence covers two rectangular blocks, 6054 and 6126, and contains the West Kora-1 oil discovery. L15 also is nearby the Point Torment-1 gas discovery and the recent Stokes Bay1 well.

West Kora-1 was drilled in 1984 in EP 104 by Esso Australia and had oil shows in the Anderson Formation. Following drill stem testing, a production test was carried out over the gross interval 1735-1751m. This resulted in the production of about 20,000 barrels of oil with an initial rate of 350 barrels per day with a water cut of 35%. However, this water cut increased to 85%.

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In June 1992 operator Anzoil perforated a new interval from 1693-1696m and ran a through tubing bridge plug. However, this failed to isolate water production in the well, which was believed to originate from the original lower of three Esso perforated intervals.

Further testing in 1992, and over the period December 1997 to January 1998 demonstrated the need for a work over program to isolate the water production.

Emerald is currently awaiting advice from Buru regarding the activity plans to re-establish oil production from West Kora #1 and assess other opportunities in the new Production Licence.

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

Emerald continues to progress exploration studies to characterise leads and prospects in its strategic holdings along the structurally significant Pinnacle Fault zone in 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.

Emerald is currently evaluating 1600 km of recently purchased processed 2D seismic data to further assess area prospectivity and identify exploration leads. Insights from this new data will also inform planning for future seismic acquisition in the permit area over the next few years.

After an initial review of the seismic data is completed, Emerald will be seeking to farm out a portion its 100% interest in this large permit area in anticipation of new seismic acquisition in 2011.

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Exploration Permit/Retention Licence/Applications Emerald Net Working Interest	Permit Size (approx sq km)
EP 104 12.75% Retention Lease R1 12.75% Production Licence L98-1 (option) 12.75% EP463 100% TP24 100% WA-419-P 100% Total	700 300 200 200 400 8,000
	9,800

Corporate

At 30 June 2010 the consolidated entity had $169,000 cash on hand.

On 30 July 2010, the Company signed an underwriting agreement for a fully underwritten rights issue and placement to raise $2.75m before costs.

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

Date	Headline
25/06/2010	PLACEMENT-SECONDARY TRADING NOTICE
25/06/2010	Appendix 3B
21/06/2010	Emerald ConsolidatingAppalachianOperations
18/06/2010	EmeraldTakingLegal Action inUSNOXXE Dealing
17/06/2010	Emerald toDrill in NW AliceField
9/06/2010	Change of Director`s Interest Notice
25/05/2010	Results of Meeting
25/05/2010	Company Presentation-Operations Update
20/05/2010	Change of Director`sInterestNotice
13/05/2010	Change of Director`sInterestNotice
11/05/2010	Change of Director`sInterestNotice
30/04/2010	Quarterly Activities and Cash Flow Report
30/04/2010	Emerald to increase interest in NW Alice field
23/04/2010	Notice of Extraordinary General Meeting/Proxy Form
12/04/2010	SECONDARY TRADING CLEANSINGNOTICE PURSUANT TO708A(5)
8/04/2010	NOXXE UPDATE

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

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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 and Texas in the USA and in the Canning Basin of Western Australia. Emerald’s focus is on both conventional and nonconventional 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.

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.

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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 June 2010
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) - R&D rebate Net Operating Cash Flows		Current quarter $A’000	Year to date (12 months) $A’000
		95 (587) (38) - (294) 4 -	114 (1,463) (188) (22) (1,136) 44 348
		(820)	(2,303)
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) Refundable deposits paid Refundable deposits refunded Net investing cash flows 1.13 Total operating and investing cash flows (carriedforward)		(0) (12) -	(17) (633) 115
		(12)	(535)
		(832)	(2,839)

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1.13 Total operating and investing cash flows (broughtforward)	(832)	(2,839)
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-Subscriptions received	567 (37)	606 (37)
Net financing cash flows	530	569
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	(302) 471 -	(2,270) 2,439 -
	169	470

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
		162
		Nil
1.25	Explanation necessary for an understanding of the 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 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest N/A

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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
			1,000
			250
			100
			150
Total			1,500

On 30 July 2010, the Company signed an underwriting agreement for a fully underwritten rights issue and placement to raise $2.75m before costs.

Reconciliation of cash

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)	169	470
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	169	470

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

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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	132,803,764	132,803,764
	17,322,230	177,322,230	$0.035	$0.035
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 1,500,000 2,000,000 5,000,000	- - - -	Exercise price 17.68 cents 25 cents 25 cents 10 cents	Exercise date 23/01/11 28/02/10 31/05/11 31/03/14
	11,661,115	-	10 cents	30/6/2010
	-	-
	2,000,000 325,000	- -	30 cents 25 cents	31/12/09 31/12/09
7.11 Debentures (totals only)	-	-
7.12 Unsecured notes(totals only)	-	-

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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: 2 August 2010 (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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