EMERALD RESOURCES NL — Regulatory Filings 2007

Oct 17, 2007

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ASX RELEASE

Release Date: 18 October 2007 To: Australian Stock Exchange Ltd No of Pages: 4 From: Eric Streitberg Re: Stokes Bay-1 Update

Please find attached an update on the Stokes Bay-1 well.

The attached release will also be available on the Company’s website at; www.arcenergy.com.au.

For inquiries please contact:

Eric Streitberg, Managing Director Telephone +61 8 9480 1300 Freecall 1800 337 330 Email eric@arcenergy.com.au

About ARC Energy Limited ARC Energy is one of Australia’s pre-eminent energy companies, owning and operating oil and gas interests in the Perth, Canning and Bass basins, and internationally. Listed on the Australian Stock Exchange with a market capitalisation of approximately A$500 million, ARC has an aggressive onshore and offshore exploration and development drilling program. It continues to drive increased shareholder value by the early adoption of innovative technical and commercial practices.

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Level 4, 679 Murray Street, West Perth, Perth Western Australia 6005 Freecall: 1800 337 330 Tel: 61 8 9480 1300 Fax: 61 8 9480 1388 Website: www.arcenergy.com.au, Email: arc@arcenergy.com.au, ASX Code: ARQ

STOKES BAY-1 DRILLING REPORT CANNING BASIN, WESTERN AUSTRALIA

Date:	18thOctober 2007
Permit:	R1
Well Location:	Lat : 17o08’ 23.46”SLong : 123o42’ 32.40”E
Directional offset to target:	1024 metres
Elevation:	Ground Level is 12.4mAMSLRotary Table is 18.1mAMSL
Proposed Total Depth(measured KB):	2800 metres
Prognosed drilling time:	15 days
Spud Date:	0930 hrs, WST 3 October 2007
Present Depth at 0600 hrs:	2755mMD
Time of Reporting:	0600 hrs, WST 18thOctober 2007
Operations Since LastReport:	Since last report on Thursday October 11th, Stokes Bay-1 hasbeen deepened from 1841mMD to present TD of 2755mMD.Stokes Bay-1 was drilled to a depth of 2589 metres at 1930hours on 15 October 2007, having intersected the originalprimary objective; the Carboniferous aged Anderson Formation.Subsequently, ARC Energy Limited (Operator) proposed to theEP 104/R1 Joint Venture that the well be deepened from 2589metres to approximately 2800 metres to evaluate the UpperDevonian aged Nullara carbonates. This recommendation wasbased on the favourable information gained from the recentValentine wellbore and recognition that the Nullara carbonatereef level produces oil at Blina, and had strong shows in thenearby Point Torment 1 well. Parties electing to participate in thedeepening operation and their respective equity levels in this partof the Stokes Bay-1 well (below 2589mMD) are:•ARC Energy Limited – 69.25% (Operator)•Emerald Oil & Gas NL - 12.75%•Pancontinental Oil & Gas NL - 10.0%•First Australian Resources Limited - 8.0%

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	Interval to 2589mMD, (Full EP104 / R1 JV participation) :The well has encountered elevated mud gas and minor oil showsover the gross intervals 2455 to 2470mMD and 2510 to2535mMD in the lower Anderson Formation. On the basis ofinterpretation of data obtained from the low resolution LoggingWhile Drilling (LWD) tools these intervals have indications ofsome hydrocarbon saturations. Further analysis and a possibletesting decision will await higher resolution and more completelogging data to be acquired at the end of the well program.Interval 2589m to 2755mMD (participation by less than all
	parties) :In the past 24 hours, whilst drilling at a depth of 2755mMD, thewell has encountered a total loss of returns indicative ofpenetrating a porous and highly permeable interval. Preliminarycorrelation indicates these losses occurred at or near the top ofthe Nullara Fm which is tentatively picked at 2722mMD (-2294mTVDSS); some 86m shallower than at Pt Torment 1.Efforts to control the fluid losses were successful, and whenattempting to drill ahead at the same depth, mud returns wereagain lost to the formation. The losses have now been containedby the spotting of LCM across the interval below the AndersonFormation, and the well operation is POOH for logging andpossible drill stem test to assess what fluids are present in theformation.
Current Operations:	Monitoring static well fluid losses prior to pulling out of hole forwireline logging.
Hydrocarbon indications:	Mud gas and oil shows as noted in the Anderson Formation.
Comment:	N/A
Participants in the Permit(post earning):	Empire Oil and Gas NL - 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%

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- Canning Basin Stokes Bay 1

Spud Date: 09:30hrs 3[rd] October 2007 DATE : 18/10/2007

General Well Data

Planned TD : 2500mMD / 2130m TVSS Drill Floor Elevation : 18.1m amsl

Summary @06:00hrs WST

POOH to run logs

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----- Start of picture text ----- Canning Basin Stokes Bay-01(Exploration Well from KO)Predicted Progress Stokes Bay 1Actual Progress Stokes Bay 1Bli0200Spud Stokes Bay -1 at 09:30hrs 3rd October 20074006009 5/8" @808mMDin Valentine 18001000 KO Stokes Bay-1 ftom 975mMD at 09:30hrs 03/10/071200 4/10/07 Drilling 8 1/2" at 1226m14005/10/07 Drilling 8 1/2" at 1439m16006/10/07 Drilling 8 1/2" at 1652m1800 7/10/07 Drilling 8 1/2" at 1819m8/10/07 Drilling 8 1/2" at 1840m9/10/07 Work stuck pipe. 10/10/07 POOH w /Fish 11/10/07 RIH w /new BHA2000 13/10/07 Drilling 8 1/2" at 2013m Anderson Formation Marine MemberPrimary Target2200 14/10/07 Drilling 8 1/2" at 2255m240015/10/07 Drilling 8 1/2" at 2485m Nullara Limestones2600 16/10/07 Drilling 8 1/2" at 2606m17/10/07 Lost circulation at 2755m.Expected TD 2500mMD28002130mTVSS 18/10/07 POOH to Log.30000 5 10 15 20 25 30 35 40DaysDepth (Measured below Rotary Table in metres)----- End of picture text -----