METGASCO LTD — AGM Information 2006

Nov 14, 2006

15 November 2005

ALISTRALIAN STOCK EXCHANGE Via Electronic Lodgement

CHAIRMAN'S ADDRESS

2006 Annual General Meeting - 15 November 2005

Good Afternoon Ladies and Gentlemen

It is my pleasure to welcome you the Second Annual General meeting of Metgasco Limited.

Since I spoke to you last year we have made significant progress on several important fronts, which I will deal with in turn.

We have recently strengthened your Board through the election of Mr Nick Heath, whom it is my very rewarding duty to introduce to you today. Nick recently retired from a long and distinguished career with ExxonMobil. He is rightly regarded as one of the most knowledgeable people in Australia's gas transportation and marketing industries.

Our gas sales effort was further strengthened this year when Mr Kevin Dixon, who has had a distinguished career in petroleum engineering, gas sales and pipelining, joined our management team as our General Manager of gas marketing.

The Company has been actively pursuing sales opportunities both in the immediate vicinity of our gas field but also further afield. Development of a major gas sales agreement is no easy task. The customer naturally wants security of supply for which the supplier must have certified reserves and demonstrable production capacity.

Last year I told you that we were intent on having reserves certified. As previously announced, this effort resulted in Metgasco establishing the largest certified gas reserves in NSW in the 3P category. We will soon be embarking on a program to convert a significant percentage of these 3P reserves into the 2P category. Some of these reserves will be earmarked for the Richmond Valley Power Station.

As I'm sure you know, the 12 MW power station originally planned has been expanded to 30 MW and named the Richmond Valley Power Station. This project was expanded in size to meet the growing need for power in the Casino area. The Richmond Valley Power Station will supply gas fired power to the town of Casino and generate NSW greenhouse gas abatement credits. I am pleased to tell you that today we have announced that the Australian Pipeline Trust has been selected as our preferred infrastructure partner to construct and operate this project. This project has been granted Major Project status by the NSW State Government. We are currently conducting a detailed environmental assessment of the project and an important part of this process will be receiving comments and suggestions from the local Casino community, which will of course be one of its major beneficiaries.

This time last year I referred to our horizontal drilling program which has been successfully completed. These wells were the test bed, so to speak, allowing us to match the appropriate drilling and dewatering technology to the particular coals of the Clarence Morton basin for optimal production rates. We are currently replacing the pumps on these horizontal wells to further tailor our well completion technology to the coal type. The horizontal drilling program has improved flow rates, compared with those from the vertical wells, up to 100 thousand cubic feet per day. We believe there is considerable room for improvement with well design and better pumping application. The lesson being learned in this industry in the US is one of continuous improvement and Metgasco representatives were in Oklahoma in August this year to observe successful innovation in exploiting coals similar to those of the Clarence Morton basin. These technical advances will have immediate relevance here.

In January, we announced a farm-in to the adjacent tenement PEL 13. This farm-in allows Metgasco to leverage the work done to date on establishing reserves in PEL 16. Metgasco will operate and initially earn a 51% interest in the coal seam gas rights of PEL 13 by funding the drilling of a new core well and additional seismic reprocessing. Metgasco has partially completed this well and will complete the coring operation next month. The combined net acreage of PEL 13 and PEL 16 provides Metgasco in excess of 500,000 acres allowing access to approximately 90% of the productive coal seams in the Clarence Moreton basin.

During the year the Company completed a successful share placement to raise \$2.3 million. Currently a Share Purchase Plan Offer is open which will give existing shareholders an opportunity to purchase shares at a discount. Funds raised from the Share Purchase Plan will contribute to the Reserve Expansion Program. Our goal is to increase our 2P gas reserves to around 100 petajoules and to obtain an independent certification of these reserves.

All in all it has been a very busy and productive year and I believe, given the company's competitive advantages, of location and quality of resource, that we will be able to seize the opportunity, offered by the very lively interest current in the coal seam gas industry, to contribute to the nation's energy supply with an environmentally friendly energy resource.

We have a very exciting future.

Dr Peter Power Chairman

For further information please contact: Glenda McLoughlin David Johnson Managing Director Chief Financial Officer

Metgasco Level 3, 32 Walker St, North Sydney Tel: +61-2 9923 9100 Fax: +61-2-9923 9199 www.metgasco.com.au