METGASCO LTD — AGM Information 2011

Nov 13, 2011

2011 Annual General Meeting Managing Director’s Address

14 November 2011

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Disclaimer

This presentation is being provided for the sole purpose of providing the recipients with background information about Metgasco Ltd (Metgasco). No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation (“forward-looking statements”). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Metgasco, its Directors and Officers) which may cause the actual results or performance of Metgasco to be materially different from any future results or performance expressed or implied by such forward-looking statements.

This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor.

Due care and consideration should be undertaken when considering and analysing Metgasco’s financial performance. All references to dollars are to Australian Dollars unless otherwise stated.

To the maximum extent permitted by law, neither Metgasco nor its related corporations, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

This presentation should be read in conjunction with other publicly available material. Further information including historical results and a description of the activities of Metgasco is available on our website, www.metgasco.com.au.

ASX Listing Rule 5.11 Disclosure

Reserves have been certified by Mr Tim Hower of MHA Petroleum Consultants (Denver) who is a qualified person as defined under the ASX Listing Rule 5.11. Reserves have been developed within the guidelines of the SPE. Mr Hower has consented to the use of the reserve figures in this presentation. Conversion of reserves from PJ to Bcf at 1.04 PJ/1.00 Bcf

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Exploration to development / production

• Excellent reserve position, with both conventional and CSG potential

• Excellent location relative to markets

• Gas market demand is strengthening

• Opportunity to add value to shareholders and the general community with gas sales

• Challenges:

• Move from exploration phase to development / production phase

• Demonstrate to general community that CSG in an attractive source of energy, one that can be managed safely and in co-existence with other land users

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Health, safety and environment

• Employees:

• 2 years LTI free on October 26, 2011

• Contractors:

• 1 year without an LTI on September 5 2011

• No reportable environment incidents

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4

Successful exploration - growing CSG reserves

3000 Petajou	l	es		1P	2P 3P	2P 3P			�	Largest uncontracted gas volumes	Largest uncontracted gas volumes
							2542			on	the east coast of Australia
2500						2239			�	Maiden reserves achieved in PEL
2000										13:
1500				1389 1538						�	2P reserves – 31 PJ
1000			1127							� �	3P reserves – 302 PJ 2C Contingent Resource –
500				247	298	397	428				1,334 PJ
0	2007 22 Notes:			2008	2009 2.7	2010 2.7	2011 2.7				PEL 13 reserves from two core wells only
	1. 1P, 2P, 3P & 2C Reserves and Resources certified by MHA Petroleum
	Consultants (Denver)

Petajoules

� Potential for further reserve growth across all PELs and over additional seams will enable Metgasco to steadily grow its existing reserve position

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LNG study - Worley Parsons

• Potential gas resources well in excess of regional demand

• Worley Parsons study initiated

• Standalone LNG export projects investigated for three sites:

• Gladstone

• Brisbane

• Offshore (floating facilities) NSW

• All options economically feasible

• Potential to supply gas to the new Queensland LNG projects

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Multiple development pathways – gas, power, LNG

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700
1x 3.5 Mtpa NSW Electricity
LNG Plant Market with
600
Carbon price or
direct action
500 policy
Power
400
Brisbane
Gas Load
300
Mini LNG 200
Nth NSW
100 Electricity ad
NRPS
RVPS
0
Export LNG 0 100 200 300 400 500
Market Sector Demand (PJ/A)
7
Distance to Market (Km)
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CSG trial production - Richmond seam

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• Corella P11 – single lateral on production test for over three years

• Corella P18 and Harrier P01: improved drilling and completion techniques

• Harrier P01 results exceeding expectations

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Largest conventional prospect to be drilled mid 2012

• Interpretation and mapping of seismic surveys:

• 8 prospects and leads across the three permits

• An estimate of the Original Gas In Place for each prospect and lead has been determined

Permit	OGIP Pmean (Bcf)
PEL 16	1530
PEL 13	504
PEL 426	417

• Greater Mackellar Structure: Pmean OGIP 1,312 Bcf:

• Extent of gas charged sands

• Higher quality deeper sands

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9 9

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2010 / 2011 achievements - other

• In principle agreement (MOU) with dairy for gas sales

• Environmental submission for Lions Way Pipeline

• PEL 426 coal seam wells

• Regional G&G studies

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Strong reserve position

• 100% ownership of gas reserves

• � Largest uncontracted reserve position in the CSG sector

• � Reserves: � Cover PEL 13 and 16 � Over 10% of area � Excludes conventional gas

• � Internal estimates of resource potential: � 24 TCF OGIP – CSG � 2 TCF OGIP – conventional

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Australian Coal Seam Gas Reserves	Australian Coal Seam Gas Reserves	Australian Coal Seam Gas Reserves
	(Petajoules)
Company	3P	2P
QGC (BG) Origin	14,261 7,268		7,245 5,122
Conoco Phillips Santos Shell	Arrow $A520m takeover bid	6,265 5,171 4,129	5,004 3,348 2,636
PetroChina AGL	August 2011	4,129 3,506	2,636 2,029
Bow Energy		2,750	238
Metgasco		2,542	428
Eastern Star		2,238	1,216
Sinopec Petronas TOTAL	Santos $A730m takeover bid	2,211 2,112 2,112	1,766 1,377 1,377
Kogas Molopo	July 2011	1,152 817	751 345
Westside Senex		369 249	221 79
Mitsui		212	110
CS Energy		189	70
Dart		102	45
Total	61,784		36,043

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Share price performance

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All Ords (XAO), vs MEL
120
100
80
60
40
20
0
09-Nov-10 09-Dec-10 08-Jan-11 07-Feb-11 09-Mar-11 08-Apr-11 08-May-11 07-Jun-11 07-Jul-11 06-Aug-11 05-Sep-11 05-Oct-11 04-Nov-11
XAO MEL
Index Return
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Compared with All Ordinaries

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NSW gas development is important

• Environment

• Gas is the cleanest fossil fuel

• Gas fired power generation is the lowest cost means to reduce GHG emissions

• Gas fired power generation complements renewables – solar and wind

• NSW gas supply

• Limited conventional gas supplies

• Already heavily reliant on coal fired power, limited gas fired power generation

• Demand for gas expected to grow to 30% of total energy supply in the next 25 years

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• Business and employment

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CSG – a governments perspective

• State Government’s response to the NSW Parliamentary Inquiry into CSG

“Increased use of natural gas, including CSG, to meet an increasing proportion of future energy needs is a key component of the strategy to restart economic growth in NSW.”

• Prime Minister’s quote relating to passage of the Carbon tax package through Parliament:

“We believe coal-seam gas will be part of the energy mix of the future.”

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Source: The Australian 10/11/11

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Community consultation / participation

• Key Messages

• CSG is a clean fossil fuel

• Production techniques are proven and safe for the environment

• Farmers and industry can co-exist

• Sustainable, local economic development

• Approach:

• Direct contact with the northern rivers community though normal business and employment of local workforce

• Participation in community events (Beefweek, Primex and Lismore Show)

• Presentations to local councils and community groups (eg; Chamber of Commerce, Rate Payers Associations)

• Accessible to local media representatives

• Respond to Government/Parliamentary requests for submissions

• National media focussed through APPEA

• We will continue to conduct open, direct and transparent communications

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Looking forward : exploration to production

• Heightened demand for gas

• Domestic customers currently seeking to lock in large gas volumes

• Gladstone LNG projects require additional gas to meet export commitments

• Potential for stand-alone LNG project

• Metgasco is the last remaining independent company on the east coast with large, uncommitted 2P gas reserves

• the only company on the east coast with conventional gas supply potential

• General community acceptance of the CSG industry is essential and external communication programs will consume a lot of our focus

• Metgasco plans:

• First gas sales and production

  • Gas sales to local customers (Richmond Dairies)

  • Richmond Valley Power Station – Stage 1 (6 MW)

• Drill high impact conventional gas lead – Greater Mackellar, Pmean 1,312 Bcf

• Continue to refine CSG production technology and improve reserve position

• Evaluation of gas sales and strategic opportunities

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