Annual General Meeting Managing Director's Address

13 November 2012

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

2011/2012: A tough year, but the outlook is good

Exciting CSG reserves and conventional potential
NSW
More than 1 million gas customers
NSW has a supply issue from 2014/2015
Northern Rivers area: opportunity to sustain and grow industry through a lower cost, safer and more reliable supply of energy than LPG and diesel
250 years of supply, but currently only providing 6% of NSW gas
Eastern Australian market undersupplied by 2014 (Wood Mackenzie)
AEMO gas demand forecast to triple by 2020
Gas prices forecast in the \$7 to \$12 range by 2020
Potential to make a significant contribution to the Northern Rivers and NSW economy is recognised
Potential to make a huge difference to greenhouse gases
Increased gas sales in the US have made a huge impact on greenhouse gases
NSW Government has given CSG the green light. It is now time for Metgasco and other NSW CSG companies to perform

Share price performance

Health, safety and environment

Employees:
3 years LTI free on October 26, 2012
Contractors:
2 years without an LTI on September 5, 2012
No reportable environment incidents
Strong focus on environmental performance:
Water management in particular
Increased MEL staff and consultant support
Bioassay results show water is salty, not toxic

Significant CSG reserves base

World scale acreage position in the Clarence -Moreton Basin
4 tenements (PEL 16, 13, 426 & 130)
- − PEL 130 subject to work program approval
1,107,317 acres in PEL 16, 13, 130 & 426
100% owned
Large gas resource potential
MEL's starting base for CSG is a large OGIP estimate of 23 Tcf
Current reserves established in 10% of MEL's acreage
Potential for further reserve growth across all PELs and additional seams enable MEL to target a reserve position > 5,000 Bcf
CSG Reserves and Resources

	Reserves			Resources
	1P (Bcf)	2P (Bcf)	3P (Bcf)	2C (Bcf)	OGIP 2 (Bcf)
PEL 13		30.0	290.8	1,282.8	10,940
PEL 16	2.6	381.4	2,153.2	1,049.7	7,339
PEL 426	-				4,951
Total	2.6	411.4	2,443.9	2,332.5	23,230

Notes:

1P, 2P, 3P & 2C Reserves and Resources certified by MHA Petroleum Consultants (Denver).

2.OGIP estimates undertaken by Mr. Peter Stanmore General Manager of Exploration at Metgasco.

Large uncontracted coal seam gas reserves

100% ownership of gas reserves
Large uncontracted reserve position in the CSG sector
Reserves:
Cover PEL 13 and 16
Over 10% of area
Excludes conventional gas
Scope to significantly increase CSG reserves

METGASCO
-----------------

Eastern Australian CSG Reserves (PJ)
	as at 31 December 2011
Company	3P	2P
QGC	15,675	10,350
Arrow Energy	12,500	7,800
Origin Energy	7,799	5,562
ConocoPhillips	6,809	5,444
Santos	3,998	2,901
AGL Energy	3,831	2,111
Metgasco	2,542	428
Sinopec	2,404	1,922
Petronas	1,449	1,449
TOTAL	1,449	1,449
Mitsui Group	1,111	420
Molopo Energy**	824	343
KOGAS	790	790
Westside Corp	725	258
TRUEnergy	559	304
Other	266	12
Senex	249	79
Toyota Tsusho	156	156
Stanwell Corp	137	137
Red Sky	114	5
Blue Energy	75
Total	63,462	41,920

Source: IES - Modelling and Analysis for Gas Market Review 2012. A Report to the Office of Queensland Gas Market Advisor

LNG participant company Independent

Further upside from conventional gas discovery

Kingfisher E01
First major conventional gas discovery in NSW (November 2009)
Large section of gas charged sands identified
138 metres of gas charged sands in Ripley Road and Gatton formations
Up to 500 meters of additional section below TD of Kingfisher E01
Extensive testing and appraisal program conducted
Good quality +95% CH⁴ gas
Production test (2,050-2,043.7m) 3 mmscfd
Extended production test of Gatton formation (1,450- 1,453m) following limited stimulation of a 3 meter zone
Greater Mackellar Structure
Pmean OGIP 1,312 Bcf
Plan to drill in 1H 2013
Seismic acquired November 2012, after a long wet period
Rosella E01 planned for 2Q 2012 to test Greater Mackellar structure

Multiple commercialisation options available

Local and Regional markets

Local sales e.g. Richmond Dairies
Compressed Natural Gas (CNG)/micro LNG
Local power generation

Domestic and Export

15PJ to 30 PJ gas sales for domestic & third party sales to LNG proponents
Stand alone large scale LNG development

Strong east coast demand – domestic and export

Gas market is undergoing significant structural change driven by

LNG developments in QLD Gas being sold to higher priced Asian LNG markets
Transition to a lower carbon economy
Declining production from traditional east coast conventional gas Cooper Basin

Source: Australian Financial Review 29 March 2012

NSW – Security of supply / importance?

"The point is that NSW is facing a gas supply crisis…The supply contracts start to run out in 2014 and one-third of the energy in NSW comes from gas." The Hon Chris Hartcher, MP,

NSW consumption approx. 140 PJ/annum and growing
94% of NSW's gas now comes from interstate (Cooper or Gippsland Basin)
Gas shortages and/or price increases will start to occur in the next few years as current contracts expire

October 8, 2012 Infrastructure NSW, 20 year strategy: CSG Development Vital

"The development of the coal seam gas industry will be 'game changing' for New South Wales, reducing the state's dependence on coal and possibly creating an LNG export industry".

"CSG industry would help to address the security risk of declining reserves of conventional gas from interstate basins; meet the increasing demand for gas-fired generation; and help to contain upward pressures on wholesale gas prices because of declining reserves and increased demand including for exports".

The report recommends the NSW government encourage private sector investment to build pipelines connecting the state's CSG fields in areas such as the Gunnedah Basin to the national gas transmission network.

"The planning and approval processes need to be streamlined, proportionate and timely," it said.

The Australian - August 18 2012

Upward trend in gas prices

Price risk now skewed to the upside Availability of abundant low-cost marginal CSG for domestic use now increasingly unlikely.

Source: National Gas Outlook: Domestic gas Prices and Markets. ACIL Tasman 30 May 2012

Days of wholesale sales gas price contracts under \$4/GJ are over
LNG plants will secure gas contracts to ensure that plants are fully utilised
Domestic gas prices likely to increase to over \$6.50 to \$10 by 2015, \$7 to \$12 by 2020**
Gas contracts are increasingly oil linked

Source: Broker Research and Company Estimates ** 2012 Gas Market Review - Queensland

NSW Government gives CSG / Metgasco the green light

"With yet to be tapped coal seam gas reserves representing over 250 years of supply, it's essential that we start to get Projects moving with proper protection in place". The Hon Chris Hartcher , MP,

NSW Minister for resources and Energy, 15 May 2012

"Importantly, the Study (referring to the Namoi Catchment Study) shows that the collective impacts of coal mining and coal seam gas extraction can be effectively managed without negatively impacting agricultural water use across the region".

The Hon Chris Hartcher , MP, Media Release, 31 July 2012

The NSW government has released the following policies to provide the general public with more confidence in the industry:

Strategic Regional Land Use Policy (SRLUP)
Aquifer Interference Policy
Codes of Practice for Coal Seam Gas

The release of these policies coupled with the renewal of Metgasco's Petroleum Licences 13 and 16 and the granting of Metgasco's first production licence are a strong message that the NSW Government is behind the CSG industry.

Metgasco – responding to the challenges ahead

Technology	 Productivity  Recoveries
Costs	 Labour and materials  Supplies
Schedule	 Resources (people and equipment) and management  Working efficiently within new NSW regulatory environment
Water Management	 Huge opportunity for benefits to the community?
Community Support	 Strengthen relationships with the local communities in which we operate  Increase internal resources devoted to ensuring accurate information is communicated  Promote benefits of industry, ensure compliance with regulations, and respect for those we work with  Deliver benefits to the community

Community consultation

Metgasco focussed on key stakeholders, local community and landholders:
One to one communication
Small, disciplined discussion groups
Prompt and open response to letters, emails and media reports
Primary focus for 2012/2013
Communication with landholders and community affected by CSG operations, including a Casino "shop-front"
Establishment of a community consultative committee
Demonstration of CSG value and safety
- − First class execution of field activities (seismic and drilling)
- − Gas sales to local community

2012/2013 Program

CSG pilot wells:
Further demonstration of productivity
Additional gas for local sales
Core wells;
Reserve definition and acreage management
Conventional program
Seismic
Rosella-1 well (Greater Mackellar structure)
Commence local gas sales
Pipelines
Compressed natural gas

Our management team

Peter Henderson – Managing Director & CEO

Formerly Operations Technician Manager for Esso Australia and Development Manager for Premier Oil PLC.

Sean Hooper – CFO & Company Secretary Sean is a Chartered Accountant with more than 25 years of broad financial experience. He is formerly the Financial Controller and Company Secretary of Horizon Oil.

Richard Shields – External Relations Manager

Richard has extensive knowledge and experience in external relations, having worked for more than 20 years in senior government and politically related roles.

Robert Petersen – Business Development Manager

Robert has more than 30 years experience in gas and electricity. He has held senior positions with Eastern Star Gas and AGL.

Dr Simon Hann – Drilling & Production Manager

Simon was previously the Manager of CSG Drilling and Completion for Santos/GLNG operations. Simon has worked for Shell, Woodside and Geodynamics.

Peter Stanmore – GM Exploration Peter has 30 years experience with ExxonMobil, Delhi Petroleum and Santos. During his time at Santos Peter was the leader of the Onshore Exploration Evaluation team.

Metgasco is moving ahead

Heightened demand for gas
NSW faces supply shortages as early as 2014
Northern Rivers region faces high LPG and diesel costs
Gladstone LNG projects require additional gas to meet export commitments
Potential for stand-alone LNG project with FLEX LNG
Among the last of the independent companies on the east coast with uncommitted, certified 2P gas reserves
Significant onshore conventional gas supply potential
NSW Government is behind the CSG industry
Management strengthened to meet commercialisation/production challenge

Field Work	Commercial Development
 Continue to refine CSG production technology by drilling HP02,03 & 04 and demonstrating	 First gas sales and continue to grow local market
commercial productivity	 Secure GSA for a gas supply project to
 Drill high impact conventional gas lead;	underpin a major field development
Rosella E01	 Pursue partners for upscale commercial potential