METGASCO LTD — Capital/Financing Update 2005

Jun 27, 2005

28 June 2005

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgment

WEEKLY DRILLING UPDATE

• Completion of drilling program
• Drilling completed on sixth well MSC-08
• Three wells now on production test

Metgasco has now completed its initial drilling program. Three wells are now on production test and two further wells will be completed and placed on production test in the coming weeks. These wells will then be drawn down over a period of up to four weeks. The draw down process involves pumping water out of the well to allow gas to flow. All five completed wells are in the process of being placed on production flow test to measure gas and water flows. The sixth well, MSC-08 has been drilled as a core hole and is not intended to be placed on production test at this time. Once the water draw down process has been completed, the Company will be in a position to assess initial gas flow rates. The drilling rig has now commenced demobilization to move off site. More detailed comments on drilling activities over the past week are as follows:

MSC-03, MSC-04, MSC-05

Three wells (MSC-03, MSC-04 and MSC-05) have now been placed on production test. The draw down of MSC-04 was reactivated after coal fines were cleared from the hole using a work over rig. All three wells are continuing to flow gas while maintaining positive pressure. Following re-installation of the well head and prior to drawdown recommencing, MSC-04 registered a wellhead pressure buildup of 28psi.

MSC-06

The well head assembly for MSC-06 is currently being completed. Draw down will commence when additional surface pipe and a more accurate water meter have been received and installed.

MSC-07

Well head assembly for this well has commenced. Once the well head is installed the well will be drawn down

MSC-08

This well spudded on Tuesday 21^st June and reached total depth of 500m on 26^th June. MSC-08 is a core hole and has been drilled with the goal of providing additional data on coal and gas content and composition. It is intended that this well will be converted to a production test hole in the future once this data has been acquired.

Overview of Proiect

Metgasco owns 100% of PEL 16 located near Casino and Lismore in Northern New South Wales. The focus of exploration is coal bed methane of the Walloon Coal Measures of the Clarence Moreton Basin. The Walloon Coal Measures have been the subject of successful exploration and development activity over the past 4 years. The trial production program will comprise five production test wells and one core hole. The wells will be flow tested to establish gas production rates with the objective of reserve certification. PEL 16 is well located in an area of no embedded energy supply in one of the fastest growing population areas of Australia.

For further information contact: Glenda McLoughlin Chief Financial Officer Metgasco Ltd Tel: (02) 9923 9100 Fax: (02) 9923 9199

Metgasco Limited ACN 088 196 383 Level 3, 32 Walker St North Sydney NSW 2060 Tel: (02) 9923 9100 Fax: (02) 9923 9199 Website: www.metgasco.com.au