METGASCO LTD — Capital/Financing Update 2005

Jun 5, 2005

6 June 2005

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

WEEKLY DRILLING UPDATE

• Commencement of gas flow from MSC-05 $\bullet$
• Gas flow and further drawdown of MSC-03
• MSC-04 drawdown about to commence
• Running of 5" liner on MSC-06

MSC-03

Following the establishment of free gas flows while maintaining positive pressure in MSC-03; the fluid level in the well has been further drawndown. Monitoring of the well following drawdown is indicating a further increase in positive pressure.

MSC-04

The wellhead assembly for MSC-04 has now been completed and commencement of drawdown is expected in the next few days.

MSC-05

Following an initial drawdown in MSC-05, the well has established sustainable gas flow while maintaining positive pressure. Further drawdowns in the well are expected at a slower rate to optimise water production rates.

MSC-06

During the week, MSC-06 reached total depth of 671.5m. The stabilizer used at the bottom of the 7" production casing failed to open correctly requiring perforating of the casing prior to cementing. The perforating and cementing is now complete and 5" liner pipe is due to be run in the hole.

Overview of Project

Metgasco owns 100% of PEL 16 located near the townships of Casino and Lismore in Northern New South Wales. The focus of exploration is coalbed methane of the Walloon Coal Measures of the Clarence Moreton Basin. The Walloon Coal Measures have been the subject of intense exploration and development activity in the past 4 years. In the Surat Basin, exploration and development in the Walloon Coal Measures has now established 3P Reserves of in excess of 1800Pj and commercial production is expected from at least 3 fields in the next 18 months.

Metgasco PEL 16 is well located in an area of no embedded energy supply in one of the fastest growing population areas of Australia and is also only 70km from the Queensland Gas Market.

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