METGASCO LTD — Capital/Financing Update 2005

Mar 20, 2005

21 March 2005

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

METGASCO DRILLING UPDATE

Metgasco Ltd advises that its South Casino Trial Production program has been approved by the NSW Department of Primary Industries ("DPI") and that the Drilling Contractor Mitchell Drilling has advised that it has commenced mobilization of the Soilmec G-55 rig ('Rig 40"). Drilling is expected to commence within the next 48 hours.

The South Casino Trial Production program will comprise five production test wells and one core hole. The holes will be located between 200m and 600m apart and will consist of both single seam and multiple seam production completions to a depth of approximately 700m. The wells will be flow tested to establish gas production rates with the objective of reserve certification.

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. The Company is approximately 70km from the Queensland Gas Market.

For further information contact: David Johnson Managing Director Metgasco Ltd Tel: (02) 9363 9604 Mob: 0418 418 533 Fax: (02) 9327 4765

Glenda McLoughlin Chief Financial Officer Metgasco Ltd Tel: (02) 9363 9604 Mob: 0413 439 299 Fax: (02) 9327 4765

Metaasco Limited ACN 088 196 383 Suite 10/402 New South Head Rd Double Bay NSW 2025 Tel: (02) 9363 9604 Fax: (02) 9327 4765 Website: www.metgasco.com.au