METGASCO LTD — Capital/Financing Update 2006

Nov 12, 2006

ABN 24 ORR 194 383

Level 3, 32 Walker St, North Sydney, NSW, 2060 tel +61 2 9923 9100 fax +61 2 9923 9199 www.metgasco.com.au

13 November 2006

Australian Stock Exchange Via Electronic Lodgement

SHARE PURCHASE PLAN OFFER

Metgasco Ltd (ASX:MEL) is pleased to announce a Share Purchase Plan ("SPP") to eligible shareholders.

Eastern Australian gas markets are experiencing buoyant conditions and the coal seam gas sector is rapidly expanding to meet this growing demand for gas. Metgasco's Casino gas project in the Clarence Moreton basin in northern New South Wales is well placed in this market. In order to accelerate the Company's development, the Directors have resolved to allow shareholders to purchase up to \$5,000 of Metgasco shares at a discount to the market price of the Company's shares.

The SPP offer is for eligible Metgasco shareholders on record as at 5.00pm on Monday 27 November 2006. The offer will be priced at a 10% discount to the weighted average market price of Metgasco's shares traded over a pricing period prior to the record date. This price will be announced on 28 November with detailed documentation sent to shareholders on Friday 1 December.

Participation in the SPP is entirely voluntary. Shareholders may apply for a parcel of ordinary shares valued at either \$500, or \$1,000 or \$2,000 or \$5,000. Acceptances under the SPP will close at 5.00pm on Wednesday 13 December 2006. The SPP timetable is attached to this release and full details of the offer will be sent to shareholders by 1 December 2006.

Funds raised by the SPP, together with Metgasco's existing cash reserves will:

• Provide additional funding for the reserve expansion drilling program which commences in December 2006;
• Contribute towards funding the environmental assessment process for the Richmond Valley Power Station;
• Contribute towards funding field operations and the development of field infrastructure for the Casino gas project;
• Provide funding for ongoing expenses relating to gas commercialisation planning; and
• Provide additional working capital.

The SPP will be available to shareholders of the company with a registered address in Australia and New Zealand. Prior to electing to participate in the SPP, shareholders should consider the terms and conditions of the SPP, their own financial objectives and circumstances, and whether participation in the SPP suits those objectives and circumstances.

Broker Handling Fee

Metgasco will pay a 2.0% broker handling fee to facilitate acceptances under the Share Purchase Plan Offer. This fee will be payable to any Participating Organisation of the Australian Stock Exchange:

• Whose stamp appears on the Application Form; or $\bullet$
• Where the acceptance for a broker sponsored client is initiated through CHESS by a $\bullet$ broker participant, on behalf of a client

The Directors of Metgasco have the discretion to alter key dates and terms. The SPP timetable is provided below:

SHAREHOLDER SHARE PURCHASE PLAN (SPP) TIMETABLE

Date	Event
27 November 2006 Record date		The date on which Metgasco determines eligible shareholders
	28 November 2006 Price announcement date	Share issue price announced
1 December 2006	Dispatch date	SPP documents dispatched to shareholders
15 December 2006	Closing date	Closing date for acceptances Applications must be received by 5.00pm (Sydney EST)
18 December 2006	Allotment and dispatch date	Allotment and dispatch of shareholder statements

For further information contact: David Johnson Managing Director

Glenda McLoughlin Chief Financial Officer

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.metoasco.com.au