METGASCO LTD — Capital/Financing Update 2006

Sep 10, 2006

11 September 2006

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

\$2.3 MILLION PLACEMENT

Metgasco (ASX:MEL) is pleased to announce that it has completed a placement of 11,775,000 ordinary shares at 20 cents to raise equity of \$2,355,000. These shares represent approximately 15% of the Company's issued capital and have been issued pursuant to Listing Rule 7.1.

Shares have been placed with clients of Bell Potter Securities and Taylor Collison.

Proceeds from this placement will be used to undertake additional drilling to expand the Company's 2P gas reserve position, with a goal of achieving over 100 Petajoules in 2P reserves, and to replenish working capital.

Metgasco holds the largest certified gas reserves in NSW. It is currently conducting production testing on its horizontal well pilot program at Casino.

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