METGASCO LTD — Capital/Financing Update 2006

Apr 11, 2006

12 April 2006

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

ENCOURAGING EARLY GAS FLOWS

Metgasco (ASX:MEL) advises that over the past week the horizontal well MSC-9 at South Casino has reached a peak flow rate of 101,000 scf/day and horizontal well MSC-10 at South Casino has reached a peak flow rate of 13,000 scf/day.

The Company considers these early flow rates to be very encouraging considering that the wells are at such an early stage of dewatering. MSC-9 has been on production test since 31^st March pumping water at an average rate of 45 barrels/day. MSC-10 experienced gas block (excess gas in the rotor) which required production testing to be stopped and tubing to be flushed back through the casing annulus. Dewatering of this well recommenced on $7^th$ April and it is now flowing gas at 11,000 scf/d and producing water at an average rate of 36 barrels/dav.

The Company plans to continue dewatering and monitoring gas flows from the horizontal wells over the coming weeks.

Overview of Project

Metgasco holds 100% of PEL16 located near Casino and Lismore in northern New South Wales. PEL16 contains gas reserves of 1,080 BCF (3P) and 21 BCF (2P). These are the largest independently certified gas reserves in NSW. The Company has completed a pilot program of 5 vertical wells to test the gas production capability of the Richmond coal seam. This pilot program has now been extended to include drilling two horizontal wells.

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