METGASCO LTD — Capital/Financing Update 2006

Mar 12, 2006

13 March 2006

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

DRILLING UPDATE

Metgasco advises that at as of this morning, drilling depth on MSC 9 was 532m and the rig was drilling ahead. Conductor casing has been set and the Company has commenced drilling the angled section of this well. Over the coming week, the Company expects to complete the angled section of this well and commence in-seam drilling.

Over the previous week, the Company has finished installing pumps and well-head equipment on MSC 10. The hole was flushed with water to remove coal fines and pumped clear. Initial dewatering has been accompanied by early gas desorption and gas flow. Over the coming week, the Company expects to undertake additional water flush treatments of MSC 10 while undertaking dewatering.

Overview of Project

Metgasco holds 100% of PEL16 located near Casino and Lismore in northern New South Wales. PEL16 contains a CSM gas resource of over 4 trillion cubic feet of gas-in-place and also has the potential for conventional oil and gas reservoirs. 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