METGASCO LTD — Capital/Financing Update 2006

Feb 8, 2006

9 February 2006

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

DRILLING UPDATE

Metgasco advises that horizontal well MSC-10 has now drilled 566 metres of the angled section of this well. An additional 109 metres of the angled section is required to be drilled to reach the target seam. This is expected to be completed by the end of this week.

The Company will then run and cement casing. Horizontal in-seam drilling will commence next week with a section of approximately 630 metres to be drilled.

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