METGASCO LTD — Capital/Financing Update 2007

Jun 4, 2007

5 June 2007

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

EXTENSION TO RESERVE EXPANSION DRILLING PROGRAM

Metgasco (ASX:MEL) is pleased to advise that following recent funding from the Federal Government under the Sustainable Regions program and a review of results from the current core drilling program, the Company has committed to drill an additional four core wells.

Drilling results from the current core drilling program have demonstrated extensive distribution of coals within PEL 16 and substantially higher volumes of gas charged coal than had been encountered previously. The general increase in net coal within PEL 16 is a result of the Company's current drilling practice of coring to a depth of approximately 850 metres. This has resulted in an increase in coal samples of up to 100% at certain locations.

Two of the planned core wells will be funded by the Sustainable Regions program and two will be funded by Metgasco (100%) with a total cost to the Company of approximately \$1 million. Drilling will commence immediately upon completion of the current Stratheden Joint Venture program (Corella wells).

The extension of the Reserve Expansion Drilling Program is expected to contribute to the proving of additional gas reserves in excess of the current 2P gas reserve target of 660 Petajoules.

Glenda McLoughlin Chief Financial Officer

Metgasco Limited Level 3, 32 Walker St North Sydney NSW 2060 Tel: (02) 9923 9100 Fax: (02) 9923 9199 Website: www.metgasco.com.au