METGASCO LTD — Capital/Financing Update 2007

May 29, 2007

30 May 2007

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

DRILLING REPORT

Metgasco (ASX:MEL) advises that the following drilling activity has taken place over the past week:

Corella-E9 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 5 May 2007 Current depth is at 490 metres and drilling ahead.
Corella-E8 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 15 May 2007 Current depth is at 420 metres and casing is being set.
Corella-E7 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 26 April 2007 This well has been successfully drilled to total depth of 756 metres. A well developed sequence of Walloon coal measures has been obtained to date containing approximately 44 metres of coal. These coals have exhibited excellent free gas shows. This well has been suspended pending additional testing.
Corella-E6 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 2 April 2007 During coring operations the Company encountered a zone of interest comprising fractured, gas charged sandstone which has exhibited characteristics of a conventional gas reservoir. The Company is currently mobilising equipment to conduct a DST which is expected to commence within 3 weeks.
Corella-E4 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 29 March 2007 Permeability testing has been completed. Operations have now been completed on this site. Results are being analysed and will be incorporated into the reservoir model for the purposes of gas reserve certification.

Corella-E5	Metgasco 85%, CS Energy earning 15%
Location:	PEL 16, Stratheden Joint Venture Area
Spud Date:	19 February 2007
Status:	Rig onsite conducting permeability testing.
Corella-E3	Metgasco 85%, CS Energy earning 15%
Location:	PEL 16, Stratheden Joint Venture Area
Spud Date:	12 February 2007
Status:	Suspended pending additional testing.
Corella-E1	Metgasco 85%, CS Energy earning 15%
Location:	PEL 16, Stratheden Joint Venture Area
Spud Date:	27 January 2007
Status:	Suspended pending additional testing.
Riflebird-E2	Metgasco 100%
Location:	PEL 16
Spud Date:	22 January 2007
Status:	Suspended pending additional testing.
Riflebird-E1	Metgasco 100%
Location:	PEL 16
Spud Date:	15 January 2007

Suspended pending additional testing.

For further information contact:

David Johnson Glenda McLoughlin

Managing Director Chief Financial Officer

Status:

Metgasco Limited
ACN 088 196 383
Level 3, 32 Walker St
North Sydney NSW 2060
Tel: (02) 9923 9199
Fax: (02) 9923 9199 Website: www.metgasco.com.au