METGASCO LTD — Capital/Financing Update 2007

May 15, 2007

16 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-E8 Location Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 15 May 2007 Current depth is 15m and drilling ahead prior to placing conductor casing.
Corella-E7 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 26 April 2007 Drilled to a depth of 312m. Casing has now been placed and cemented prior to commencing coring operations.
Corella-E6 Location: Spud Date: Status:	Metgasco 85%, CS Energy earning 15% PEL 16, Stratheden Joint Venture Area 2 April 2007 Coring operations have been completed with the well now drilled to a total depth of 771 metres. A total of 42m of coal has been sampled for testing. In the last week drilling encountered a zone of interest comprising fractured, gas charged sandstone which has exhibited characteristics of a conventional gas reservoir. An 80m cement plug has now been placed and a wellhead has been installed to allow further testing to occur. The Company is currently mobilising equipment to conduct a DST.
Corella -E4	Metgasco 85%, CS Energy earning 15%
Location:	PEL 16, Stratheden Joint Venture Area
Spud Date:	29 March 2007
Status:	Suspended pending additional testing.
Corella-E5	Metgasco 85%, CS Energy earning 15%
Location:	PEL 16, Stratheden Joint Venture Area
Spud Date:	19 February 2007
Status:	Suspended pending additional 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.

Metgasco 85%, CS Energy earning 15%
PEL 16, Stratheden Joint Venture Area
27 January 2007
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
Status:	Suspended pending additional testing.

For further information contact:

David Johnson Glenda McLoughlin

Managing Director Chief Financial Officer

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