METGASCO LTD — Capital/Financing Update 2007

Apr 19, 2007

20 April 2007

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

DRILLING RIG SECURED FOR PILOT PRODUCTION DRILLING PROGRAM

Metgasco (ASX:MEL) is pleased to advise that it has entered into an agreement with Ensign International Energy Services to provide drilling services for the forthcoming pilot production drilling program.

Ensign Drilling will mobilise an ADR 100 rig from North America where it has recently been engaged in surface to inseam drilling in coal seam gas ("CSG") production. Metgasco is now moving to its "next generation" well design for surface to inseam drilling in the Clarence Moreton basin. The ADR rig is one of the most advanced drilling rigs to be used in Australia and will be the only one of its type employed in CSG drilling in Australia.

The drilling program is due to commence in August and will initially consist of a 6 well pilot production program for the Stratheden Joint Venture and a 2 well pilot production program for the Casino Gas Project.

Metgasco Managing Director David Johnson said "The ADR rigs provide us with the capability to substantially improve our drilling productivity. The ADR should improve our cycle time per well and therefore allow us to drill and complete a greater number of wells in the same period. This next-generation equipment is also capable of delivering significant improvements in safety and well design."

Key design features of the rig are:

• Increased hoisting capacity
• Range 2 pipe handling
• Fit for purpose rig design incorporating full automation on the drill floor (iron roughneck) and automated catwalk tubular handling
• Highly mobile rig design with improved rig shift times in comparison to other rigs in the oil and gas industry here in Australia.
• Smaller foot print, reducing any impact on the environment. The rig is also designed for total containment of all drainage points allowing for zero discharge capability.
• Improved Health and Safety performance due to full drill floor automation and $\bullet$ integrated rig design reducing manual handling requirements.

The rig will also be capable of drilling to sufficient depths to allow the Company to test a number of conventional targets on PEL 16 and associated farm in acreage.

For further information contact: David Johnson Managing Director

Clenda McLoughlin
Chief Financial Officer

Metgasco Limited

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

For further information contact: James Van Rooyen
Coal Seam Methane Manager

Ensign International

Ensign International
461 Greenwatte St
Toowoomba Qld 4350
Tel: (07) 46991888
Fax: (02) 4699 1800
Website: www.ensignnint.com