METGASCO LTD — Capital/Financing Update 2007

Jan 30, 2007

31 January 2006

AUSTRALIAN STOCK EXCHANGE Via Electronic Lodgement

DRILLING REPORT

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

MMMC-01 Location: Objective: Drilling Activity:	(Metgasco earning 51% interest, Molopo 49%) PEL 13 Coring and associated testing of the Walloon Coal Measures Following a successful sidetrack at 324m, 302m of hole was cored over the past week to a depth of 626m through the Walloon Coal Measures. A total of 13.75m of coal core samples have been retrieved for gas testing. While coring at 620m the core barrel twisted off below the coal measures and required fishing for retrieval. Fishing for the core barrel has been suspended to allow for wireline logging to be completed. The Mitchell rig 107 will move off wellsite shortly and the hole will remain open pending the arrival of Multiphase test equipment for commencement of downhole testing; expected to commence in the next week.
RifleBird - E1 Location: Objective:	Metgasco 100% PEL 16 Coring and associated testing of the Walloon Coal Measures. This is the first of two wells required to expand 2P gas reserves for the purposes of establishing sufficient supply volumes to the Richmond
Drilling Activity:	Valley Power Station. Slade Drilling contractors commenced drilling from BOP casing depth

of 95m through Kangaroo Creek sandstone to a current depth of 202m. The BOP is now being set and tested prior to commencement of open hole drilling to predicted top of the coal measures where coring will commence.

Coring and associated testing of the Walloon Coal Measures. This is
the second of two wells required to expand 2P gas reserves for the
purposes of establishing sufficient supply volumes to the Richmond
Drilling to a depth of 95m was completed prior to setting BOP casing
and testing. The hole will be further openhole and core drilled by

Corella $- E1$	(Metgasco 85%, CSE earning 15%)
Location:	PEL 16 (MEL: CSE Farm In)
Objective:	Coring and associated testing of the Walloon Coal Measures. This is the first of up to 10 core wells required to identify 2P gas reserves of
	540Pj under the MEL: CSE Joint Venture.
Drilling Activity:	Drilling to a depth of 95m was completed prior to setting BOP casing and testing. It is expected that the Mitchell Rig 107 will mobilise to the site in the next few days to commence open hole drilling to predicted top of coal measures prior to commencement of coring.

For further information contact: Glenda McLoughlin or David Johnson
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