METGASCO LTD — Capital/Financing Update 2011

Jul 13, 2011

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ASX / MEDIA RELEASE

ASX Code: MEL

14 July 2011

METGASCO INCREASES GAS RESERVES

Metgasco advises that coal seam gas drilling and testing results from PEL 13 have been assessed by independent reserve certifiers, MHA Petroleum Consultants (Denver), resulting in a significant increase in Metgasco’s overall gas reserves.

This is the first time that reserves have been certified in PEL 13 and add to Metgasco’s currently certified reserves in its adjacent exploration lease, PEL 16.

PEL 13 reserves have been certified as 31.2 Petajoules 2P, 302.4 Petajoules 3P and 1334.1 Petajoules 2C. The following table provides details of Metgasco’s gas reserves.

PEL 13 and 16 – Independently Certified Coal Seam Gas Reserves (Petajoules)

Reserves	PEL 13	PEL 16	Metgasco Total
1P		2.7	2.7
2P	31.2	396.7	427.9
3P	302.4	2,239.3	2541.7
2C Contingent Resource	1334.1	1,177.4	2511.5

Notes:

1P Reserves = Proved 2P Reserves = Proved + Probable 3P Reserves = Proved + Probable + Possible 2C Reserves = Contingent The energy conversion factor used was 1.04 PJ per billion cubic feet (“bcf”).

The PEL 13 reserves and resources are the result of drilling just two wells on the eastern boundary of PEL 13, Bowerbird E01 and Bowerbird E02. The reserves and resources are included in just 190 km[2] , or 21% of the PEL 13 area. More exploration activity is expected to increase the 2P and 3P reserves in this 190 km[2 ] area and to book reserves and resources in the remaining 79% area of PEL 13.

The new reserve figures represent coal seam gas only, not Metgasco’s conventional gas potential.

Metgasco’s CEO, Mr Peter Henderson said “This is a positive result and demonstrates the potential for further significant reserve increases with more core-well drilling.”

Metgasco will continue to prove up its coal seam gas reserves steadily but will increase its focus on production / commercial opportunities. Metgasco has a very strong reserve

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position. Apart from its conventional gas potential, relative to its Australian competitors Metgasco has probably the highest level of coal seam gas reserves per dollar of current market capitalisation.

Compliance Statement

The Reserves statement provided in this announcement has been prepared by Mr Tim Hower of MHA Petroleum Consultants (Denver) and personnel under his supervision. Reserve estimates have been developed within the guidelines of definitions of proved, probable and possible reserves provided by the Society of Petroleum Engineers and the World Petroleum Council. These methods are consistent with the ASX Listing Rules. Mr Hower has consented to the use of the reserves figures in this announcement and the form and context in which the information appears.

For further information contact: Peter Henderson Glenda McLoughlin Managing Director Chief Financial Officer and CEO

Metgasco Limited ACN 088 196 383 Level 9, 77 Pacific Highway, North Sydney NSW 2060 Tel:+61 2 9923 9100 Fax: +61 2 9923 9199 Web: www.metgasco.com.au

Metgasco Limited

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