METGASCO LTD — Capital/Financing Update 2011

May 30, 2011

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ASX / MEDIA RELEASE

ASX Code: MEL

31 May 2011

PILOT DRILLING PROGRAM PROGRESS REPORT

Metgasco is pleased to provide an update on the progress of the coal seam gas (CSG) multi-lateral pilot wells.

Gas desorption has commenced on both the Harrier P01 and Corella P18 wells with both wells currently producing gas and water continually to surface. Gas flow is currently being restricted to ensure an efficient dewatering process and to avoid potential near well bore damage. Water levels are currently 400 metres above the coal seam for Harrier P01 and 200 metres above the coal seam for Corella P18.

Metgasco’s Managing Director, Peter Henderson, said “The performance of these two wells to date provides very positive indicators for commercial flow rates. Both wells are continually producing gas against considerable downhole pressure which will not be applied in routine operation.”

Metgasco will provide further information on the progress of these wells as it becomes available.

Background on Metgasco

www.metgasco.com.au

Metgasco has a 100% interest in PEL 16, 13 and 426 in the Clarence Moreton Basin in NSW where we operate the largest acreage position in the basin. Metgasco currently has 2P gas reserves of 397 Petajoules and 3P gas reserves of 2,239 Petajoules from less than 10% of our acreage area. We are exploring for gas in conventional and unconventional reservoirs and in 2010 discovered the Kingfisher gas field, the largest conventional discovery in NSW in over a century of exploration in the State. Metgasco is currently progressing its gas commercialisation agenda which includes gas and electricity supply to NSW and gas supply to Queensland. With gas in place resources likely to exceed the domestic markets requirements and sufficient to supply export scale projects, Metgasco is currently investigating LNG project development options.

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

Metgasco Limited ACN 088 196 383 Level 9, 77 Pacific Highway North Sydney NSW 2060 Tel: (02) 9923 9100 Fax: (02) 9923 9199 Website: www.metgasco.com.au