METGASCO LTD — Capital/Financing Update 2011

Feb 8, 2011

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ASX / MEDIA RELEASE

ASX Code: MEL

9 February 2011

FIRST WELL IN MULTI-LATERAL PILOT SPUDS

Metgasco is pleased to advise that the drilling of the first well in the Harrier Pilot program commenced yesterday.

The first multi-lateral well, Harrier P02, spudded on 8 February 2011. Two horizontal inseam laterals are expected to be drilled with a target length of 1,000 metres per lateral (resulting in 2,000 metres of in seam exposure per well). The wells are being drilled by Lucas Rig 25 which is a Schramm T130XD.

The Harrier multi-lateral pilot program has been located near Corella P11 where Metgasco has had its lead pilot production well on test for three years and during this time has produced gas at rates of between 160,000 – 200,000 scf per day.

All wells in the multi-lateral pilot program will be drilled into the Richmond coal seam reservoir in the Walloon Coal Measures. This is the first of up to four wells to be drilled. The Harrier wells have been designed to achieve increased in-seam exposure to the resource and thereby result in gas production rates above those currently being achieved from Corella P11, which has a single in-seam horizontal section of 680 metres.

Location of Harrier Pilot Wells

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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 coal seams, conventional and shale 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: David Johnson Glenda McLoughlin Managing Director Chief Financial Officer

Address Level 9, 77 Pacific Highway North Sydney NSW 2060 Tel: +61 2 9923 9100 Fax:+61 2 9923 9199

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