METGASCO LTD — Investor Presentation 2012

Oct 10, 2012

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Unlocking the Potential

APPEA CSG Conference October 9, 2012

Disclaimer

This presentation is being provided for the sole purpose of providing the recipients with background information about Metgasco Ltd (Metgasco). No representation, express or implied, is made as to the fairness, accuracy, completeness or correctness of information contained in this presentation, including the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the presentation (“forward-looking statements”). Such forward-looking statements are by their nature subject to significant uncertainties and contingencies and are based on a number of estimates and assumptions that are subject to change (and in many cases are outside the control of Metgasco, its Directors and Officers) which may cause the actual results or performance of Metgasco to be materially different from any future results or performance expressed or implied by such forward-looking statements.

This presentation provides information in summary form only and is not intended to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor.

Due care and consideration should be undertaken when considering and analysing Metgasco’s financial performance. All references to dollars are to Australian Dollars unless otherwise stated.

To the maximum extent permitted by law, neither Metgasco nor its related corporations, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from fault or negligence, for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it.

This presentation should be read in conjunction with other publicly available material. Further information including historical results and a description of the activities of Metgasco is available on our website, www.metgasco.com.au.

ASX Listing Rule 5.11 Disclosure

Reserves have been certified by Mr Tim Hower of MHA Petroleum Consultants (Denver) who is a qualified person as defined under the ASX Listing Rule 5.11. Reserves have been developed within the guidelines of the SPE. Mr Hower has consented to the use of the reserve figures in this presentation. Conversion of reserves from PJ to Bcf at 1.04 PJ/1.00 Bcf.

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CSG – potential to have a huge influence in NSW

• NSW

• more than 1 million gas customers

• NSW has a supply issue from 2014/2015

• Northern Rivers area: opportunity to sustain and grow industry through a lower cost, safer and more reliable supply of energy than LPG and diesel

• 250 years of supply, but currently only providing 6% of NSW gas

• Eastern Australian market undersupplied by 2014 (Wood Mackenzie)

• AEMO – gas demand forecast to triple by 2020

• Gas prices forecast in the $6 to $12 range by 2020

• Potential to make a huge difference to greenhouse gases

• Increased gas sales in the US have made a huge impact on greenhouse gases

NSW Government has given CSG the green light

• it is now time for NSW CSG companies to perform

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Page 3

Corporate Overview – well positioned to respond to demand for gas

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• Metgasco (“MEL”) is an ASX listed, onshore conventional and unconventional gas company, with significant 100% owned acreage in the Clarence Moreton Basin in northern NSW

• MEL’s pilot wells have demonstrated economic gas production in its large resource base and local gas sales are due to commence in 2013

• MEL is continuing to explore multiple commercialisation options for its gas including supply to Gladstone LNG and SE QLD gas markets

 Capital Structure

to Gladstone LNG and SE QLD Capital Structure	gas markets
ASX code	MEL
Shareprice(at 04 October 2012)	$0.20
Market Capitalisation(million)	$78
Shares on Issue(million)	392
Options on Issue(million)	5.3
Cash(at 30 June 2012,million)	$22
Debt	Nil

 Major Shareholders

	LNG Limited 8.8%
	ERM 8.1%

Page 4

Industry Experienced Board and Management

• MEL’s Board and management bring high quality industry experience

• Board has proven track record of project delivery and senior leadership in the E&P industry

• Management has strong technical background; over 100 years of combined E&P operating experience

• Supported by MEL’s 28 staff across its Sydney and Casino offices

Industry Focused & Experienced Board

Nicholas M. Heath, Non-Executive Chairman

Formerly: Director of ExxonMobil Australia and Production Manager of Esso’s Gippsland operations

Management with Strong Technical Background

Sean Hooper, CFO and Company Secretary

Chartered Accountant with more than 25 years of broad financial experience. Formerly the Financial Controller and Company Secretary of Horizon Oil.

Peter J. Henderson, Managing Director and CEO

Formerly: Operations Technical Manager for Esso Australia and Development Manager for Premier Oil PLC.

Dr Simon Hann, Drilling and Production Manager

Recently Manager of CSG Drilling and Completion for Santos/GLNG operations. Simon has worked for Shell, Woodside and Geodynamics.

Steven J. Koroknay, Non-Executive Director

Formerly: Head Operations and Technical Manager, Bass Strait with Esso Australia. Prior to joining MEL, was the founder of Anzon Energy and Anzon Australia

Leonard F. Gill, Non-Executive Director

Formerly: CEO of TXU Australia (now TRUenergy)

Peter Stanmore, GM Exploration

30 years experience with ExxonMobil, Delhi Petroleum and Santos. At Santos he was the leader of the Onshore Exploration Evaluation team.

Richard Shields, External Relations Officer

Richard has extensive knowledge and experience in community relations, having worked for more than 20 years in senior government and politically related roles.

Robert Petersen, Business Development Manager

Robert has more than 30 years experience in gas and electricity. He has held senior positions with Eastern Star Gas and AGL.

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Aidan Stewart, Operations Manager

Aidan has more than 25 years experience in the upstream oil and gas industry, including Schlumberger and Sydney Gas.

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Significant CSG Reserves Base

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• World scale acreage position in the Clarence Moreton Basin

• 3 tenements (PEL 16, 13 & 426)

• 1,126,059 acres

• 100% owned

• Large gas resource potential

• MEL’s starting base for CSG is a large OGIP estimate of 24 Tcf

• Current reserves established in 10% of MEL’s acreage

• Potential for further reserve growth across all PELs and additional seams enable MEL to target a reserve position > 5,000 Bcf

• CSG Reserves and Resources

 CSG	Reserves and Resources	Reserves and Resources	Reserves and Resources	Reserves and Resources	Reserves and Resources
	Reserves Resources
	1P (Bcf) 2P (Bcf) 3P (Bcf) 2C (Bcf) OGIP2 (Bcf)
PEL 13		30.0	290.8	1,282.8	10,940
PEL 16	2.6	381.4	2,153.2	1,132.1	8,031
PEL 426	-				4,951
Total	2.6 411.4 2,443.9 2,414.9 23,922

Notes:

• 1.1P, 2P, 3P & 2C Reserves and Resources certified by MHA Petroleum Consultants (Denver) 2.OGIP estimates undertaken by Mr.Peter Stanmore General Manager of Exploration at Metgasco.

Page 6

Further Upside from Conventional Gas Discovery

• Kingfisher E01

• First major conventional gas discovery in NSW (November 2009)

• Large section of gas charged sands identified

• 138 metres of gas charged sands in Ripley Road and Gatton formations

• Up to 500 meters of additional section below TD of Kingfisher E01

• Extensive testing and appraisal program conducted

• Good quality +95% CH4 gas

• Production test (2,050-2,043.7m) – 3 mmscfd

• Extended production test of Gatton formation (1,450-1,453m) following limited stimulation of a 3 meter zone

• Greater Mackellar Structure

• Pmean OGIP 1,312 Bcf

• Plan to drill in 1H 2013

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Page 7

CSG Proven Production – Richmond Seam

Schematic of Multi-Lateral Well

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After several years of resource definition, MEL has recently refined completion techniques to enable strong, sustainable gas flow rates

• Corella P11 – single lateral on production test for over three years – 200 mcfd production rate: validates the target of 400 mcfd from dual lateral

• Corella P18 – sidetrack single lateral (improved drilling and completion techniques) encouraging test results

• Harrier P01 – dual lateral: test results on target for > 450 mcfd

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Page 8

Large Uncontracted Coal Seam Gas Reserves

Eastern Australian CSG Reserves (PJ)

• 100% ownership of gas reserves

• Large uncontracted reserve position in the CSG sector

• Reserves:

• Cover PEL 13 and 16

• Over 10% of area

• Excludes conventional gas

• Scope to significantly increase CSG reserves

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as at 31 December 2011

	Company	3P	2P
	QGC	15,675	10,350
	Arrow Energy	12,500	7,800
	Origin Energy	7,799	5,562
	ConocoPhillips Santos	6,809 3,998	5,444 2,901
	AGL Energy Metgasco	3,831 2,542	2,111 428
	Sinopec	2,404	1,922
	Petronas	1,449	1,449
	TOTAL Mitsui Group	1,449 1,111	1,449 420
	Molopo Energy** KOGAS	824 790	343 790
	Westside Corp	725	258
	TRUEnergy	559	304
	Other	266	12
	Senex	249	79
	Toyota Tsusho	156	156
	Stanwell Corp	137	137
	Red Sky	114	5
	Blue Energy	75
	Total	63,462	41,920

Source: IES - Modelling and Analysis for Gas Market Review 2012. A Report to the Office of Queensland Gas Market Advisor. Petronas, Sinopec and Kogas reserves, 2P or 3P, not clear, treated as 3P.

LNG participant company Independent

Page 9

Strong East Coast Demand – Domestic and Export

Gas Market is undergoing significant structural change driven by

• LNG developments in QLD - Gas being sold to higher priced Asian LNG markets

• Transition to a lower carbon economy

• Declining production from traditional east coast conventional gas - Cooper Basin

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Source: Australian Financial Review 29 March 2012

Page 10

NSW – Security of Supply / Importance?

The Hon Chris Hartcher, MP, The Australian - August 18 2012

• NSW consumption approx. 140 PJ/annum and growing

• 94% of NSW's gas now comes from interstate (Cooper or Gippsland Basin)

• Gas shortages will start to occur in the next few years as current contracts expire

October 8, 2012 Infrastructure NSW, 20 year strategy : CSG Development Vital

• “THE development of the coal seam gas industry will be “game changing” for New South Wales, reducing the state's dependence on coal and possibly creating an LNG export industry”.

• “ CSG industry would help to address the security risk of declining reserves of conventional gas from interstate basins; meet the increasing demand for gas-fired generation; and help to contain upward pressures on wholesale gas prices because of declining reserves and increased demand including for exports”.

The report recommends the NSW government encourage private sector investment to build pipelines connecting the state’s CSG fields in areas such as the Gunnedah Basin to the national gas transmission network.

“The planning and approval processes need to be streamlined, proportionate and timely,” it said.

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Upward Trend in Gas Prices

Price risk now skewed to the upside Availability of abundant low-cost marginal CSG for domestic use now increasingly unlikely

Source: National Gas Outlook: Domestic gas Prices and Markets. ACIL Tasman 30 May 2012

• Days of wholesale sales gas prices contracts under $4/GJ are over

• LNG plants will secure gas contracts to ensure that plants are fully utilised

• Domestic gas prices likely to increase to over $6.50 to $10 by 2015, $7 to $12 by 2020**

• Gas contracts are increasingly oil linked

Source: Broker Research and Company Estimates

• ** 2012 gas Market Review - Queensland

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Page 12

Multiple Commercialisation Options Available

Local and Regional markets

• Local Sales – eg Richmond Dairies

• Compressed Natural Gas (CNG)/micro LNG

• Local power Generation

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Domestic and Export

• 15PJ to 30 PJ Gas Sales for Domestic

• & third party sales to LNG Proponents

• Stand Alone Large Scale LNG development

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Page 13

NSW Government gives CSG / Metgasco the Green Light.

“With yet to be tapped coal seam gas reserves representing over 250 years of supply, it’s essential that we start to get Projects moving with proper protection in place."

The Hon Chris Hartcher , MP, NSW Minister for resources and Energy, 15 May 2012

“Importantly, the Study (referring to the Namoi Catchment Study) shows that the collective impacts of coal mining and coal seam gas extraction can be effectively managed without negatively impacting agricultural water use across the region

The Hon Chris Hartcher , MP, Media Release, 31 July 2012

The NSW government has released the following policies to provide the general public with more confidence in the industry:

• Strategic Regional Land Use Policy (SRLUP)

• Aquifer Interference Policy

• Codes of Practice for Coal Seam Gas

The release of these policies coupled with the renewal of Metgasco’s Petroleum Licences 13 and 16 and the granting of Metgasco’s first production licence are a strong message that the NSW Government is behind the CSG industry.

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Page 14

Strong Relationship with the Community

Metgasco Land Manager meeting a local Casino farmer

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Landowners

• Metgasco sees the local landowners as critical partners.

• Before undertaking any exploration activities, Metgasco enters into an access arrangement with the landholder

• It does not carry out any operations other than in accordance with an access arrangement.

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Local Community

• Metgasco has strong relationships with the local community and all tiers of government.

• The team of 15 employees in our Casino office has a strong local representation

• Focus on creating opportunities for the local region has generated support for Metgasco:

• Priority purchasing from local suppliers

• Field traineeship established through local TAFE

• Visible presence and contribution to the local community

Page 15

CSG – responding to the challenges ahead

Technology	• Productivity • Recoveries • Costs

Costs				• Labour and materials
				• Supplies
Water Management				• Huge opportunity for benefits to the community
Schedule			• Resources (people and equipment) and management
			• Working efficiently within new NSW regulatory environment

Community Support	• Strengthen relationships with the local communities in which we operate • Increase internal resources devoted to ensuring accurate information is communicated • Promote benefits of industry, ensure compliance with regulations, and respect for those we work with • Deliver benefits to the community

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Metgasco is moving ahead

• Heightened demand for gas

• NSW faces supply shortages as early as 2014

• Northern Rivers region faces high LPG and diesel costs

• Gladstone LNG projects require additional gas to meet export commitments

• Potential for stand-alone LNG project with FLEX LNG

• Among the last of the independent companies on the east coast with uncommitted, certified 2P gas reserves

• Significant onshore conventional gas supply potential

• NSW Government is behind the CSG Industry

• New management team in place

Field Work

Commercial Development

• Continue to refine CSG production technology by drilling HP02,03 & 04 and demonstrating commercial productivity

• Drill high Impact conventional gas leadRosella E01

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• First gas sales and continue to grow local market.

• Secure GSA for a major gas supply project to underpin a major field development

• Pursue partners for upscale commercial potential

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