15 May 2008Centralised Company Announcements PlatformAustralian...

15 May 2008
Centralised Company Announcements Platform
Australian Stock Exchange
10th floor, 20 Bond Street
Sydney NSW 2000

APPALACHIAN PROJECT - FIRST WELL COMPLETED

Highlights

First well completed, tied in to flow lines

26 feet of gas pay in Big Six Sandstone at 2,344 feet depth

Well flow tested at 2 MMcf gas per day absolute open flow (AOF)

Estimate stabilised production rate of 350 – 400 Mcf per day on 70 lbs line pressure

Gas to be sold into ‘grid’ upon completion of Amine treatment Plant

Emerald Oil & Gas NL (“Emerald”) is pleased to announce that the first well in its Appalachian Project has been completed and hooked up to production facilities.

The JD Vanderpool #5 well, located in eastern Kentucky was drilled in 2001 but not tied in to production facilities due to small amounts of Hydrogen Sulphide (H2S) in the gas. Emerald has acquired an 80% interest in the well
from the Operator, P&J Resources for a total cost of US$250,000 as its first stage of gas production under Emerald’s Drilling and Operating Agreement announced on April 30, 2008. P&J are currently completing installation of an Amine plant (at its sole cost) to remove the H2S, which will allow the well to be hooked into the pipeline grid for production and sales.

The well intersected the Big Six formation at 2,344 feet, and after logging flow tested at 2 MMcf gas per day AOF. This is a natural flow with no fracture treatment. It is estimated that the well will flow at a stabilised production flow rate of approximately 350 – 400 Mcf per day once choked back on current line pressure of 70 lbs.

Several Productive and Prospective Formations

The Kentucky and West Virginia acreage includes several productive formations including shallow (Berea, Big Injun sandstones), deeper (Big Six sandstone) and unconventional (Ohio shale, Devonian Marcellus shale, and Camb-Ordovician Knox shale). The acreage has existing production
predominantly from shallower producing zones drilled from the 1940’s onwards. These wells still have deeper potential plus re-work and offset location opportunities.

Completed well costs will vary from approximately US$300,000 for shallower wells, $600,000 for deeper vertical wells and to up to $1,000,000 for deeper horizontal wells. Wells in West Virginia are more expensive due intermediate casing being set through a water zone.

Emerald’s initial drilling program will include a mix of shallow, deep and unconventional targets. Subsequent programs will include horizontal completions.

First West Virginia well

The Operator is currently staking a location for the first deep well of the program to be drilled on the West Virginia acreage. Spudding of the well is anticipated within 7 days.