quarterly report out ... strategy games.

JUNE 2007
QUARTERLY REPORT
EUROPEAN GAS LIMITED

HIGHLIGHTS

Lorraine Permit, France
�� Two well stratigraphic drilling program
successfully completed.
�� Further laboratory work completed.
�� Planning of production test program at
Folschviller and Diebling advanced.
Lons le Saunier Permit, France
�� Granted subsequent to the end of the
quarter.
Gardanne Permit, France
�� Commenced Geological 3D Modelling.
St Etienne Permit, France
�� Commenced land survey to detect gas
emissions.
Canning Basin, Western Australia (royalty)
�� Work programs to commence in
September quarter.
Potential European Expansion
�� Funding agreement entered into for
€36.375 million (approximately A$58
million).
�� Funds for the potential purchase of natural
gas production assets and working capital
purposes.
�� Funding is conditional on successful
purchase of the assets.
Offer for Heritage Petroleum Plc
�� Compulsory acquisition process complete.
�� Heritage is now a wholly owned subsidiary
of European Gas.
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It may not be the definitive news we were all hoping for regarding the pilot production program in Lorraine

But the potential size of their energy assets in the heart of Europe has never looked so large and so definitive.

There are definite parallels back home in Australia where ORG, AGL and other really covet the CBM assets of companies like QGC and AOE which as a result have morphed into billion dolloar companies with successful partnerships.

The magical mystery tour we are on with the potential purchase of additional natural gas producing assets and the tantalising $58mill of funding with convertible notes at $1.20 conditional on that purchase has to be pivotal imo.

How will things look going forward with say a 20% position in EPG by Gaz de France or Total? They dont need to take over the company to gain real value for themselves or EPG .... just look at ORG, AGL and AOE/QGC back home.

Poyndexter