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14 August 2008

SUCCESSFUL COMPLETION OF DRILLING PHASE FOR THE
FOLSCHVILLER 2 APPRAISAL WELL
LORRAINE, FRANCE

HIGHLIGHTS

¾ Successful completion of the drilling phase for the Folschviller 2 appraisal (production
test) well at the 100% owned Lorraine Project in eastern France.
¾ Two laterals and two sidetracks successfully completed for a total of 433 metres of coal and a further 367 metres of gassy sediments.
¾ Mobilisation of the production testing equipment is under way.
¾ Planning to re-enter the well to complete additional laterals and/or stimulation.

PROGRAM

European Gas Limited (“European Gas”) is pleased to announce the completion of the Folschviller 2 appraisal well at the company’s 100% owned Lorraine Project in eastern France.

The Folschviller 2 well site is 850 metres east of the town of Folschviller and immediately adjacent to company’s Folschviller St 1 stratigraphic well.
Two laterals and two sidetracks have been completed for a total of 433 metres of coal and a further 367 metres of gassy sediments. The target has been the coal of the Marie-Maurice-Noirel seam and the Alpha-Alpha’-Beta-Gamma seam.
In an adjacent core hole, a net coal thickness of 10.3 metres and an average gas content of 9.9 cubic metres pet tonne (m³/t) or 350 standard cubic feet per tone (Scf/t) was recorded for the Marie-Maurice-Noirel seam. The Alpha-Alpha’-Beta-Gamma seam has a net coal thickness of 14.9 metres and average gas content of 9.4 m3/t (333 Scf/t).

Some mechanical difficulties were encountered when drilling an additional lateral and after analysis of the risks, a decision was made to proceed to the testing the two completed laterals and the two sidetracks. It is planned to re-enter the well at a later date to complete additional laterals and/or stimulation via drillstring or coiled tubing.
Mobilisation of the production testing equipment is under way and dewatering equipment will be installed after removal of the blowout preventer unit (BOP).
Production testing will assist the planning of subsequent production test wells. These tests will be used to determine reserves, deliverability and evaluate the application of a lateral drainage strategy for appraisal and development of the Lorraine coals.

The program is in preparation for the development of the large Gas in Place (GIP) resource which to date totals 28.1 billion cubic metres (991.2 billion cubic feet) within approximately 5% of the Company’s Lorraine permit and application areas. This GIP resource is likely to be enhanced due to;
• In the Folschviller St1 and Diebling St1 stratigraphic wells, coal thicknesses were 25% to 80%
higher than that used in the original GIP calculations;
• The overall gas content values were 15% to 25% higher than those used in making the original GIP calculation.