Emerald Energy provides the following update on operations in the Ombu block in Colombia.

Slim-hole Well Drilling Operations Drilling operations have commenced on Capella No.SH1, the first of two slim-hole wells planned to be drilled in the Capella field to further delineate the extent of the upper Mirador sand. The Capella No.6 well encountered net potential hydrocarbon pay of 80 feet in the upper Mirador sand, greatly exceeding the previously recorded maximum net thickness of 23 feet encountered in the Capella No.2 well.

Slim-hole wells are designed to recover continuous core samples through the target formations and may be logged using special slim-hole logging tools, but cannot be utilised as production wells. As they can be drilled at substantially lower cost than a larger bore well designed for production, they are suited to cost-effective delineation of reservoir thickness in certain areas of the Capella field.

The Capella No.SH1 slim-hole well is located approximately 1.6 kilometres to the north-west of the Capella No.6 well and is expected to intersect the upper Mirador sands deeper on the structure. The well is planned to take up to one month to drill and evaluate but, as this is the Company’s first such operation, may take longer.

The second slim-hole well, Capella No.SH2, is planned to be located approximately 2.5 kilometres to the south-west of the Capella No.6 well and to commence drilling after operations are completed on the Capella No.SH1 well.

Steam Injection Testing A mobile steam generation facility has been procured and mobilised to the Capella field. The Company is currently finalising the design of a steam injection and flow testing programme, based on the results of all the well information acquired to date, to test the effectiveness of steam injection in enhancing well production rates and ultimate recovery from the reservoir. This testing programme is expected to commence during the fourth quarter of 2009.

Production Testing The Capella field produced at an average oil rate of 255 barrels per day during the second quarter of 2009 and 284 barrels per day during July, with production levels remaining limited by market constraints.

General The Company has been notified by the Ministry of Environment that an environmental permit has been granted for the conduct of exploration activities in the area to the north of the Capella wells drilled to date in the Ombu block; this area, previously identified as the northern environmental permit area will, in future, be known as Romero and the southern environmental permit area will continue to be known as Capella.

The Agencia Nacional de Hidrocarburos (“ANH”) has notified Canacol Energy Inc. (“Canacol”) that the assignment of a 10 per cent working interest in the Ombu Contract has been completed. This working interest was assigned to Canacol following the fulfilment of its obligations under the farmout agreement between Canacol and Emerald, entered into prior to the drilling of the first exploration well.

Emerald’s Chief Executive Officer, Angus MacAskill, said,“We are very pleased with the continued progress in the Capella field and look forward to the results of the slim-hole delineation wells, steam injection testing, and the previously announced horizontal well, all planned to commence this year, which together are expected to materially assist in planning the development of the Capella field.”

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