Investment Update

3                                                                July
2008
AIM: XTR
                          XTRACT ENERGY PLC
                     ("Xtract" or the "Company")

                 PROJECT UPDATE - MEO Australia Ltd

Xtract refers shareholders to  the following press release  announced
in Australia by MEO Australia Ltd ("MEO").

Following the placing referred to in MEO's announcement, Xtract holds
approximately 13.9% of the issued capital of MEO.

                       "ASX AND MEDIA RELEASE

          MEO AUSTRALIA ANNOUNCES MAJOR STRATEGIC ALLIANCE

Key points:
*         Strategic alliance formed with Resource Development
  International Ltd ("RDI") - an entity
            controlled by one of Australia's wealtheiest men,
Professor Cliver Palmer
*         RDI has extensive iron ore, steel, nickel and energy
  interests and is planning to raise A$5 billion
            and list on the Hong Kong and Australian Stock Exchanges
later in 2008
*         Funding secured for forthcoming Zeus-1 exploration well
  targeting multi-TCF potential gas
            resources in WA-361-P leaving MEO with a 25% interest
*         Majority funding for up to 9 wells (including Zeus-1) in
  MEO's three offshore West Australian
            Permits in the success case
*         Staged funding program for appraisal drilling in NT/P68 -
  up to 4 intital wells
*         100% funding for NT/P68 appraisal to achieve Third Party
  Reserve certification
*         MEO fully funded through to commercial production of
  upstream facilities and its approved Gas-to-
            Liquids projects on Tassie Shoal while retaining a 20%
interest
*         Placement of 21.391m shares at $0.55 to Mineralogy Pty Ltd
  - Prof Palmer's private company -
            raising $11.8M cash to MEO before costs.

MELBOURNE, AUSTRALIA (July  3, 2008)  - MEO Australia  is pleased  to
announce that it  has entered  into a major  strategic alliance  with
Resource Development International  Ltd ("RDI"),  an unlisted  public
entity associated with  and Chaired by  Brisbane based billionaire  -
Professor Clive Palmer. RDI will contain substantial iron ore (up  to
10 billion tons), steel, nickel and energy interests. RDI is planning
to raise A$5 billion via an  initial public offering (IPO) of  shares
later this  year.  RDI will  be  dual listed  on  the Hong  Kong  and
Australian  Stock  Exchanges.  Leading  investment  banks  have  been
appointed to manage the IPO.

This strategic alliance will see  a staged funding approach for  each
of MEO's  project  areas  subject  to  various  conditions  precedent
including a successful IPO. As part of MEO's 15% placement  capacity,
the Company has placed 21.391m shares to Mineralogy Pty Ltd at  $0.55
to raise $11.8m before costs to fund ongoing geotechnical activity in
NT/P68. MEO  has further  granted 14.498m  options to  subscribe  for
ordinary shares in MEO at an exercise price of $0.65 on or before  30
September 2008.

RDI has undertaken to fund the vast majority of MEO's share of  costs
in up to 9 wells (success case) in the company's three offshore  West
Australian permits (WA-359-P,  WA-360-P and WA-361-P)  to earn a  35%
interest in each permit. MEO's interest in these permits will  reduce
to 25% in the event the option to drill in each is exercised by RDI.

RDI has  initially  committed  to  fund  80%  (well  cost  capped  to
US$31.25m, and  thereafter  52.5%)  of the  forthcoming  Zeus-1  well
targeting multi-TCF potential gas resources in WA-361-P to earn a 35%
interest. MEO will fund  10% of the well  and retain a 25%  interest.
Existing JV partners - Cue Energy  (20%, ASX: CUE) and Gascorp  (20%,
unlisted) have the option to fund up to a combined 10% of the cost of
this well or allow MEO to increase  its interest in the permit by  up
to 10% by funding up  to an additional 10% of  the well cost. In  the
event of drilling success at Zeus-1, RDI will fully fund MEO's  share
of  two  additional   appraisal  wells.  In   the  event  Zeus-1   is
unsuccessful, RDI will fund MEO's share of one additional exploration
well subject to a successful listing of RDI.

In  its  Timor   Sea  projects,  and   subject  to  Petrofac   Energy
Developments Oceania Ltd's pre-emptive rights, the agreement with RDI
sees MEO's  share  of funding  for  all appraisal  drilling  and  all
project  capital  costs  (upstream  and  downstream),  fully  carried
through to commercial production on each of its proposed Tassie Shoal
Gas-to-Liquids (GTL) projects, while  retaining a 20% interest.  This
involves RDI funding a staged appraisal drilling program of initially
two wells (Heron-3 and  Blackwood-2) to earn a  25% interest and  two
additional wells to earn a further 25% interest. Thereafter, RDI  has
undertaken to secure funding to meet  all of MEO's costs in  relation
to any further appraisal activities required for certification of gas
reserves and all  capital costs  required to  bring each  of its  GTL
projects into commercial production.

Implications

MEO has secured a substantial  strategic funding partner in RDI  with
aligned  interests  and  outstanding  connections  to  major  Chinese
business, consumer and  resources interests.  The agreement  executed
with RDI represents a watershed event in the history of the  company.
It has  the potential  to see  the company  fully funded  with a  20%
carried equity interest through to  commercial production on each  of
its approved  GTL  projects in  the  Timor Sea  subject  to  securing
adequate gas resources from NT/P68 or 3rd party sources.

The agreement also meets the immediate funding requirements to commit
irrevocably to drilling the Zeus-1  well during October 2008.  Zeus-1
is targeting multi-TCF potential gas  resources in WA-361-P which  is
immediately adjacent to the established North West Shelf Gas  Project
that supplies  gas  to  the onshore  LNG  producing  facilities.  The
agreement also provides  for further  significant funding  for up  to
eight additional wells, across the  three WA offshore permits,  which
meets the majority of MEO's share of appraisal drilling costs.
In relation to the Company's present assets, this agreement  protects
MEO shareholders from any significant dilution in share capital.

C.R. Hart
Managing Director

Details of the transaction
The strategic alliance comprises a number of significant components:

Direct shareholding in MEO
*         Placement of 21.391m shares [approx 5% of issued capital]
  at $0.55 to Mineralogy Pty Ltd raising
            $11.765m before costs.
*         Granting of 14.498m options [approx 3.4% of issued capital]
  at an exercise price of $0.65 and expiry date of
            30 September 2008. Upon exercise, the company will
receive further cash proceeds of $9.434m.
*         A further 2m options have been granted with an exercise
  price of $0.55 and expiry date of 30 June 2009.
            Exercising these options will generate cash proceeds of
$1.1m.

Commitment to Farm-in to WA-361-P to earn 35% interest
*         RDI earning a 35% interest (MEO 25%) to fund 80% of the
  proposed Zeus-1 well to a cap of US$31.25m.
            RDI funding 52.5% of well costs in excess of this cap.
MEO to fund 10% of the well cost to cap of
            US$31.25m and 37.5% of well cost above this level
(assuming Cue and Gascorp fund 10%).
*         RDI to fund 100% of MEO's share of two subsequent appraisal
  wells in the event that Zeus-1 discovers
            hydrocarbons.
*         RDI to fund 100% of MEO's share of one additional well in
  the event that Zeus-1 fails to discover
            hydrocarbons, subject to the listing of RDI.
*         Cue and Gascorp each have an option to pay for 5% of the
  Zeus-1 well to maintain their respective 20%
            interests. Any interest not taken up by Cue and/or
Gascorp reverts to MEO and increases its funding
            share by that quantum.

Option to farm-in to WA-359-P and/or WA-360-P to earn 35% interest
*         MEO has an option to make an irrevocable commitment by 1
  January 2009 to drill a well in either or both
            permits or withdraw from either or both the permits.
*         MEO has granted RDI an option until December 1, 2008 to
  earn a 35% interest in either or both permits
            (MEO 25%) by funding 80% of the cost of one exploration
well.
*         RDI to fund 100% of MEO's share of two subsequent appraisal
  wells in the event that first well discovers
            hydrocarbons.

Option to farm-in to  NT/P68 and the Tassie  Shoal GTL projects  (LNG
and methanol) to earn up to 70% interest in 3 stages
*         This option is subject to Petrofac Energy Developments
  Oceania Ltd's pre-emptive rights to match the offer
            by RDI within 30 days.
*         Option to commit to funding 100% of MEO's share of two
  appraisal wells (Heron-3 and Blackwood-2) to
            earn a 25% interest. Election to participate the earlier
of 14 days after the close of the RDI IPO or 31
            December 2008.
*         Option to earn an additional 25% interest by committing to
  funding 100% of MEO's share of two further
             appraisal wells.
*         Option to earn a final 20% interest by meeting MEO's share
  of costs in relation to:
              o           all  further  appraisal  costs  to  achieve
adequate third party gas reserve certification;
             o          all capital costs pertaining to bringing  any
NT/P68 gas resource into commercial production; and
             o          100% of MEO's share of capital costs to bring
each GTL project into commercial production."

Further information on MEO can be found at www.meoaustralia.com.au.

Enquiries please contact:


Xtract Energy plc                 Andy Morrison, CEO [phone]
                                                     1798
Smith & Williamson Corporate      David Jones         [phone]
Finance Limited                   Azhic Basirov      4000
Scott Harris                      Stephen Scott      [phone]
                                  Annabel Michie     0030


For further Information on Xtract please visit www.xtractenergy.co.uk

About Xtract Energy Plc

Xtract identifies and  invests in  a diversified  portfolio of  early
stage energy sector technologies and businesses with very significant
growth  potential.  We  aim  to  work  closely  with  the  associated
management teams to achieve  critical project milestones, to  finance
later development stages and to  build and crystallise value for  all
shareholders and partners.

A short description  of the  principal assets  of Xtract  is set  out
below. These assets are either held directly or through wholly  owned
subsidiaries of the Company.

MEO Australia
MEO is focused on developing  gas-to-liquids ("GTL") projects in  the
Timor Sea Australia,  in an  area of  shallow water  known as  Tassie
Shoal. It has secured Commonwealth Government environmental approvals
for two  large  scale  (1.8  Mtpa)  methanol  plants  (50  per  cent.
interest) and a 3 Mtpa LNG  plant (100 per cent. interest) which  are
adjacent to the Evans Shoal gas field.

Elko Energy
Elko is an oil & gas exploration  company which has an interest in  a
5,370km2 exploration and production licence  in the Danish North  Sea
and an investment in Dragon  Energy Inc, a private Canadian  company,
with a development project in Gansu Province, China.

Wasabi Energy
Wasabi  is  a  diversified  investor  in  renewable  energy  and  low
greenhouse  emission  technologies,  with  interests  in   geothermal
waste/heat, uranium exploration in Australia's Northern Territory and
biodiesel investments in Victoria.

Central Asian Interests
Xtract's  Central  Asian  interests  include  a  production   sharing
agreement with Kyrgyzneftegaz to instigate a water injection  project
on the  Beshkent- Togap  oil field.  Xtract also  holds interests  in
several exploration  licences  in the  Tash  Kumyr area  and  in  the
Toktogul exploration licence.
Oil Shale
Xtract has oil shale and related petroleum product exploration rights
over mining tenements in the Julia Creek area of Queensland and was
granted an exploration permit which gives rights to explore for oil
shale in an area in the South of New Zealand. It is investigating the
commercial production of hydrocarbons (crude oil) from oil shale.

Xtract is also available for trading on the open market segment of
the Frankfurt Stock Exchange (ticker R9X.FSE).

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