Petsec Makes Discovery with Vermilion 258 G-7 Well

Petsec Energy reported that its Vermilion 258 G-7 development well in the Gulf of Mexico has reached total depth and encountered 3 hydrocarbon bearing sands having an estimated 12 to 16 meters (39 to 54 feet) of net gas pay.

The two wells in this current development program, the G-7 and the G-3, have met pre-drill expectations and are expected to be in production by late November.

Production from these wells will significantly increase Petsec Energy's production and cash flow in 2005. Petsec Energy's current net production is in excess of 20 million cubic feet of gas per day.

The current US gas market is very strong, with 12 month forward gas prices in excess of US$ 7.50 per thousand cubic feet.

The Vermilion 258 gas field, containing an estimated 23 billion cubic feet of gas, was discovered by Petsec Energy in January 2004. Production facilities were built and the two exploration wells, the G-1 and G-2, were brought into production in July and August. The successful G-3 and G-7 wells will take the number of productive wells on the field to four.