Petsec Earnings Surge on Higher Production and Gas Prices

Petsec Energy reported significantly higher production, revenue and profit for the year ended December 31, 2004.

Fuelled by a much stronger second half, Petsec lifted full year net production from 4.5 billion cubic feet (Bcfe) of gas to 5.7 Bcfe, resulting in a 30.1% jump in net revenue to US$32.8 million (A$44.7 million) compared with US$25.2 million (A$38.7 million) in 2003.

The Company also reported a 30.3% rise from US$19.8 million (A$30.5 million) to US$25.8 million (A$35.1 million) in EBITDAX (earnings before interest, taxes, depreciation, depletion, amortization and exploration expense)*.

Second half production was boosted by the addition of three producing wells in Petsec's Vermilion 258 gas field in the Gulf of Mexico.

The extra production was clearly reflected in the final quarter (to 31 December 2004) with net production up 26% to 1.97 Bcfe, net revenue 58% higher at US$12.8 million (A$16.7 million) and a 65% jump in EBITDAX to US$10.6 million (A$13.8 million) in the three months.

The higher gas price received of US$6.50 per Mcfe in the latest December quarter also played a key role in the increased revenue and earnings and pushed the average gas price received up from US$5.58 in 2003 to US$5.77 for the full year.

Petsec's Executive Chairman, Mr. Terry Fern, said 12 month forward gas prices were currently in excess of US$6.60 per Mcf.

"Petsec Energy has hedged part of its near-term production, and the Company has approximately 42% of expected first quarter production hedged, of which 25% is at a fixed price of US$7.89 per MMbtu and 17% is protected by zero cost collars with a floor of US$6.00 and a cap of US$7.08," he said.

"Approximately 19% of expected second quarter 2005 production from existing wells is hedged at a fixed price of US$6.61 per MMbtu and about 24% of the remaining 2005 expected production from existing wells is protected by a fixed price hedge of US$6.73 per MMbtu."

* All figures are preliminary and unaudited