Petsec Makes 1 Million Barrel Discovery in the Gulf of Mexico

Petsec Energy announced a new one million barrel oil discovery in the Gulf of Mexico, USA, adding to the Company's recent four new commercial gas discoveries in the area.

The Australian company will now proceed with plans for a separate oil production and distribution facility on its highly successful Main Pass 18 lease block.

Today's announcement follows results of Petsec Energy's evaluation of the oil and gas discoveries made in the Company's Main Pass 18 G-6 well, which was the last well in a successful four well program drilled from the Company's Main Pass 19 platform with the Noble Lester Pettus.

The G-6 well, drilled to a total depth of 13,018 feet (3,969 m), discovered a total of 7.5 billion cubic feet of natural gas net of royalties, to Petsec in three sands and 1.1 million barrels of oil net to Petsec in two sands.

"We are pleased to advise that the oil component of our G-6 discovery is estimated to contain in excess of one million barrels of recoverable oil, net to Petsec Energy. With current oil prices of the order of US$68 per barrel, this oil discovery delivers significant value to Petsec Energy." the Company's Chairman, Mr. Terry Fern, said today."

"The oil discovery is of a size to warrant a separate development at Main Pass 18. It is envisaged that this would involve the drilling of 2-3 development wells to produce the oil discovered to date, the drill testing in Main Pass 18 and the adjacent lease Main Pass 103 of additional targets totaling 8-15 Bcfe including potential for more oil, and the installation of a platform, production facilities and pipelines." Mr. Fern said.

"We are currently studying the most efficient way of undertaking this project in light of other oil exploration potential the Company has in the immediate area."

Mr. Fern said the G-6 well is currently being completed as a gas producing well from the Main Pass 19 platform and is expected to be in production within the month.

"Significantly, the results from the G-6 well have increased the potential for success of other prospects on the Main Pass 18 lease block and the adjacent Main Pass 103 block, also held by Petsec Energy," he said.

"We plan further drilling at Main Pass 18/103 to commence during the September quarter of 2006, after the drilling of two to three wells at our Vermilion 257 block also in the Gulf of Mexico, expected to commence in late May, which in turn follows the drilling of one well in China, expected to spud in late April."

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