Mosaic Oil to Resume Drilling Operations at Fairymount-7H

Mosaic Oil will resume horizontal drilling of Fairymount-7H oil development well in PL 46 (Fairymount Oilfield), southeast Queensland, Australia.

The drilling of Fairymount-7H will immediately follow completion of the Waggamba-1H well where drilling is scheduled to commence in mid-July 2006 using Ensign Rig 5.

The earlier attempt at horizontal underbalanced drilling of Fairymount-7H using coiled tubing was suspended in April 2004 due to cave-ins of the section above the main oil target reservoir, the Showgrounds Sandstone. The well will now be re-entered and drilled overbalanced using a polymer mud system to minimize the operational risk previously encountered by underbalanced drilling.

"This decision is a flow-on benefit from Mosaic's recent farm-out deals. Available funds, previously budgeted for exploration work commitments, can now be used to accelerate lower risk oil and gas appraisal and development activities to take advantage of high oil prices" commented Mosaic Oil Chief Executive Officer, Mr. Lan Nguyen.

The Fairymount oilfield (Mosaic 100 %), with cumulative oil production of 1.1 million barrels, is located 55 km southeast of Mosaic's main Silver Springs operation and currently produces around 26 barrels of oil per day. Engineering data suggests the Fairymount-7H area has high undeveloped oil potential. If successful, the well could access up to 0.25 million barrels of recoverable oil reserves.