Petsec Completes Gulf of Mexico Lease Acquisition

Petsec Energy has now completed the acquisition of interests in a further 33 lease blocks in the Outer Central Shelf (OCS) waters of the Gulf of Mexico and has formed a new joint venture for the exploration of these properties.

As previously advised, Petsec has acquired a 50% interest in 28 lease blocks, a 25% interest in 5 additional lease blocks, and the right to participate in future MMS lease sales with the group for up to a 35% working interest. Consideration for the purchase was a US$9.8 million (A$13.0m) cash reimbursement to the sellers, who also retain a 20% after payout back-in on the initial 33 leases. Petsec anticipates being named operator on a significant number of the leases.

Over 36 prospects have been mapped to date with an estimated net unrisked potential of 157 Bcf of gas and 29 million barrels of oil. Within this potential is an estimated 43 Bcfe of gas net, discovered by prior drilling. The leases, which have all been acquired at OCS lease sales in 2005 and 2006, are expected to be tested over the next two to three years.

First drilling on the new blocks is targeted to commence by November 1, 2006 and will be a 2 – 5 well program in the Mobile Bay Area.

The acquisition takes Petsec's leasehold position in the Gulf of Mexico from 17 to 50 leases and provides a significant increase to the company's inventory of high quality drillable prospects.