Petsec Raising Funds for 2007 Exploration Program

Petsec Energy announced a share placement of 11.5 million shares to international & Australian investors at A$2.40 per share, and a partially underwritten Shareholder Share Purchase Plan ("SSPP"), at A$2.40 per share to raise a minimum of A$39.6 million for the Company's 2007 exploration and development program in the Gulf of Mexico, USA and China.

The Shareholder Share Purchase Plan offers the right to all eligible shareholders to purchase up to a maximum of 2,083 additional shares to the value of A$5,000 at the same price as the institutional placement price of A$2.40 per share.

BBY Limited managed the placement and partially underwrote the SSPP.

This capital raising follows the Company's decision to participate in 14-20 wells in 2007. This program is a significant increase on the 9 wells drilled in 2006 and will expose the company to potential reserve additions in excess of 60 Bcfe.

Drilling in the Gulf of Mexico is expected to commence early in the new year.

The funding will be applied to the Company's projects in:

• Mobile Bay, Gulf of Mexico - The development of gas discoveries made in the recently completed 3 well drilling program at Mobile Bay.
• Moonshine, Onshore Louisiana - A drilling program of 7-9 wells to commence first quarter 2007, which we expect will continue for most of the year. The Moonshine Project covers an area of approximately 60,000 acres in a highly productive area that has produced over 340 Bcfe and 7 million barrels of oil.
• Gulf of Mexico, USA -An exploration program of 5-7 wells commencing in the first quarter of 2007.
• Wei 6-12 South, China - An oil development plan and pre-development work on the 6.12 south oil field discovered in May 2006. This discovery is estimated to contain 70-100 million barrels of oil in place with a recovery rate ranging between 30-50% (Petsec's net interest is 12.5%). A drilling program of 2-4 wells is planned in the second half of 2007 targeting additional reserves of 2.5-4.0 million barrels of oil net to the company.

Petsec Energy Ltd is an independent oil and gas exploration and production company listed on the Australian Stock Exchange. Its focus of operations is on gas in the shallow waters of the Gulf of Mexico and onshore Louisiana Gulf Coast region of the USA, and on oil in the shallow waters of the Beibu Gulf off the south coast of China.