Adelaide, Jan 15, 2007 (ABN Newswire) - Petsec Energy Ltd (ASX: PSA)(PNK: PSJEY) will next month commence its biggest USA onshore oil and gas drilling program since the Sydney-based company commenced USA operations more than 12 years ago.

The new onshore exploration program - on the Company's Moonshine Project located on the Louisiana Gulf Coast region between New Orleans and Lafayette - will run in tandem with Petsec Energy's ongoing offshore activities which have historically yielded very high oil and gas discovery rates.

Petsec's Executive Chairman, Mr Terry Fern, today outlined details of the onshore Louisiana, Moonshine exploration program, which includes the drilling of 6 to 9 targets in 2007, scheduled to commence in the second half of February.

"Two rigs have been secured for the Moonshine drilling. The first of these will commence in February, with the second rig scheduled to start drilling in the second quarter," Mr Fern said.

"The 2007 Moonshine drilling is targeting in excess of 20 billion cubic feet of gas equivalent (Bcfe) net to Petsec Energy, and is part of an overall expanded 2007 exploration program by the Company in the USA and China," he said.

To date, Petsec Energy's USA oil and gas exploration and development successes have come from its offshore leases, in the Gulf of Mexico. Of 25 exploration wells drilled in the Gulf of Mexico over the past four years, 24 were successful - including 8 successful wells out of 9 wells drilled in the past calendar year.

Petsec Energy also participated in the significant oil discovery at Wei 6-12 South in China during 2006, in a joint venture operated by ROC Oil. A declaration of feasibility is expected by the end of January.

The Company holds a 50% working interest (36-37.5% net) in the Moonshine joint venture area and is the operator.

"Moonshine is our first comprehensive USA onshore exploration program and we are targeting it as another significant growth phase in the Company's history," Mr Fern, said.

"As well as the highly prospective onshore program, we look forward to a continuing active offshore program in the Gulf of Mexico which in the past three months has yielded four successive gas discoveries on our Mobile Bay leases. "These gas discoveries are expected to be brought into production in the second and third quarters of this year."

Mr Fern said that Petsec was looking to drill between 14-20 wells in 2007 across its USA onshore and offshore leases, and offshore south coast of China in the shallow waters of the Beibu Gulf. This compares with a total of 10 wells drilled in the 2006 year of which 9 were successful and 6 wells in 2005.

"The expanded 2007 program, if successful, has the potential to more than double the Company's current oil and gas reserves," he said.

Petsec Energy last year acquired an additional 37 leases in the Gulf of Mexico, giving the Company a total of 51 leases in the Gulf with prospects generated by 3D seismic of over 270 billion cubic feet of natural gas and 32 million barrels of oil.

Moonshine

The Moonshine Project covers a large, 94 square mile, highly prospective area located approximately 50 miles (80 kilometres) west of New Orleans on the west bank of the Mississippi River.

Prior to Petsec's acquisition of its interests in the Moonshine Project , only a portion of the block had been surveyed with 2D seismic and no previous 3D seismic had been shot.

Petsec completed a 3D seismic survey over the Moonshine Project area in August 2005 and during 2006 mapped a significant number of gas and oil prospects which are expected to be tested over the next 2 to 3 years.

The Company holds a 50% working interest (36-37.5% net) in the Moonshine joint venture area and is the operator.

"The prospects to be drilled in 2007 are less than 12,000 feet in depth, and have target sizes between 5 Bcfe and 15 Bcfe of gas. In the deeper geologic section (greater than 12,000 feet in depth), a significant number of prospects have been mapped with targets in excess of 20 Bcfe of gas. It is anticipated that a number of these prospects will be drilled in 2008." Mr Fern said.

"Each of the Moonshine wells in the 2007 program are expected to take about 3 weeks to drill, with production generally achieved within 3-to-4 months of discovery," he said.

"There is existing pipeline infrastructure in the surrounding area where 340 billion cubic feet of gas and 7 million barrels of oil have been produced to date."

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