Sydney, July 3, 2008 (ABN Newswire) - Mosaic Oil (ASX:MOS)(PINK:MSAOF) has released the production and drilling schedule update. The key points are as follows:

- Net daily production of over 1500 BOEPD achieved in June 2008 against an original
target of 1440 BOEPD for July 2008.

- Cash balance (unaudited) of over $23 million at 30 June 2008

- 2008 Drilling Program to be increased to 12 wells from originally planned 10 wells

- On track to achieve revenue target of $32 million for 2009 Financial Year

Fairymount-9 (PL 46 - MOS 100%)

Fairymount-9 has been on pump since early April 2008. However the production has declined to approximately 4 BOPD (barrel of oil per day) with high watercut.

Waggamba-4H (PL 202 - MOS; 50% gas, 65% free oil/condensate)

Waggamba-4H has been on continuous production since late May 2008. The well is free flowing at a controlled stabilised rate of 1.2 MMSCFD (approximately 1.6 TJ/d) of gas and approximately 145 BOPD through an 18/64" choke.

Taylor-18 (PL 49 - MOS 100%)

Taylor-18 was brought on continuous production in early June 2008. The well is free flowing at a controlled stabilised rate of 2.1 MMSCFD (approximately 2.5 TJ/d) of gas and 20 BOPD.

Mosaic's Managing Director, Mr Lan Nguyen, said "Whilst we are disappointed with the production rate at Fairymount-9, we are extremely pleased with the controlled stabilised production rates of both Waggamba-4H and Taylor-18."

"On a trouble-free basis and assuming the current oil price and typical natural production decline in the absence of long term flow history, we would reasonably expect the contribution from these two wells alone to the Company's FY2009 sales revenue to be at least $11 million. By comparison, Mosaic's total revenue in the 2007 Financial Year was $18 million," Mr Nguyen said.

The 2008 operated drilling program has now increased to planned 12 wells. The additional wells are Waggamba-6H and Waggamba-7H horizontal wells.

Previously planned Soldier-1 well will be replaced by a further Taylor appraisal/ development well in light of the excellent production performance of Taylor-18.