The company is undertaking a placement of 12c shares to raise $12 million, for which commitments have already been received.

It will then carry out a rights issue which, if fully subscribed, will raise a further $6 million.

Mosaic managing director, Lan Nguyen, said the funds would accelerate the company's drilling programs, including plans to target 10 wells per year over the next three years.

He said the board and management were targeting a 200% production increase, along with a similar uplift in projected revenues, between 2008 and 2010.

"Mosaic has undertaken a comprehensive technical and economic review of its exploration and development opportunities in the Surat-Bowen Basin and has identified a considerable number of drilling targets which it wishes to pursue," he said.

"Mosaic Oil has a good acreage position in the Surat-Bowen Basin, and this acreage is [close] to infrastructure that the company owns or part-owns."

Next year's drilling in this region would focus on "very low risk" liquids rich gas and oil development wells for increasing production output from the discovered probable reserves.

"We have substantial uncommitted 2P conventional gas reserves in the high growth Queensland gas market, and Mosaic Oil's infrastructure has plenty of spare capacity that we can access to and hence we can quickly translate any drilling success to cashflow," Nguyen said.

"Importantly, our existing gas contracts also have capacity for material production increases."

Subject to 2008 results, a slightly lower level of expenditure is expected to follow in 2009.

Over the next three years the company is planning a total drilling, seismic and development program in the Surat-Bowen Basin estimated at $35-40 million.