The latest reserves estimate compares with 38Bcfe at the start of the current calendar year.

Petsec also reported a 33.3% increase in net profit before tax to $US9.6 million ($A12.9 million) for the six months to June 30, 2006, compared with $7.2 million in the previous corresponding period.

Income tax expense was $3.1 million for the half-year. Actual income tax paid was only $200,000 due to the utilisation of carried forward tax losses.

Net profit after tax was $6.5 million.

Net revenue after royalties increased 7.3% to $33.9 million from production of 4.6Bcfe, and earnings before interest, tax, depreciation, depletion, amortisation and exploration expense (EBITDAX) were $27.7 million.

Net cash flow from operating activities rose 9.5% to $26.6 million, and net cash at the end of the period was $25.7 million.

Exploration success drives reserves growth

In the six months to June 2006, Petsec participated in the drilling of six wells and five of these were successful. The company discovered 21Bcfe of gas in the Main Pass 18/19 leases in the Gulf of Mexico, and in excess of 2.5 million barrels (MMbbl) of oil net to Petsec in Block 22/12 in China’s Beibu Gulf.

These discoveries increased US reserves to 42Bcfe of gas and to the order of 4-7MMbbl of oil in China.

The three successful wells in Main Pass 19 came into production in May. The Main Pass 18 well discovered 7.5Bcf of gas and in excess of 1MMbbl of oil. Further exploration potential exists in this lease and on the adjoining lease Main Pass 103.

Development of the discovery and further exploration is anticipated late this year into early 2007. Production of the discovered gas is awaiting negotiated access terms to the jointly owned Main Pass 19 platform.

The Wei 6-12S discovery in China intersected over 270 feet (80.5m) of net oil pay and flowed 5750 barrels of high quality oil per day.

“The discovery has demonstrated significant upside for this structure and the surrounding prospects which are seismically similar and in the same productive formation,” Petsec said.

“It is anticipated that the surrounding prospects will be drill tested in 2007.”

Operator Roc Oil has said the oil-in-place for the Wei 6-12S and 6-12-1 discoveries are between 60MMbbl and 100MMbbl. Oil recovery is anticipated to exceed 40%.

Wei 6-12S was extensively appraised by two sidetrack wells, delivering enough data to start feasibility studies with the expectation that an oil development plan could be achieved in early 2007. Development is anticipated to be similar to that of the 12-8 West oil field (10MMbbl recoverable) on which an oil development plan was completed in late 2005.

Outlook

“In October, Petsec Energy expects to commence a two to five well drilling program in Mobile Bay, Gulf of Mexico, to test 5-11Bcfe of gas net to Petsec,” the company said.

“Also in October, a two to three well drill program is anticipated on Moonshine, onshore Louisiana, to test 6-10Bcfe of gas. These two wells give a net exposure of 11-21Bcfe.”

Development and exploration of Main Pass 18/103 is anticipated in late 2006-early 2007.

A review of the company’s recently acquired 33 Gulf of Mexico leases will be conducted to determine a suitable drilling schedule for 2007.

The acquisition of the leases in early August increased Petsec’s 3D seismic mapped prospect inventory in the Gulf of Mexico to a reserves potential exceeding 280Bcf of gas and 32MMbbl of oil, which represents potential seven-fold of the company’s current reserves. The leases also contain some 43Bcfe of undeveloped gas, not including the recent Main Pass 18 discovery.