The Churchie 3 well flowed to the Brisbane market in March and was the principal reason for the lift in revenue. The field will initially supply 5 million cubic feet of sales gas a day into the Queensland gas grid with Mosaic expecting its annual share of product sales during this period to be around $4.2 million.

Following the successful gas production from the Churchie field and the completion of the associated pipeline, Mosaic Oil has changed strategy and made oil revenues its priority for 2003.

The company has given the go ahead for a September drilling program in its fully held Waggamba complex in south-east Queensland. The drilling schedule was previously delayed following the fatal fire on Century Resources Rig-1 while drilling for Origin Energy at Myall Creek.

"High oil ratios of up to 100 barrels of oil per million cubic feet of gas make the Waggamba area very attractive to us. We are also aware that Waggamba itself is part of a much larger system," said Mosaic CEO Howard Brady.

Oil Search has also boosted the prospect of cash flow from the Kimu gas field (PNG) in which Mosaic holds equity of 28.6%. Mitsubishi Gas Chemical Company Inc. and Itochu Corporation of Japan are participating in a feasibility study into the use of Kimu Gas for methanol manufacture and visited the site in the June quarter.