Overall the company generated net revenues from oil and gas production of $7.1 million in the quarter and $16.2 million for the half year to 30 June 2004. Additionally net production for the quarter equalled 0.9 bcfe (billion cubic feet equivalent) of gas and 2.2bcfe for the half year.

As part of the Beibu Gulf joint venture Petsec completed a drilling program in Block 22/12 of three wells. Despite positive predictions only the 12.8.3 well encountered 11m of viscous oil pay with the two other wells failing to find significant hydrocarbons. The JV has now been forced to evaluate the economic viability of developing the block.

On the positive side construction and installation of production facilities at Vermilion 258 are now complete with production commencing in late July 2004. The stabilised production rate of the G-2 well alone is in excess of seven million cubic feet (MMcf) of gas per day net to Petsec.

The company was also awarded three new leases - Vermilion 244 and 259, Main Pass 19.

Future operations include drilling up to four wells from the newly installed Vermilion 258 platform (the G platform) in the fourth quarter of 2004. The program consists of one development well to accelerate 3-5 bcfe of production, and three exploration wells to test targets with a total net mapped potential of approximately 12 to 15 bcfe of gas.

A drilling program of one to three wells on the Main Pass 19 lease is also planned to commence in the fourth quarter to test a total net mapped potential of approximately 10 to 15 bcfe of gas.

Gas production estimates for 2004 may be 10% to 15% lower than the 6.5 bcfe estimated earlier in the year, due to lesser production from West Cameron in the first half and a later start for Vermilion 258 production.

Not unexpectedly the company’s share price dropped 16 cents yesterday to land at $1.16 after peaking earlier this year at $1.68.