The capital raising involves a one-for-one non-renounceable rights issue of 4c per share to all existing shareholders.

Last year the company raised $16 million to fund its commitments to the Santos-operated Cooper Oil Project (COP) and drilling the offshore Marina-1 well.

For 2008, Drillsearch said it would continue developing its onshore assets, involving eight newly acquired exploration blocks in the Cooper-Eromanga Basin and its Turtle-Barnett prospect in the Bonaparte Gulf.

In southwest Queensland, Drillsearch has recently increased its Cooper-Eromanga landholding to over 21,000 square kilometres following the acquisition of eight new exploration blocks in partnership with its 62%-held Canadian subsidiary Circumpacific.

The joint venture estimate the four-year work program planned for this region to reach $US120 million.

“Native title negotiations are planned to commence in the coming months and if successfully completed the areas will be granted to Drillsearch and Circumpacific based on their preferred tenderer status,” Drillsearch said.

“An understanding based upon a Heads of Agreement between the companies will see Drillsearch and Circumpacific begin to work in these blocks on a 50:50 participating interest basis, with Drillsearch managing the technical evaluation for a 10% management fee on all blocks.”

The partners plan to kick-off a regional geologic study next month with the aim of compiling and evaluating all available geologic and geophysical data.

This will allow the joint venture to rank the properties based on geologic prospectivity, as well as identify and manage the risks associated with exploration and development.

Elsewhere in the Cooper-Eromanga Basin, Drillsearch will be free-carried by Santos through a 200 square kilometre 3D seismic survey in the Chandos Block.

Data from the survey will be used to locate exploration wells, with first drilling to begin in the first quarter of 2009.

In return for funding the survey, Santos will become operator and earn a 30% stake in the area.

Offshore northwestern Australia, Drillsearch said it was continuing negotiations with potential farm-in partners for its Turtle-Barnett project in the Bonaparte Gulf.

The company has also started an engineering study over the project area with Icon Energy and RPS Group designed to provide plans for a potential low-cost commercial development of the in-place resources at the project.

“In addition this study will also evaluate the feasibility of re-entering the Barnett-2, a suspended oil well drilled in 1989 which, when tested on pump, produced at a rate of 921 barrels of oil per day,” Drillsearch said.

“Re-entering this well and bringing it into production could potentially be used to generate cash flow for the company while the development of the larger Turtle Barnett project continues.”