The Sydney-based oil and gas exploration company, with interests in Queensland, Western Australia and Papua New Guinea, has strengthened its board and implemented a new three-point medium-to-long term strategy.

“The first part of the strategic focus concentrates on maximising oil and gas production from our existing wells and established infrastructure at a lower cost,” Nguyen said.

“The second part is to focus on capital management and attract investment through a farm-out policy to accelerate the exploration and development opportunities we have and to better manage risk.

“The third part is to use the cash flow and expertise we have, especially what we’ve learnt from operating in Queensland, to extend into new producing basins in Australia and overseas, onshore and offshore, to move into the next stage of company growth.”

Nguyen said Mosaic has so far been successful in meeting the first two sets of goals and was now seeking new ventures.

In March, the company posted a record half-year revenue of $9.73 million, up 12.5% on the previous corresponding period. It said it was on track to achieve record revenue of more than $17 million for the 2006-07 financial year, translating to about $4 million in earnings before interest, taxes, depreciation and amortisation.

The company attributed the half-year boost to higher production of natural gas, liquefied petroleum gas and oil/condensate from its Surat/Bowen Basin operations in Queensland, as well as high prices for those products.

Production for the half-year to December 2006 was 216,649 barrels of oil equivalent, compared with 213,283boe and 160,787boe for the previous two half-years.

It said this came from production at the Silver Springs/Waggamba area in the Surat Basin increasing by a staggering 156% in the June-December 2006 period compared with the previous six months, resulting from a beam pump installed in the area.

Mosaic wholly owns the mature Silver Springs, Taylor, Tinker and Fairymount oil and gas fields, discovered in the 1970s and 80s, in Queensland. Production there comes from Triassic sandstones.

New production in the area is coming from an emerging gas and oil province discovered by Mosaic in the lower and older Permian sandstones. These are the small Downlands/Spring Grove gas and oil fields, the large Churchie gas field and the soon-to-be-developed Waggamba gas field.

The recently successful Churchie West-1 gas well was brought into production in late March and the Downlands-4 well is expected to come online shortly.

Nguyen said the record revenue results and several farm-outs have allowed Mosaic to further evaluate its higher-value assets on the North West Shelf offshore Western Australia, and its interest in the Kimu gas field in PNG.

“Some of the projects we have in Queensland are in the early stages of production and generating very good cash flow for us, providing a platform for us to grow into other bigger and better things,” he said.

“We still have quite a long way to go in Queensland, but we are focusing on capital management there by farming out a high stake area to get it moving at a much faster pace than we’ve done in the last five to six years.”

The company’s most recent farm-out was to Canadian-based explorer Avery Resources, which will conduct a 3D seismic survey over the company’s ATP 709P lease.

Under the deal, accepted by Mosaic in early March (and subject to finalisation of the farm-out agreement), Avery agreed to drill two wells in ATP 709P and to acquire 80-100 square kilometres of 3D seismic data to earn a 50% working interest in the permit.

It will also acquire an option to participate at a 50% working interest level in drilling two new wells in the Taylor oil and gas field area. Avery will pay over $5 million within 12 months after the execution date of the farm-in agreement.

Mosaic said it is also about to complete the final well (Brynog-1) in the $5 million farm-in Stage 1 program it has with Ausam in PL 119 and ATP 471P Bainbilla Block in the Surat.

“Our aim with farming out is to reduce the exposure and the risk,” Nguyen said.

“Yes, that involves giving away some of the interest, but in exchange we can accelerate the production and participate in more exploration and drilling activities.”

The company’s farm-out deals have so far attracted more than $10 million of current and future expenditure commitments net to Mosaic, paying for seismic acquisition and the drilling of at least six wells.

Meanwhile, the company’s purchase of Queensland infrastructure in 2000 has also aided its development of Permian gas fields in the state.

“Perhaps it doesn’t have the same sizzle as the North West Shelf, but having interest in the infrastructure in Queensland so close to our tenements is really exciting for the company from a capital management perspective,” Nguyen said.

“Anything we discover can be brought to market quickly. We basically just plug it straight into the pipeline nearby, so cost-effective and time-efficient discoveries go straight to the kitchens in Brisbane and straight to our bottom line.”

The cashed up company plans to increase Surat/Bowen Basin drilling by 50% this year, Nguyen said.

Meanwhile, across the country, Mosaic’s 6% stake in WA-208-P on the North West Shelf offers Mosaic blue-sky upside potentials over the next five years.

The Santos-operated joint venture has spudded the Hurricane-2 well, which will investigate the possibility of an oil leg down-dip from the Hurricane-1 gas discovery well drilled in 2005. Hurricane-1 discovered a 76m gross gas column on rock with no gas-water or gas-oil contact identified. Supporting pressure and gas/condensate compositional data indicates the likelihood of an underlying oil leg, according to Mosaic.

Hurricane is 15km west of the Legendre oil field and is just one of the opportunities the permit offers. The lease’s prospects and leads have combined unrisked potential oil resources of about 220MMbbl of oil, leaving Mosaic with a healthy 13.2MMbbl through its 6% stake.

“Most people think the permit is restricted to Hurricane-2 – they don’t understand the full extent or potential of that permit,” Nguyen said.

“Even for a company like Santos, there’s probably about five years worth of prospectivity and potential in exploring that permit. It’s a significant opportunity, especially for us.”

As part of its new strategic focus, Mosaic also recently established a business unit to identify new exploration and production opportunities in Australia and overseas and to evaluate these using “rigorous technical, financial and risk assessment”.