Executive chairman Terry Fern outlined the company’s exploration plans, including the drilling of up to 11 wells, at the annual Good Oil Conference in Fremantle, Western Australia.

“Starting in October, the closing months of 2006 will see Petsec target a total of 19 to 36 billion cubic feet of gas equivalent (Bcfe) with the drilling of a significantly increased number of exploration wells in the Gulf region,” Fern told the conference.

“If successful, that exploration could generate free cash flow over the next three years to Petsec in the range of $US120 million to $US216 million based on the current net operating margin of $US6 per million cubic feet of gas.”

The exploration boost follows the recent announcement that Petsec had upped its leasehold position in the Gulf of Mexico from 17 to 50 leases.

Exploration will be focused over the new lease blocks located in the Outer Central Shelf (OCS) waters.

First drilling on the new blocks will start next month at Mobile Bay, with a two- to five-well program targeting 5-11 billion cubic feet (Bcf) of gas net to Petsec.

Also starting in October would be the first wells on Petsec’s Gulf of Mexico onshore play – the Moonshine Project – where the company plans to drill two or three wells to test 6-10Bcf of gas.

Exploration and development of Petsec’s Main Pass 18/103 leases, involving up to three wells testing 8-15Bcf of gas, is expected to start late this year.

Under the new JV with a group of privately owned, Texas-based companies, Petsec has acquired a 50% interest in 28 lease blocks, a 25% interest in five additional lease blocks, and the right to participate in future US Minerals Management Service lease sales for up to a 35% working interest.

More than 36 prospects have been mapped to date, with an estimated net unrisked potential of 157Bcf of gas and 29 million barrels (MMbbl) of oil, according to Petsec.

Within this potential is an estimated 43Bcfe of gas net, discovered by prior drilling.

Over 36 prospects have been mapped to date with an estimated net unrisked potential of 157Bcf of gas and 29MMbbl of oil. Within this potential is an estimated 43Bcfe of gas net, discovered by prior drilling.

Fern told conference delegates that Petsec has already enjoyed significant exploration success, after five out of six wells drilled at the Main Pass 18/19 leases discovered 21Bcfe of gas, while it is also entitled to more than 2.5MMbbl of oil in Block 22/12 in Beibu Gulf offshore China.

The upshot for Petsec in the half-year to June 30, 2006, was a 70% boost in estimated recoverable reserves to 65Bcfe compared with 38Bcfe at the start of the current calendar year, he said.