The overseas-focused energy explorer earlier this month announced a share placement of 11.5 million shares to international and Australian investors at $A2.40 per share and a partially underwritten shareholder share purchase plan, also at $2.40/share.

This will raise a minimum of $39.6 million for the company's 2007 exploration and development program in China and the Gulf of Mexico.

The shareholder share purchase plan, which opened yesterday, offers all eligible shareholders the right to purchase up to a maximum of 2083 additional shares to the value of $4999.

Chairman Terry Fern said the SSPP followed a successful year in which Petsec made commercial gas discoveries in seven of the eight wells drilled in the Gulf of Mexico and a significant oil discovery in Block 22/12 in Beibu Gulf, China.

“Petsec Energy has acquired an additional 37 leases in the Gulf of Mexico in the past year such that the company now holds 51 leases in the Gulf with prospects generated by 3D seismic of over 270 billion cubic feet of natural gas and 32 million barrels of oil,” Fern said in a letter to Petsec shareholders.

“As a result of the drilling success this year and the company's large prospect inventory we have decided to increase our drilling activity in 2007.

“We are proposing to drill 14-20 wells in 2007, which if successful, could more than double the current oil and gas reserves of the company.”

Fern said Petsec expects to produce about 8bcf of natural gas from its gas fields in the Gulf of Mexico in 2006. He said it also plans to generate over $US45 million ($A57.4 million) in operating cashflow from that production, with a similar amount forecast for next year.

But he said the company announced the share placement and purchase plan because the operating cashflow is “insufficient” to cover the expected capital expenditure required for a successful 2007 exploration and development program.

Drilling in the Gulf of Mexico is expected to start early in the new year.