Fern also said he pinned high hopes on the company's recent offshore Chinese discovery it shared with a number of Australian partners.

PetSec's Ship Shoal leases, in the central Gulf of Mexico, are on line to contribute royalties late in the third quarter from two wells drilled in early 2002.

It also expects to follow up with two more wells in the same area in August or September.

Follow up drilling to the Chinese discovery is expected at the end of the year when drilling conditions improve.