The Sydney-based company today said the drilling rig has now been released and will undergo maintenance work before returning in February to drill a further one-to-two wells on the Mobile Bay 994 lease.

Petsec late last month announced that its Mobile Bay 993-1 well had reached target depth and encountered 6.1m (20 feet) of net gas pay, which was at the high end of Petsec’s pre-drill expectations.

Petsec’s working interest in the well is 50% before payout (40% after payout), while its net revenue interest is 39.42% before payout (30.53% after payout). The operator is Royal Exploration Company.

Petsec said it expected production from the well to start in the third quarter of 2007.

This was the first well in a one-to-three well drilling program being conducted on the Mobile Bay 993 and 994 leases about 160km east of New Orleans. It is adjacent and to the south of Petsec’s recent gas discoveries in the Mobile Bay 950 and 951 blocks.

The current program is targeting a total of 5-7 billion cubic feet of gas net to Petsec (after payout).

The three other wells drilled in recent months on the Mobile Bay leases also discovered gas and are now being readied for 2007 production, it said.

Petsec has scheduled the drilling of two-to-three wells offshore in the Gulf of Mexico at Eugene Island 310 and Mobile Bay 994, and two-to-three wells at Moonshine, onshore Louisiana, in the first quarter of this year.

“Our December 2006 capital raising has enabled Petsec Energy to bring forward and significantly expand its 2007 exploration program in the USA, which when combined with ongoing appraisal work on the company’s Wei 6-12 oil discovery in China is expected to create significant opportunities for shareholders in coming months,” chairman Terry Fern said.

Petsec is proposing to drill between 14 and 20 wells this year, which if successful, could more than double the company’s current oil and gas reserves.