Drillsearch Energy Limited

ACN 006 474 844

Level 4, 34 Hunter Street SYDNEY, NSW 2000, Australia ABN 73 006 474 844

Telephone: +61 2 9221 2811 Facsimile: +61 2 9221 3299 Email: [email protected]

7th December, 2005

The Manager Company Announcements Office Australian Stock Exchange Limited 4th Floor 20 Bridge Street SYDNEY NSW 2000

FOR PUBLIC RELEASE

Dear Sirs.

Re: Major Oil Drilling Programme - Tintaburra Block

Introduction

Drillsearch Energy Limited ("Drillsearch") announces a major oil drilling initiative in the Tintaburra Block, ATP299P, SW Queensland.

Participating interests in the Block are:

Drillsearch will participate at its 10% participating interest.

51 Well Oil Programme

The drilling programme will commence in January 2006 and operate continuously until at least July 2006. It will comprise 49 firm wells and 2 contingent wells. The wells will range from development and appraisal wells to near field exploration (NFE) wells.

Initial drilling will commence with appraisal and development wells at the Mulberry Field and move on to NFE targets and other producing oil fields along the Endeavour-Mulberry-Talgeberry trend. The programme will commence with one rig but an additional rig will be added to the programme around the end of March, 2006.

Background

The Tintaburra Block (100%) contains about 84 million barrels of proved plus probable oil in place. Current recovery factors on the field within the Block are quite often less than 10%. The 2006 programme is planned to develop the Mulberry Field, commence increased oil recovery from other producing fields and potentially recover an additional 20 million barrels of oil from the Block.

The ground work for this programme has been laid since 2002 with an ongoing investment in reservoir studies and 3D seismic surveys, followed by the new field discovery at Mulberry in early 2004, and successful development drilling at that field in April 2005.

Inpacts on Driffsearch Energy

The anticipated impacts on Drillsearch group going forward from the 51 well Tintaburra Block programme will be:

• Drillsearch's share of drilling costs will be approximately $5.5 million through $\bullet$ . 2006 to be financed by a combination of equity and debt facilities. Additional capital will be required progressively for surface facilities to handle higher oil volumes.
• Drillsearch group production will double to around 220,000 BOE's $\bullet$ (2005:108,000) with an anticipated 108,000 bbls pa of high quality oil coming from the Block
• Group petroleum revenues increasing from $10 million through 2006 to a $\bullet$ minimum of $16 million per annum.
• An increase over time in 3P petroleum reserves from 2.07 million to 2.8 million $\bullet$ barrels. Since these reserves will be mainly oil then Drillsearch will have a very long reserve life index. If the 2006 programme is successful, there is the likelihood of further drilling with incremental reserve increases to move total group 3P reserves to 3 million BOE's.
• These increased oil production volumes will lead to significantly increased net $\bullet$ operating revenue and enhance Drillsearch's capacity to participate in other petroleum opportunities. This will include additional drilling in the Block.
• To provide Drillsearch with a strong reserve base in Australia to grow in the future

Details of the 51 Well Oil Programme

Location:

Tintaburra Block covers approximately 1700 sq. km. and is located in SW Queensland 20 km south of the town of Eromanga.

Programme Area--Eastern Tintaburra Block

Time-structure map of the top Cadna-Owie Formation.

The programme will comprise 3 phases:

Mulberry Area:

45 wells planned to delineate Mulberry and А. other producing fields. The focus will be on extending the Mulberry field and other producing fields. Targets will be selected using the Talgeberry/Endeavour 3D seismic survey data. Some wells will be completed as water injectors to enhance reservoir pressure.

Aros:

B. 3-4 near field exploration (NFE) wells planned for the Aros trend, where Aros-1 hit oil in 1990. Locations have been identified from the Aros 3D seismic data

Mugginanullah:

C. 1-2 NFE wells are planned at Mugginanullah. just North of Aros.

Features of the Programme

The programme will be managed by Santos Limited as operator. It will rely on a committed campaign to deliver low cost, fast turn around drilling using modern drilling rigs.

The programme will feature:

Reduced Drilling Costs:

Drilling costs will be significantly reduced by using a new modular design rig with automated levelling, top drive and automated pipehandling. This will reduce overall rig move time to around 8 hours once drilling proficiency is proven. This unit has been imported from North America. A second unit is expected to join the programme in March 2006.

Advanced Surface Facilities and Reservoir Engineering:

• New oil production will be placed on stream commencing in first half 2006.
• Artificial Lift: Will use lower cost artificial lift systems designed to minimise down time and capital input.
• This will generally involve installation of progressive cavity pumps (PCP's) rather than traditional Donkey pumps.
• Power for pumps to be provided by a gas turbine.
• Field development will take advantage of water injection for reservoir pressure maintenance
• Automated testing and monitoring to optimise oil productivity.
• Interconnected piping systems to gather oil at the Mulberry field and pipe it via a new pipeline from Mulberry to the Tarbat facilities.

Yours faithfully. DRILLSEARCH ENERGY LIMITED

PHILIP F. KELSO MANAGING DIRECTOR