Reserve Growth

Drillsearch has seen a significant increase in 2P Reserves over the half-year to 31 December 2012. Total 2P Reserves for Drillsearch's Cooper-Eromanmge operations increased 69% to 18.72 mmboe over the Company's total 2P Reserves of 11.1 mmboe as at 30 June 2012. This substantial increase has been driven by Drillsearch's appraisal drilling and testing in the Western Flank Oil Fairway and Western Wet Gas Project Area. The uplift in Reserves follows the completion of the Company's latest independent audit review by RISC.

Oil Business

The half-year saw an increase in 2P Oil Reserves of 117% to 7.8 mmboe. The increase was largely driven by continued appraisal drilling and testing in PEL 91 at Bauer-9 and Bauer North-1 along with the oil discovery at Pennington-1. Reserves were also included for the Flax-1 well acquired as part of the takeover of Acer Energy Limited. RISC did not review the Eastern Margin Oil Reserves at Tintaburra as at 31 December 2012. Reserves reviewed by GCA at 30 June 2011 have been adjusted for production to 31 December 2012 by Drillsearch.

Wet Gas Business

The half-year saw an increase in 2P Wet Gas Reserves of 47% to 11.0 mmboe. The increase was largely driven by EPT's of PEL 106B and PEL 107 wet gas discoveries. In addition field pressure surveys of Brownlow showed connectivity to a larger resource,