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1 A N N O U N C E M E N T 1 March 2011 PETSEC ENERGY LTD ACN PETSEC ENERGY PRESENTATION AT THE EXCELLENCE IN OIL AND GAS CONFERENCE SYDNEY Attached is a copy of the presentation to be delivered today by Petsec Energy Ltd s (ASX: PSA) CEO Mr. Terry Fern at the Excellence in Oil and Gas Conference, held at the Sydney Convention & Exhibition Centre in Darling Harbour on Tuesday 1 st March to Wednesday 2 nd March 2011, inclusive. A copy of the presentation will also be made available on the company s website, Paul Gahdmar Company Secretary and Group Financial Controller Petsec Energy Ltd Ph: (02) Level 13, Gold Fields House, 1 Alfred Street, Sydney NSW 2000, Australia PO Box R204, Royal Exchange NSW 1225, Australia Telephone (61 2) Facsimile (61 2) Company information is available on: petsec.com.au

2 2011 BUSINESS PLAN: FOCUS SHIFTS TO OIL

3 PETSEC ENERGY LTD FORWARD LOOKING STATEMENT DISCLAIMER This presentation contains predictions, estimates and other forward looking statements that are subject to risk factors associated with the oil and gas industry. Although the company believes that the expectations reflected in these statements are reasonable, it can give no assurance that its expectations and goals will be achieved. Important factors that could cause actual results to differ materially from those included in the forward looking statements include, but are not limited to, commodity prices for oil and gas, currency fluctuations, the need to develop and replace reserves, environmental risks, drilling and operating risks, risks related to exploration and development, uncertainties about reserve estimates, competition, loss of market, government regulation, economic and financial conditions in various countries, political risks, project delay or advancement, and approvals and cost estimates. All references to dollars in this presentation are to US currency, unless otherwise stated. 2

4 CORPORATE PROFILE Petsec Energy is an independent exploration & production company with operations in the Gulf of Mexico, USA and in the Beibu Gulf, China USA OPERATIONS Operated in USA, Gulf of Mexico, since 1991 Drilling success: 95 wells / 74 successful / 78% success Discovered reserves: ~ 500 Bcfe gross reserves As of 31 Dec 10: 8 fields / 16.9 Bcfe 2P reserves Prospect inventory: 10 prospects / Bcfe ( MMboe) 2011 estimated production: 3 Bcfe / Revenue US$15 m 2011 Exploration: target 3-5 wells / Bcfe gas & MMbbl oil net CHINA OPERATIONS Block 22/12 Beibu: partners with Roc Oil, Horizon, FAR since oil fields: 5-15 MMbbl net to Petsec 2011 development 6.12/12.8W fields / Petsec Net: 2.94 MMbbl Plus additional exploration prospects identified 3

5 MARKET INFORMATION LISTING Australia ASX: Ticker PSA US OTC Pink Sheets: Ticker PSJEY.PK MARKET CAPITALISATION $39.3 million Shares on issue: 231.3m; Unlisted Options: 5.3m Share price: 17 cents (28 Feb 2011) 4

6 EXPERIENCED BOARD OF DIRECTORS Terry Fern, Chairman & CEO Over 35 years experience in petroleum & minerals exploration, development and financing Bachelor of Science Degree, University of Sydney Director, OceanaGold Corporation David Mortimer AO, Non-Executive Director Over 35 years experience in corporate finance Bachelor of Economics Degree (First Class Honours), University of Sydney Ex CEO of TNT Limited Group. Current Chairman of Leighton Holdings and Australia Post Michael Harvey, Non-Executive Director Over 30 years experience in the establishment and successful growth of E&P companies in South East Asia and the Gulf of Mexico, USA Bachelor of Business Administration in Finance Degree, Texas A&M Ex Shell, Huffington, CEO Gryphon Exploration Inc. Current CEO of Stonegate Production Company. 5

7 SKILLED MANAGEMENT TEAM UNITED STATES Ross Keogh President of Petsec Energy Inc. Over 30 years of experience in the oil & gas industry Bachelor of Economics Degree, Macquarie University Ex Total Oil Company & Bridge Oil Limited Ron Krenzke Executive Vice President Exploration Over 35 years of experience in the oil & gas industry Bachelor of Science Degree, Texas A&M University Ex Mobil, Amerada Hess, VP Exploration Gryphon Exploration Company. Nick Repar Exploration Manager Over 29 years of experience in the oil & gas industry Bachelor of Applied Geophysics, Michigan Technology Ex Tenneco & Stone Energy AUSTRALIA Fiona Robertson Chief Financial Officer Over 30 years of corporate finance experience Master of Arts Degree, Oxford University Ex Chase Manhattan Bank & Delta Gold Ltd. Current director Drill Search Energy Paul Gahdmar Company Secretary & Group Financial Controller Over 15 years of experience working in corporate accounting and finance in the oil & gas industry Master of Business and Technology Degree, University of New South Wales Ex Australian Oil and Gas Corporation & Rothmans of Pall Mall Denis Swords General Counsel & Secretary Over 25 years of experience in the oil & gas industry Master of Science Degree, University of New Orleans. Juris Doctor Degree, Paul M. Herbert Law Centre. Ex Gordon, Arata, McCollam, Duplantis & Eagan, LLP, Sanderfer Oil Company & Tenneco 6

8 PETSEC GULF COAST AND GULF OF MEXICO ASSETS Texas, USA Louisiana, USA Mississippi, USA South Thornwell Lafayette Moonshine West Cameron 462 Marathon Prospect Ship Shoal 36 Ship Shoal 74 South Sunrise New Orleans Main Pass 18, 19 Breton Sound 39, 42 Main Pass 132 Chandeleur 31, 32 Main Pass 270,273,274 Petsec Leases/Prospects North Padre Island Gulf of Mexico Petsec Producing Fields Pipelines Prolific oil and gas producing region 1,094 fields, 34.5 billion barrels, 437 trillion cubic feet gas High drilling success 53% successful; 41,892 wells drilled with 22,322 productive 7

9 PETSEC GULF COAST & GULF OF MEXICO ASSETS Reserves: 16.9 Bcfe (Ryder Scott 31 Dec 2010) Producing Fields: Eight Net Production: 10 Mcfd gas, 140 bopd oil Main Pass 270 Main Pass 18/19 Chandeleur 31/32 Marathon 2011 Production: o 3 Bcfe / Est. Revenue ~ US$15 m Prospect inventory: o 18 leases o 10 prospects: Bcfe o Target sizes: Bcfe 8

10 PETSEC CHINA ASSETS RESERVES 5 oil fields in two granted development areas covering 82.1 km 2 Petsec 5.2 to 15.2 MMbbl if CNOOC backs in for 51% and Petsec recovers past costs (currently US$28m) Develop 6.12/6.12S/12.8W fields. Petsec 2.94 MMbbl. PROSPECTS 8 undrilled prospects/leads 100 MMbbl gross potential MMbbl net after CNOOC back in 2012: 3 4 wells MMbbl, net MMbbl. 9

11 MAJOR CHANGES IN US / GULF OF MEXICO ECONOMIC & OPERATING ENVIRONMENT Global Financial Crisis Shale Gas Failures and weakness of US banking Lack of credit for small players Weak industrial gas demand Overly successful Major oversupply of natural gas Gas price volatility : $5 to $10+/mcf, Avg. $7.20/mcf : <$4/mcf BP Macondo Oil Well Blowout Shut down of Gulf of Mexico drilling 2010 Unlikely to recover until 2012 Significantly increased regulation Significant delays and uncertainty in drilling approvals 10

12 SHARE PRICE HISTORY & EVENTS Higher gas prices $5/mcf $10+/mcf Gas price <$4/mcf Drilling success leads to cash flow generation Falling gas prices GFC causes lack of bank credit Hurricane Ike in GoM BP oil spill 11

13 ISSUES: PROBLEMS AND SOLUTIONS Problems Solutions Oversupply and low natural gas prices, likely to remain until 2014 Target gas condensate & oil Current 1:25 oil/gas price ratio should return to better energy equivalent ratio over time Small reserve targets uneconomic (<5-10 Bcfe) Big targets > Bcfe Difficult GoM operating environment, improving but likely to continue until 2012/13 Focus operations on Gulf Coast and onshore Louisiana and Texas 12

14 USA: NEW BUSINESS PLAN - TRANSITION TO OIL AND BIG TARGETS Big Targets: Gas/condensate > Bcfe Oil > MMbbl Geologic Setting: Conventional Deep Section 12,000 20,000 Gas/condensate Oil Unconventional Sub salt Shale oil 13 Areas: Gulf of Mexico Shelf <300 water / Gulf Coast / Onshore Louisiana & Texas

15 STATUS OF NEW PLAN Big Prospects, Drill-ready Deep section 10 mapped prospects Prospect potential: > Bcfe each Programme: Bcfe ( MMboe) Subsalt Areas identified Prospect generation progressing Shale Oil JV with experienced resource play partner Regional work completed Local work nearing completion Land acquisition in 6 months 14

16 DEEPER SECTION: SHIP WRECK PROSPECT Structure Map A Ship Wreck A Working Interest: Petsec 75% Water Depth: 15 feet Target /Depths: Big Hum/Cib 18,000 19,500 feet Gross Well Cost: ~US$13 MM Reserve Potential: 63 BCF plus 1.9 MMBO 121 BCF plus 3.6 MMBO Distance to nearest facilities: 5 miles 15

17 DEEPER RESERVOIRS AND SUBSALT COMET Target Interval Onshore / Shallow Water 15,000 to 25,000 Drilling Depths Sub-salt play onshore and in shallow water areas where prolific production already exists above the salt Targets moderate depth, high quality, Miocene age reservoirs Conventional land based, shallow water, and barge rigs Lower drilling and operating costs ~US$20 MM vs >US$ 100 MM in deep water Reserve potential > 100 MMBOE/prospect 16

18 SUBSALT PLAY Identified high potential prospects onshore or in shallow water beneath floating salt bodies. Identified areas with reserve potentials >100 MMboe 17

19 US SHALE OIL & GAS PLAYS Oil and Gas Resource Plays, USA Bakken Niobrara Basins Gas Plays Oil Plays Resource plays, or shale plays, are very active in the USA. Major deals have taken place in which acreage was acquired at low cost and later sold at >10 20 times initial cost per acre. Success in shale gas now redirecting activity to shale oil 18

20 RECENT SHALE TRANSACTIONS 2010 US$238bn of transactions mainly shale gas Buyer Shale $billion $/acre CNOOC Eagle Ford ,000 BHP Fayetteville ,000 Reliance Eagle Ford ,000 Mitsubishi Cordova ,500 Reliance Marcellus ,500 Mitsui Marcellus ,000 Total Barnett ,000 BG Group Haynesville ,000 Statoil Marcellus ,500 19

21 OIL SHALE OBJECTIVES Working with our petrophysical technology partner, identify areas with appropriate resource play characteristics Focus on historic producing areas that are relatively inactive and where the source rocks are oil-prone, thick, rich and at appropriate drilling depths (<7000 feet) Utilise existing well log data and geological data to recognize and quantify the potential of source rocks as resource play targets Determine the core area of the new play and acquire key acreage at low royalty level and cost per acre Drill test wells to calibrate logs to geology and for proof of concept Expand acreage position to significant position that is attractive to a large E&P ( MMboe) Farm-out or sell all or a portion of the acreage to a large E&P with the financial capacity and drilling technology capability to fully exploit the play Receive cash and/or retain carried interest and/or ORRI and/or retain WI 20

22 PROGRESS IN 2010 Gulf of Mexico Jenny Lake Prospect TD May 100 tight gas pay P&A 16,000 Gulf Coast Marathon Prospect TD Oct Est reserves Producing: 22 MMcpd +125 bopd Further exploration potential 18,800 >20-78 Bcfe December

23 2011 PROGRAMME CORPORATE: RESTRUCTURE PEI $29.2M TERM DEBT DEBT FINANCE CHINA DEVELOPMENT $37M USA: EXPLORATION 2011 Capex (US$M) CONVENTIONAL UNCONVENTIONAL GULF COAST: 2 3 WELLS Net Target: 2 10 Bcfe 2 5 GULF OF MEXICO: 1 2 WELLS Net Target: 8 20 Bcfe 3 6 SHALE OIL: ONSHORE TEXAS Net Target: MMbbl oil ~50,000 net acres 5 10 USA Total: Capex CHINA: BEIBU GULF /12.8W Development CHINA Total: Capex

24 INDICATIVE VALUE ( ) Assets and Liabilities NPV 10 A$M 2 A$/share 3 US : 8 fields 16.9 Bcfe China: 3 fields 2.94 MMbbl Cash Debt (29) (0.13) Total indicative net asset valuation US PV10 based on 31 December 2010 strip pricing plus hedging: China PV10 based on 12.25% US$100/bbl. 2 Exchange rate of 1 for 1 US$/A$ 3 Based on current number of shares outstanding of 231,283,622. The internally estimated indicative DCF net asset valuation of the Company based on Petsec Energy estimates of 2P reserves as at 31 December Does not include any value for exploration prospects. 23

25 CONCLUSION: WHY INVEST IN PETSEC ENERGY? Experienced Board and skilled Management team Historical success Large Growth Potential 2011 Programme: US Gulf of Mexico >500 Bcfe gross China 5-15 MMbbl US prospects Bcfe China MMbbl USA Exploration - Conventional Bcfe Exploration - Unconventional MMbbl China Development 2.94 MMbbl Discount to NPV10 of reserves Market capitalisation $39 million NPV10 reserves $110 million Plus exploration potential 24

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