Drillsearch Energy Limited

ABN 73 006 474 844

Telephone +61 2 9249 9600

Facsimile +61 2 9249 9630 admin@drillsearch.com.au www.drillsearch.com.au Level 16, 55 Clarence Street Sydney NSW 2000

9 May 2012

Southend-1 Gas Flow from Drill Stem Test

• Drill stem test produces gas from short flow hindered by tool mechanical issues at Southend-1 exploration well

• Well cased and suspended for future cased-hole extended production testing to determine deliverability, volume and composition of gas

• Extensive sidewall coring program completed for unconventional gas evaluation

Drillsearch Energy Limited (ASX: DLS) is pleased to advise that a gas discovery has been made with the Southend-1 exploration well in PEL 107. The well encountered gas shows over two intervals with signs of possible hydrocarbon liquids content. Operations are currently underway to case and suspend the well for future cased-hole extended production testing in the Patchawarra Formation.

Southend-1 completes the current Western Wet Gas Fairway exploration campaign which targeted the Patchawarra and Tirrawarra Formations located on the Western Flank of the South Australian Cooper Basin. Drillsearch Energy holds a 60% interest in PEL 107 and Beach Energy (ASX: BPT) as Operator holds 40%.

Conventional Gas Pay Zones - The well encountered hydrocarbon fluorescence and wet gas shows in sands within the Patchawarra Formation and Tirrawarra Sandstone. The well encountered conventional Patchawarra Formation sands with a log and gas chromatograph signature similar to those observed in the Middleton and Raven Wet Gas Fields, and the recent Haslam-1 wet gas discovery. Drill Stem Tests (DST) indicate a gas discovery - Several Drill Stem Tests (DST's) were attempted over two intervals, however, due to apparent mechanical issues a full DST was not able to be completed. Notwithstanding, a 3 minute gas flow was achieved that proved the presence of movable gas. Well Cased & Suspended for Production Testing - Following the recovery of gas from DST, the Joint Venture has decided to immediately case and suspend the well for future cased-hole extended production testing to further evaluate the gas bearing intervals. Extensive Sidewall Coring Program - 39 percussion sidewall cores were successfully acquired from the Toolachee Formation, Roseneath Shale, Epsilon Formation, Murteree Shale and Patchawarra Formation for unconventional gas evaluation and palynological studies. Southend Prospect Background - The Southend-1 exploration well is located approximately 5km southwest of the prolific (Santos) Raven Wet Gas Field and 10km south of the Middleton-Brownlow Wet Gas field (DLS 50% / BPT 50%). If this discovery is proven up the Joint Venture sees an opportunity to combine this discovery with the Middleton-Brownlow Wet Gas field thus utilising its existing infrastructure to fast track production.

The Ensign 30 rig will move west from PEL 107 in to Beach's PEL 92 permit. We expect the rig to be drilling further PEL 91 oil wells by mid year.
Drillsearch Managing Director, Brad Lingo said "This is an encouraging result, proving a Patchawarra Formation gas play into PEL 107 where Drillsearch holds 60%. The JV hopes to quickly follow up the case and suspension decision with a cased hole test of the gas zones to prove commerciality. The close proximity of Southend-1 to the Brownlow and Middleton wet gas fields helps build a critical mass to support an expansion of the initial wet gas pilot project which started production in early January 2012."
"We are equally pleased with the successful side wall coring program to evaluate the unconventional gas reservoir. Additional testing and evaluation work will be required to establish
Resources and to determine the produceability of the unconventional zones but this is a very good starting position."
Yours faithfully
Brad Lingo Managing Director P: +61 2 9249 9600
admin@drillsearch.com.au
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Mercury Consulting
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E: david.greer@mercuryconsulting.com.au

About Drillsearch Energy Limited (ASX: DLS), which listed on ASX in 1987, explores and develops conventional and unconventional oil and gas projects. Drillsearch has a strategic spread of petroleum exploration and production acreage in Australia's most prolific onshore oil and gas province, the Cooper-Eromanga Basins in South Australia and Queensland. The company's focus is on 'brownfields' exploration where geological risk is reduced and there is access to existing infrastructure, ensuring that any discoveries can be brought into production. Competent Person Statement

Information on the Reserves and Resources in this release has been compiled by Mr. David Evans, Chief Technical Officer of Drillsearch who has given his consent as of the date of this release to the inclusion of this statement and the information in the form and the context in which they appear in this release.

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