4 September 2014

August Drilling Report

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

• Successful start to a year of record drilling activity for Drillsearch

• Balgowan-1 and Burners-1 the 14th and 15th oil discoveries in PEL 91

• Balgowan-1 further demonstrates prospectivity of PEL 91 northeast of Bauer

• Northern Cooper activity momentum with Banyan-1 drilling and Flax-1 hydraulic stimulation

• More than 40 wells planned by Drillsearch in FY2015

Oil Business

Western Flank Oil Fairway - PEL 91

As announced on 13 August 2014, the Balgowan-1 exploration well in PEL 91 on the Western Flank Oil Fairway (Drillsearch
60%, Beach 40% and Operator) was cased and suspended as a future oil producer after wireline logs confirmed 3.5 metres of net pay in the Namur Sandstone and two metres in the McKinlay Member in a 9 metre gross column. Balgowan-1 was the first in an 18- well program planned for PEL 91 in the
current financial year, and the 14th discovery in the permit. Analysis of the well results is
continuing and Drillsearch will provide an
update on the size of the discovery in due course.
Following Balgowan-1, the rig moved to drill the Burners-1 exploration well, located 1.9 kilometres north northeast of the Stunsail-1 oil discovery in PEL 91 and was spudded on
18 August 2014. Burners-1 intersected an oil-bearing reservoir with one metre net pay
in the Namur Sandstone and an oil-bearing
McKinlay Member. A drill stem test in the McKinlay Member recovered 5.1 barrels during a four-hour test and the well was cased and suspended as a future oil producer. The rig was released on 31
August 2014 and is currently at the Stunsail-
2 well site.
Stunsail-2 is located 760 metres to the southeast of Stunsail-1 with primary targets in the McKinlay, Namur, Mid-Namur and Birkhead. Stunsail-2, a near-field appraisal well, is expected to spud in the coming days and will appraise an eastern accumulation that is currently mapped as a separate accumulation to the Stunsail-1 oil pool. The well will provide additional control points for depth conversion, thereby increasing the confidence of the field volumetrics to assist with the design of surface facilities to be used in production.

Northern Gas and Liquids Project Area - PRLs 14, 17, 18, PEL 103

In PRL 14, the Flax-1 well was hydraulically stimulated across a new Mid-Patchawarra hydrocarbon- bearing interval with positive indications that pressure in the zones has not depleted. Data from the hydraulic stimulation and test is currently being analysed. A new dual completion string is being installed
intended to support selective production from both hydrocarbon-bearing zones in the Tirrawarra and Mid-
Patchawarra.

In PEL 103, the Banyan-1 vertical exploration well spudded on 27
August 2014 with drilling expected to take 12 days. Banyan-1 is 5 kilometres southwest of Senex
Energy's Acrasia Field. The well
will test an up-dip closure 400 metres from the Sprigg South-1 well drilled by Innamincka Petroleum in 2008. The primary targets are the Basal Birkhead Formation and the Poolowanna Formation.
Following completion of drilling of Banyan-1, the Juniper-3 appraisal well will be drilled in PRL 17.

Wet Gas Business

Western Wet Gas Fairway - PEL 91

The Karrata-1 well is located within the PEL 91 permit (Drillsearch 60%, Beach 40% and Operator) on the Western Wet Gas Fairway (see map on page 1) and is proposed as a vertical exploration well that will test for the presence of gas/condensate in a Patchawarra structural stratigraphic trap on the flank of the Patchawarra Trough. Drilling is expected to start in the coming days. The well site is located up-dip from the Canunda-1 wet gas discovery which is currently producing into the Middleton Gas Plant in neighbouring PEL 106 (Drillsearch 50%, Beach 50% and Operator). Karrata-1 was defined on the Irus 3D seismic survey acquired in 2012. Eight out of fourteen wells targeting the Patchawarra gas/condensate play in PELs 91 and 106 have discovered hydrocarbons.

Unconventional Business

Central Unconventional Fairway ATP 940P

The Weatherford 826 rig was released from Anakin-1 on 2
August 2014 and is currently on site at the third location, Padme-1,
where it will be drilled to total depth. It is expected that the well will spud
in the second week of September
2014.

Monthly Drilling Summary

Oil Wells

Well

Participants Progress & Summary

Primary Target Secondary Targets

Balgowan - 1 DLS 60% Spud Date: Monday, 4 Augus t 2014 Nam ur Sands tone McKinlay Mem ber

PEL 91 BPT* 40% Rig Releas e: Wednes day, 13 Augus t 2014 Mid Nam ur

Oil Bus ines s Depth: 2,019 m (TD) Birkhead Form ation Wes tern Flank Oil Operation: Cas ed & Sus pended Poolowanna Form ation C/E Bas in, SA Progres s : 2, 019 m (TD)

Burners - 1

DLS

60% Spud Date:

Monday, 18 Augus t 2014

Nam ur Sands tone

McKinlay Mem ber

PEL 91

BPT*

40% Rig Releas e:

Sunday, 31 Augus t 2014

Mid Nam ur

Oil Bus ines s

Depth:

2,031 m (TD)

Birkhead Form ation

Wes tern Flank Oil

Operation:

Cas ed & Sus pended

Poolowanna Form ation

C/E Bas in, SA

Progres s :

2, 031 m (TD)

Banyan - 1

DLS*

100% Spud Date:

Wednes day, 27 Augus t 2014

Bas al Birkhead Sands tone

Poolowanna Sands tone

PEL 103

Rig Releas e:

Saturday, 13 Septem ber 2014 (Targeted)

Hutton Sands tone

Oil Bus ines s

Depth:

2,221 m (Propos ed)

Northern Cooper Gas & Liquids

Operation:

Drilling

C/E Bas in, SA

Progres s :

997 m

Stunsail - 2

DLS

60% Spud Date:

Thurs day, 4 Septem ber 2014 (Targeted)

Nam ur Sands tone

McKinlay Mem ber

PEL 91

BPT*

40% Rig Releas e:

Sunday, 14 Septem ber 2014 (Targeted)

Mid Nam ur

Oil Bus ines s

Depth:

1,800 m (Propos ed)

Birkhead Form ation

Wes tern Flank Oil Operation: Rigging Up

C/E Bas in, SA Progres s : 0 m

Wet Gas Wells

Karrata - 1

DLS

60% Spud Date:

Thurs day, 4 Septem ber 2014 (Targeted)

Patchawarra Form ation

Tirrawarra Sands tone

PEL 91

BPT*

40% Rig Releas e:

Thurs day, 18 Septem ber 2014 (Targeted)

(gas /condens ate)

(gas /condens ate)

Gas Bus ines s

Depth:

2,700 m (Propos ed)

Wes tern Flank Oil

Operation:

Rigged up, waiting to s pud

C/E Bas in, SA

Progres s :

0 m

Unconventional Wells

Anakin - 1

DLS*

40% Re-entered:

Monday, 26 May 2014

Ros eneath / Murteree Shale

Daralingie Sands tone

ATP 940P

QGC

60% Rig Releas e:

Saturday, 2 Augus t 2014

Patchawarra Form ation

Toolachee Sands tone

Unconventional Bus ines s

Depth:

4,050 m (TD)

Eps ilon Form ation

Central Unconventional

Operation:

Cas ed & Sus pended

Tirrawarra Sands tone

C/E Bas in, QLD

Progres s :

4, 050 m (TD)

Padme - 1

DLS*

40% Re-entered:

Tues day, 9 Septem ber 2014 (Targeted)

Ros eneath / Murteree Shale

Daralingie Sands tone

ATP 940P

QGC

60% Rig Releas e:

Wednes day, 29 October 2014 (Targeted)

Patchawarra Form ation

Toolachee Sands tone

Unconventional Bus ines s

Depth:

3,969 m (Propos ed)

Eps ilon Form ation

Central Unconventional

Operation:

Rigging Up

Tirrawarra Sands tone

C/E Bas in, QLD

Progres s :

2, 402 m

* Indicates operator


For further information please contact:

Brad Lingo

Managing Director

Natalie Barrington

Communications Manager

+61 2 9249 9600

admin@drillsearch.com.au

+61 2 9249 9600

natalie.barrington@drillsearch.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.
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