Mosaic Oil (ASX:MOS) 2008 Drilling Campaign Is Underway

Sydney, April 28, 2008 AEST (ABN Newswire) - Mosaic Oil NL (ASX: MOS)(PNK: MSAOF) commenced the Company's largest ever operated drilling campaign in the Surat-Bowen Basin with success at its first target well. The 2008 drilling campaign is a key component of Mosaic Oil's accelerated growth strategy and follows the recent capital raising of $17 million (net) and an additional drilling funding of $7 million from CS Energy for two Waggamba horizontal wells.

This has laid the foundations for the increased drilling campaign in the Surat-Bowen Basin for the next three years.

- Cash receipts from operations of $9.9 million for the Quarter.

- Mosaic realised an average oil price for the Quarter of US$98.65/bbl or A$106.15/bbl (December 07 Quarter - US$94.48/bbl).

- Cash at the end of the Quarter was $23.47 million.

- Production was 5% higher (on a BOE basis) than the previous quarter.

- Mosaic continued its farm-out effort aiming to add new target wells to the planned 2008 ten operated well program

- Mosaic continued to evaluate domestic and international acreage opportunities.

The full Quarterly report can be viewed on the Mosaic Oil website:

http://www.mosaicoil.com/1157/3029_RecentASXReleases.html

PRODUCTION SUMMARY--------------------------------------------------------PRODUCTS                  March 08  December 07 March 07                          Quarter   Quarter     Quarter--------------------------------------------------------Oil/Condensate (bbls)      17,948    18,156      18,124Gas (GJ)                  489,859   456,186     471,528LPG (tonnes)                  937       934         973Barrels of Oil Equivalent 103,134    97,992     100,698--------------------------------------------------------

Mosaic Oil continued to supply gas from the Churchie, Downlands, Silver Springs and Waggamba areas to existing sales contracts and spot contracts. A strong performance from the Silver Springs/Waggamba area increased gas production by 7% compared to the previous quarter while oil/condensate and LPG production were similar to the previous quarter.

DEVELOPMENT AND PRODUCTION ACTIVITIES

Silver Springs (PL 16: Mosaic 100%) Higher Production

Gas production increased by 24% from the Silver Springs/Waggamba area due to a high availability of wells and facilities. The previous quarter was affected by a shutdown by a gas customer.

Average daily production of oil from the Silver Springs/Waggamba area was maintained at a rate of approximately 116 BBLS/day in the Mar 08 Quarter.

Churchie Field (PL 192: Mosaic 49%) A fracture stimulation on Churchie 1 well was completed. A production test was conducted and results are being evaluated.

EXPLORATION AND APPRAISAL ACTIVITY

Surat-Bowen Basin Production Leases and Exploration ATPs: (Mosaic varying percentage interests)

2008 multi-well drilling program commenced During the past Quarter, Mosaic Oil continued planning for the drilling of a number of exploration and appraisal/development wells, together with further seismic acquisition, to be carried out during 2008.

Mosaic announced in early January 2008, that it had entered into a contract with Century Drilling for Rig #7 to drill up to 15 wells.

This program will include the drilling of a number of development wells in existing fields, including two horizontal development wells on the Waggamba Field, together with several exploration wells. The latter will include the Freneau-1 (Permian Tinowon Sandstone and Triassic Rewan Formation oil targets - subject to partial farm-out), Armstrong-1 (Triassic Showgrounds Sandstone and Rewan Formation oil targets) and the Jawsone-1 Bow Energy farmin well in PL 15.

The Mosaic Oil 2008 drilling program commenced on 11th March. The first well, Fairymount-9, was completed as a Showground oil producer and placed on pump test. The second well, Waggamba-4H, spudded on 1st April and drilling operation is expected to complete by end of April. Following the completion of operations at Waggamba-4H, Rig #7 will be moved to the Taylor-18 gas development well location prior to drilling the Armstrong-1 oil exploration well.

In the Origin Energy operated PL 30, the Riverslea Southeast-1 (Mosaic 11.765%) exploration well was drilled during mid February. The target reservoirs were interpreted to be non-hydrocarbon bearing and the well was consequently plugged and abandoned.

ATP 934P Application Area, Cooper-Eromanga Basin: (Mosaic 20%)

Avery Resources (Australia) Pty. Ltd (Operator) continued the Native Title clearance process during the Quarter, following which exploration activities will be able to commence.

PRL-08 - Kimu (PNG) (Mosaic 28.57%)

The PRL-08 joint venture (Operator: Oil Search Ltd) continued interpretation of the 72 kilometres of 2D seismic data acquired over the Kimu gas field in mid- 2007. This survey has been carried out as a precursor to the possible drilling of an appraisal well or wells for the certification of gas reserves, necessary to move forward the development of Kimu gas.

A decision on the timing of further drilling on Kimu field has yet to be made.

CORPORATE AND FINANCE

Mosaic Oil had cash receipts from operating activities of $9.9 million in March quarter. The cash receipts included $3.5 million from CS Energy Limited for the funding of drilling of Waggamba 4H. Cash received in the quarter from the sale of the company's share of production was $6.4 million.

Net operating cash flows after deducting payments for production and corporate and administration was $6.9 million for the quarter. The Company also received funds for sales made in the December quarter which were previously delayed. There was still $0.6 million outstanding on 31 March 08 being for delayed payments from previous quarters. These funds have now been received.

During the March quarter Mosaic spent $1.5 million on development which included drilling of Fairymount 9. The Company also spent $0.3 million on plant & equipment at its Silver Springs operation which included purchasing a new oil pump.

The Company raised an additional $1.6 million from a placement for the rights issue shortfall.

NEW VENTURES

Mosaic Oil continues its strategy to evaluate both domestic and international new venture opportunities for diversification and medium to long term growth.

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