Drillsearch Energy Ltd (ASX:DLS) To Raise Up To A$25.6 Million In A Placement And Share Purchase Plan

Sydney, Sep 14, 2009 AEST (ABN Newswire) - Drillsearch Energy Ltd (ASX:DLS)(PINK:DRLLF) announced today an equity raising by way of:

- a placement to institutional and sophisticated investors of approximately 191.7 million shares raising approximately A$9.6 million ("Placement"); and

- a share purchase plan ("SPP") providing existing Drillsearch shareholders the opportunity to subscribe for up to A$15,000 worth of the Company's shares to raise up to A$16 million, at an offer price of A$0.05 per share (together, the "Offer")

The proceeds from the Offer will be used by the Company to fund:

- development of the recent Chiton Oil Discovery in the Western Flank Oil Fairway in PEL 91 and the expansion of exploration efforts including additional seismic studies and exploratory well drilling;

- commercialisation of the Western Cooper Gas & Liquids Project targeting conventional gas, condensate and LPG resources in PEL 106;

- appraisal of the non-conventional gas potential - deep coal seam and shale gas, tight and Basin-centered gas and shallow coal seam gas identified in the several key project areas in Cooper Basin; and

- general working capital.

Drillsearch Managing Director Brad Lingo said, "This capital raising will provide adequate funding to pursue further development of the opportunities in PEL 91, which sits in the Western Flank Oil Fairway in the Cooper Basin. Furthermore, we are excited to progress the commercialisation of the Western Cooper Gas & Liquids Project based on our conventional gas-condensate discoveries in PEL 106 and to position it towards generating positive cash flow. The Company is also intent on putting significant effort into appraising the non-conventional gas potential already identified in our Cooper Basin acreage. This will initially focus on the non-conventional potential already identified in our Western Cooper Gas & Liquids Project area but will also extend into our large holdings in the South West Queensland Cooper Basin."

Taylor Collison Limited and Patersons Securities Limited are acting as Joint Lead Managers to the Placement.

Placement

Drillsearch has successfully completed the Placement to institutional and sophisticated investors, raising A$9.6 million. The Placement of 191.7 million ordinary shares was completed at an issue price of A$0.05 per share, compared with the closing price of A$0.068 per share on 8 September 2009, the last day of trading prior to the trading halt. It is expected that the Placement shares will be issued on Friday, 18 September 2009.

Share Purchase Plan

Drillsearch also intends to offer a share purchase plan ("SPP") to provide an opportunity for existing shareholders to increase their shareholding in the Company. Under the SPP, eligible shareholders will have an opportunity to subscribe for a parcel of Drillsearch shares ("New Shares") in A$1,000 increments from a minimum of A$1,000 up to a maximum of A$15,000. The offer price per New Share will be A$0.05 per share, the same price as the Placement1.

The subscription will be free of brokerage or other transaction costs.

The SPP will open on Monday, 21 September 2009 and will close on Tuesday, 13 October 2009.

Australian and New Zealand based shareholders2 registered at 7pm (Sydney time) on Monday, 14 September 2009 will be eligible to participate in the SPP. The SPP will be capped at A$16 million. If total applications for the SPP exceed A$16 million, Drillsearch intends to scale back partly or entirely on a pro rata basis the amount raised through the SPP, subject to the minimum allotment of A$1,000 per eligible shareholder.

An SPP Booklet containing full details of the SPP offer will be mailed to eligible shareholders shortly.

Key Offer DatesEvent                                  2009----------------------------------------------SPP record date                   14 SeptemberPlacement settlement date         17 SeptemberNew Placement Shares allotted     18 SeptemberSPP booklet sent to shareholders  21 SeptemberSPP offer opens                   21 SeptemberSPP offer closes                  13 OctoberAllotment of SPP shares           16 October----------------------------------------------

Contact

Brad Lingo Managing Director Tel: +61-2-9241-4440