Drillsearch Energy Limited (ASX:DLS) Commences Production At Chiton Oil Field

Sydney, Feb 5, 2010 AEST (ABN Newswire) - Drillsearch Energy Limited (ASX:DLS) (PINK:DRLLF) is pleased to announce that first commercial oil production has commenced at the Chiton Oil Field located in PEL 91 in the Western Flank Oil Fairway. The Chiton Oil Field is the first commercial oil discovery in PEL 91 and is owned by Drillsearch (60%) and Beach Energy Ltd (40% and operator). Chiton is a major project for Drillsearch and could potentially increase the Company's annual oil production by 200% in the near term.

The current production facilities can handle up to 5,000 barrels of fluid per day - oil and associated water production. Current storage facilities at Chiton can handle over 1,500 barrels of oil. Currently oil production is running at a choked-back rate of 245 BOPD and 478 BWPD on 18/64" choke to manage storage capacity and oil trucking logistics.

Initial production is being trucked from the Chiton production facilities to the Santos-operated oil receiving and storage facilities at Dullingari. These arrangements limit the current production rate due to limits on storage capacity and trucking logistics limiting production to a single truck delivery to the Dullingari facility per day. An initial tanker delivery has already been made to Dullingari.

Currently production is shut in and the Chiton oil storage facilities are full as a result of the heavy rains in the area which has interrupted trucking operations throughout the region. Once oil transportation arrangements are finalized with the PEL 92 joint venture and regional roads are clear the Beach plans to begin production with the choke fully open and produce at a free flow rate and begin multiple truck oil deliveries per day.

In further developments, Drillsearch and Beach have committed to expand the exploration programme in PEL 91 with the Aquillus 3D seismic survey. The Aquillus 3D seismic survey will cover nearly 450 km2 and will cover over 20 Namur sandstone oil prospects already indentified as well as potential prospective Birkhead Formation areas immediately south of the Wirraway, Growler and Snatcher Birkhead Formation Oil Discoveries. The Aquillus 3D survey will cover the entire area running from the existing Modiolus 3D seismic survey up to the Mollachuta 3D survey in PEL 104.

The joint venture anticipates commencing the Aquillus 3D seismic survey in March 2010.

Managing Director Brad Lingo stated "The commencement of oil production at the Chiton Oil Field and the joint venture's moving ahead with the Aquillus 3D seismic is a clear indication of our intention to expand and accelerate our exploration program in the Western Flank Oil Fairway. It is also a clear indication that Drillsearch and Beach are working together to explore and develop what we believe is an expanding oil province in the Cooper Basin."

"We are currently evaluating multiple drilling targets covered by the existing Modiolus 3D seismic survey and more importantly a whole range of new prospects and leads are being developed in the 3D coverage area based on the Birkhead Formation channel system play which has proven to be so successful to the immediate north east of PEL 91. These new leads and prospects are in addition to the prospects already delineated by Beach in the Namur sandstone which has proven successful at Chiton and further south in PEL 92."

"We are currently evaluating 4-5 new drilling locations in PEL 91 proposed by Beach covered by the Modiolus 3D seismic including both Namur sandstone and Birkhead Formation targets and we look to undertake a multi-well program with Beach within the next six-months targeting both of these play types with a view to rapidly accelerating our drilling activity in the Western Flank Oil Fairway and with success our oil production."

Contact

Brad Lingo Managing Director Tel: +61-2-9241-4440 www.drillsearch.com.au Email: admin@drillsearch.com.au