Drillsearch Energy (ASX:DLS) Quarterly Activities Report for Period Ending 31 March 2010

Sydney, May 3, 2010 AEST (ABN Newswire) - Australian oil production for Drillsearch Energy (ASX:DLS) during the March quarter was 19,566 bbls, which was 25% below the prior quarter. This larger than expected decline was due to flooding in the Cooper basin affecting production combined with the ongoing natural decline of existing fields. This decline trend was expected to be reversed as first oil from the Chiton-1 oil field (Drillsearch 60%) was due online in January 2010.

Whilst production at Chiton commenced in late January, the well had to be shut in after a couple of days due to the wet weather and flooding which has prevented transportation from the Chiton facilities. It is not clear when access to Chiton will be reopened to allow production to recommence.

Canadian oil and gas production for the March quarter from Circumpacific was 14,699 boe, which was 8% lower than in the December quarter.

Australian revenues for the March quarter were $0.94m, which was 30% below the previous quarter. The company currently has in excess of $6m of oil inventory in the Jackson Moonie pipeline. This inventory should be realised over the coming two quarters as the pipeline is decommissioned. Canadian revenues were $0.97m, which was 156% higher than in the previous quarter primarily due to downward revision of revenue allocation by joint venture operator in previous quarter.

Drillsearch's Australian operations realised a March quarterly average oil price of $80.5/bbl. This compares with a price of $93.09/bbl in the previous quarter.

Highlights for the quarter:

- Revenue of $1.91m for the quarter, up 11% on the previous quarter.
- Production of 34,242 bbls, down 19% on the previous quarter.
- Cash position remains strong at $8.1m.
- Standard and Poor's announces Drillsearch's inclusion in the SP/ASX All Ordinaries Index.
- Western Cooper Basin Unconventional Resource Upgrade announced.
- First Oil produced from Chiton-1 Oil field.
- Acquisition of additional working interests in existing Cooper Basin acreage from Magellan Petroleum Limited.
- Flooding in the Cooper Basin impacts the Company's production.
- Management team strengthened with the appointment of David Evans as Chief Technical Officer.
- Successful completion of the Furneaux 2D marine seismic acquisition in the Gippsland Basin in advance of seeking farm out partners.

For the full quarterly report, please visit:
http://www.abnnewswire.net/media/en/docs/62785-ASX-DLS-591231.pdf

Contact

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