Q3DRILLSEARCH ENERGY LIMITED March 2013

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HighlightsQ3 DRILLSEARCH ENERGY LIMITED

March 2013

Unconventional Business• Drillsearch-QGC Unconventional Gas JV select first two

shale gas well drilling locations The Joint Venture has agreed on well locations for the first two wells in ATP 940P based on 3D seismic

Wet Gas Business• New Long-term Gas Sales Agreement with SACBJV

Western Cooper Wet Gas Project enters into a firm long-term Gas Sales Agreement with SA Cooper Basin Joint Venture

• Wet Gas production resumes at approximately 1,550 boepdWith new Gas Sale Agreement wet gas production resumed late March 2012 delivering 1,550 boepd net to Drillsearch adding to the quarterly production and revenue growth

• Commencement of Drillsearch-operated Western Cooper Wet Gas explorationWamberal-1 exploration well spudded in PEL 106A; the first in a three-well exploration campaign

Oil Business• Oil Production increases 66% – another new daily &

quarterly record Oil production increased to approximately 177,000 barrels for the March quarter – a 66% increase over prior quarter – driven by increased Western Flank Oil Production

• Kick-off of Western Flank Oil exploration drilling campaign Kick-off of four-well exploration drilling campaign targeting 4-9 mmbbls delivers Kalladeina-2 oil discovery

• Completion of Hanson Oil Field Production FacilitiesHanson Oil Field production facilities completed and commissioned with production commencing at approximately 700 bopd

• Total Production increases 80% – a new daily & quarterly recordTotal oil and gas production increased to approximately 192,000 boe for the March quarter – an 80% increase over prior quarter driven by growth in Western Flank Oil production and resumption of wet gas sales

• Sales revenues increase 37% – a new quarterly recordFollowing strong oil and gas production growth, total product sales revenues increase to $22.3 million for the March quarter – a 37% increase over prior quarter – with continuing strong realised oil price of $123/bbl

• Completion of Acer Energy acquisitionDrillsearch successfully completed the compulsory acquisition of Acer Energy on 11 January 2013

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

The Managing Director’s commentsOver the past quarter, Drillsearch maintained its singular focus on growing Reserves, production and cash flows and the March Quarterly results clearly demonstrate the fruits of this focus. Since the beginning of the financial year Drillsearch and its Joint Venture partners have all had a very clear-eyed focus on achieving these results. The September quarter was very much about delivering Reserve growth and the December quarter was very much about delivering both infield and export production facilities to put these new Reserves into production.

This quarter continued the work of the December quarter completing many of the infield production facilities in the Western Flank Oil Fairway in PEL 91 and making great progress on completing the Bauer-to-Lycium Crude Oil Pipeline. Delivering the completion and commissioning of these infield production facilities enabled Beach Energy, our Joint Venture partner and the Operator of PEL 91 to significantly increase oil production and exports through truck export operations while works on the oil export pipeline neared completion. At the time of writing this report we have been advised by Beach that the commissioning of the oil export pipeline has commenced and commercial operations is days away from being a reality.

The results of this singular focus throughout the last quarter are many. Firstly, total production was up 80% over the prior quarter hitting a new quarterly record of approximately 192,000 boe. Oil production was up 66% over the prior quarter achieving a new daily and quarterly record of approximately 177,000 bbls for the period. Growth did not only come from our Oil Business. Our Wet Gas Business also contributed to this growth late in the Quarter with the resumption of wet gas production from the Western Cooper Wet Gas Project with the execution of a new long-term gas sale agreement (GSA) with the South Australian Cooper Basin Joint Venture (SACBJV) which will provide long-term production and cash flow over the next three years.

This significant increase in production in turn drove a significant growth in revenues and cash flow for the Company with quarterly revenues reaching nearly $23 million – a new quarterly record for the Company. This was in part aided by strong oil prices with an average realised oil price of $123.00 per barrel but was mainly driven by the growth in production.

During the quarter we also maintained our focus on continuing to grow our oil and gas Reserves. The Company kicked-off a new exploration drilling campaign in the Western Flank in PEL 91 targeting another 4-9 million (gross) barrels of oil prospective resources. At the time of writing this report, this program has already delivered a new oil discovery on the first exploration oil well at Kalladeina-2. When the Kalladeina oil discovery is taken with the Pennington discovery, our exploration efforts are estimated to have already delivered over 100% Reserve replacement for the year offsetting our forecast production for the year.

During the quarter we also focused on proving up additional wet gas Reserves in two separate exploration drilling programs. These efforts have not yet yielded the same results as we have seen in the Western Flank Oil Fairway, however, we remain optimistic that continuing exploration in our wet gas project areas is likely to deliver quite significant Reserve growth. We also will be increasingly focused on appraisal of our substantial portfolio of existing wet gas discoveries to drive Reserve growth in our Wet Gas Business.

Moving into the last quarter of this financial year our focus remains fixed on delivering growth in Reserves, production and cash flow. With our continuing exploration efforts in the Western Flank Oil Fairway and with the commissioning and completion of the Bauer-to-Lycium Crude Oil Pipeline we believe the Company is well positioned to deliver this growth during the final quarter of this financial year.

Brad Lingo Managing Director

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

Oil revenue

LPGs revenue Condensate revenue

Sales Gas revenue

Revenue (A$m)

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Mar 13Dec 12Sep 12Jun 12Mar 12

Production and Revenue – New Quarterly Records setDuring the March quarter the Company delivered a new all-time record in both quarterly production and revenue. The March quarter saw continued strong growth in overall production to 192,259 boe, up 80% on the prior quarter. For the FY 2013 year-to-date, Drillsearch has produced 510,822 boe, exceeding FY 2012 total production of 389,877 boe by 31%.

With this strong increase in oil production, the March quarter delivered strong growth in production sales revenue setting a new quarterly record of $22.9 million – a 37% increase over the $16.7 million for the prior quarter. This brings FY 2013 year-to-date production sales revenues to $42.3 million – another new record for the Company.

This strong growth was primarily driven by the continued development and ramp up of production from the new Western Flank Oil discoveries in PEL 91 but was also assisted by continuing strong oil prices averaging $123/bbl for the quarter – an increase of 13% over the $116/bbl realised for the prior quarter.

The Bauer Oil Field saw an 83% increase in production during the quarter with Bauer-1, 3 and 7 online and producing an average of approximately 3,100 BOPD (gross). During the quarter Bauer-5,6,7 and 8 development wells were also completed and connected to the Bauer Central Oil Production Facility. The completion and connection of these development wells and optimised oil export trucking operations with minimal downtime significantly contributed to this production growth. The Western Flank Oil production increase was, however, negatively impacted by localised rain events in early March which interrupted truck crude oil export operations. With the commissioning of the Bauer-to-Lycium Crude Oil Export Pipeline, these impacts will be substantially eliminated.

The Hanson Oil Field production facilities were also completed and production commenced in early March at a rate of approximately 700 bopd. Crude oil from the Hanson oil field commenced trucking to the Bauer Central Oil Production Facility in advance of the start-up of the Bauer-to-Lycium Crude Oil Export Pipeline. During the quarter, substantial progress was also made towards completing and

commissioning the Bauer-to-Lycium Crude Oil Export Pipeline.

Production of wet gas from the Western Wet Gas project area recommenced on 17 March 2013 as the PEL 106B Joint Venture entered into a new, firm GSA with the SACBJV. Production is currently estimated at 1,550 boepd net to Drillsearch with 1,000 boepd in sales gas production and approximately 550 boepd in condensate and LPG production. Production is expected to continue to increase from the Western Cooper Wet Gas Project as works are underway to complete the connection and bring the Canunda Wet Gas Field into production.

With the completion of the Bauer field production facilities, the completion and commissioning of the Bauer-to-Lycium Crude Oil Export Pipeline and production coming back online from the Western Wet Gas Project with the new long-term gas sale agreement, Drillsearch believes it remains on track to meet its FY 2013 production guidance of approximately 1.1–1.3 mmboe, albeit towards the lower end of the range. It is estimated that once the pipeline is commissioned, the daily production rate from the Bauer Oil Field will increase to 6,000 bopd (net to Drillsearch) with an additional 1,750 boepd coming from the Wet Gas Business. At the time of writing this report, the commissioning of the pipeline has since commenced and is on track to commence full operation by early May.

Source: Drillsearch Energy Limited

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

Exploration and DevelopmentOil Business

Western Flank Oil FairwayExploration drilling recommenced in the Western Flank Oil Fairway, where oil exploration, appraisal and development is expected to continue for several months.

The PEL 91 Joint Venture commenced a four-well exploration drilling program targeting prospects that are covered by the Aquilius and Limbatus 3D seismic surveys which were completed in 2011 and 2012 respectively, and generated a substantial prospect inventory for further exploration. The exploration campaign is targeting an unrisked gross recoverable prospective oil potential of 4–9 million barrels of recoverable oil, on a combined basis over four prospects.

This exploration campaign commenced with the spudding of the Kalladeina-2 well, targeting a new oil play trend north of the Bauer Oil Field. Subsequent to the quarter end, wireline logs confirmed a McKinlay-Namur oil pay zone resulting in Kalladeina-2 being cased and suspended as a new oil discovery and future oil producer. The Company estimates that the Kalladeina-2 contains gross 2P Reserves of approximately 400,000 bbls. The Bauer-1, 2, 3, 4 and 7 wells are now online. Bauer-5, 6, and 8 wells have been completed and connected with Bauer-9, and Bauer North-1 scheduled to be completed by the end of April 2013. With the completion of these additional well connections, ten production wells will be connected and producing into the Bauer Central Oil Production Facility. Hanson Oil Production Facilities were also completed and commissioned in early March with this additional production coming into the Bauer Facilities via trucking operations.

The Bauer-to-Lycium Oil Export Pipeline has been completed, installed and tested. Construction of end-of-line storage, handling and transport facilities are complete and as of the time of writing this report, the commissioning of the pipeline has commenced with commercial operation expected by early May. This pipeline is capable of handling up to 10,000 bopd of gross oil exports to the Lycium Oil Terminal for on-shipment via the Lycium-to-Moomba Oil Export Pipeline.

Processing of the Irus 3D seismic continues and is expected to be completed by the end of June 2013. The PEL 91 Joint Venture is also in the process of completing the 485km2 Caseolus 3D seismic survey. Upon completion the Joint Venture will have 3D seismic data covering 58% of the permit, further upgrading and adding to the oil prospect exploration inventory.

WESTERN FLANK OIL FAIRWAY PEL 91, COOPER-EROMANGA BASIN

Source: Drillsearch Energy Limited

Source: Drillsearch Energy Limited

PEL 91 BAUER-TO-LYCIUM PIPELINE INSTALLATION, COOPER-EROMANGA BASIN

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

Inland-Cook Oil Fairway

Two commitment wells were drilled during the quarter in ATP 539P. Triclops-1 spudded on 14 January 2013 and Tibor-1 spudded on 7 February 2013; with both targeting the Hutton Sandstone and sands in the Birkhead Formation. Both exploration wells encountered oil shows in several target zones; however, quantities were not commercial and both wells were plugged and abandoned.

No seismic activity took place during the quarter; however, processing and interpretation of the 2012 Kaden 3D seismic continues. Seismic acquisition planning is underway for the latter part of 2013 for both 2D and 3D seismic with the reprocessing of historical 2D seismic data being investigated.

Permits ATP 920P and ATP 924P in the Inland-Cook Oil Fairway have been granted to Drillsearch by the Queensland Government, effective from 1 March 2013.

Wet Gas Business

Western Cooper Wet Gas Project Area

The PEL 106B Joint Venture, operated by Joint Venture partner, Beach Energy entered into a new, firm GSA with the SACBJV for wet gas production from the Western Cooper Wet Gas Project in PEL 106B. The GSA provides for the sale of 10 BCF of raw gas on a firm basis for over a three-year term with a Maximum Daily Quantity (MDQ) that can be delivered of 35 mmscfd of raw gas. Raw gas sales of 10 BCF are on a firm supply and purchase basis, and additional quantities over and above this will be supplied on an as-available basis up to the MDQ.

Under the GSA the PEL 106B Joint Venture will sell untreated raw gas consisting of condensate, LPG and sales gas, and will be paid for each component. Condensate and LPG pricing will be linked to international product pricing, less specific transport and processing charges. Gas sales are priced on a confidential basis, reflecting transport and processing costs of the SACBJV in producing sales gas quality for onward sale.

The additional gas sales underpin the expansion of the Western Cooper Wet Gas Project to increase the project’s overall production capacity via the completion and connection of the Canunda Wet Gas Field. Construction of the gas gathering pipeline tying the Canunda Wet Gas Field to the Middleton Gas Plant is completed, and commissioning of the tie-in is expected to be completed in the June quarter.

The exploration program in PEL 106B has progressed with the Coorabie-1, Rosetta-1 and Destres-1 wells drilled. The Coorabie-1 well was cased and suspended with a future evaluation program being formulated for Patchawarra and Tirrawarra Formation wet gas bearing sands. At both Rosetta-1 and Destres-1 gas shows were encountered, however reservoir quality associated with the shows was poor and as such both were plugged and abandoned.

In the 100% Drillsearch owned and operated Western Cooper Wet Gas project area at PEL 106A, a three-well exploration program commenced with the spudding of Wamberal-1 on 3 April 2013 using the Weatherford 826 drilling rig. Wamberal-1 encountered water bearing sands within the primary target, the Patchawarra Formation. It is thought that the Wamberal location was not adequate for trapping gas hence the reason for failure. Data acquired during drilling indicates

INLAND-COOK OIL FAIRWAY,COOPER-EROMANGA BASIN

Source: Drillsearch Energy Limited

WESTERN WET GAS PROJECT AREA, COOPER-EROMANGA BASIN

Source: Drillsearch Energy Limited

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

the sands are of good quality if found to be gas bearing elsewhere. In addition, elevated gas readings were observed in several intervals higher in the section but were not of sufficient thickness to warrant completing the well and as such the well was plugged and abandoned.

The exploration program is primarily targeting conventional wet gas accumulations with liquids-rich gas in high quality sands in the Patchawarra Formation up to 61 billion cubic feet (BCF) recoverable raw gas and 2.4 million barrels of oil equivalent (boe) of condensate and LPGs. The drilling campaign will also appraise tight sand, shale and coal unconventional pay intervals as secondary targets within the Roseneath and Murteree Shale.

Exploration success from the wet gas drilling campaign may provide the opportunity to accelerate the development of wet gas discoveries in PEL 106A through the aggregation of new discoveries with nearby existing discoveries.

Northern Cooper Wet Gas Project Area

In the Northern Wet Gas Project area, the 478km2 Coolabah 3D seismic data acquisition covering PEL 101 in its entirety was completed in March with processing underway and expected to be completed at the end of August 2013. At the time of this report, preliminary 3D seismic data has been received and is of excellent quality. Preliminary analysis of this data confirms the leads and prospects originally mapped in the permit area on 2D seismic and will provide a strong basis for appraising the existing Ginko, Crocus, Crocus South and Jute wet gas discoveries as well as follow-up exploration drilling in the nearby prospects.

Permit ATP 932P in the Northern Wet Gas project area has been granted to Drillsearch by the Queensland Government, effective from 1 March 2013.

Unconventional Business

Central Unconventional Fairway

Drillsearch and Joint Venture partner QGC have agreed on locations for the first two wells in the Nappamerri Trough Shale Gas Fairway in ATP 940P.

The wells, Anakin-1 and Charal-1, have been based on 3D seismic to target multi-layered tight gas Patchawarra Sandstone and REM shale gas. Charal-1 is due to spud in mid July 2013 and Anakin-1 in October 2013 with the Weatherford 826 drilling rig, after it completes the three-well wet gas drilling campaign in PEL 106A.

Field activities, such as building of access roads to facilitate the construction of well pad leases, are in progress.

Ongoing interpretation of the Winnie 3D seismic survey, which was completed in the December 2012 quarter, continues with the aim of optimising future well locations.

Western Unconventional Fairway

Drillsearch’s focus on Cooper Basin unconventional resources continues to attract interest from international parties seeking to secure a foothold in the Cooper Basin by looking to form new unconventional exploration Joint Ventures in Drillsearch’s Cooper Basin acreage.

Corporate

Completion of Acer Energy Takeover

On 11 January 2013, Drillsearch completed the compulsory acquisition of all the outstanding shares in Acer Energy Limited it did not already own. As such, Acer Energy became a wholly-owned subsidiary of Drillsearch and the combined company now holds the largest discovered, uncommitted conventional gas resource in the Cooper Basin outside of the Cooper Basin Joint Venture partners, with a combined gross acreage position of approximately ~24,200km2 (~19,100km2 net to Drillsearch).

Renewal of MD’s employment contract

During the quarter Drillsearch announced that it has extended the employment contract of Managing Director, Brad Lingo. Mr Lingo, who was appointed Managing Director on 15 June 2009, has agreed to enter into a new employment agreement which has no fixed term.

NORTHERN WET GAS PROJECT AREACOOPER-EROMANGA BASIN

Source: Drillsearch Energy Limited

CENTRAL UNCONVENTIONAL FAIRWAY– ATP 904P

Source: Drillsearch Energy Limited

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

Financial Position The financial information presented in this report is unaudited.

Description Units

9 months ended March 2013 (Unaudited)

3 months ended March 2013

3 months ended December 2012*

Quarter Change%

Production

Oil bbl 352,588 176,734 106,683 66%

Gas “Raw” MMscf 919 77 – N/A

LPGs Ktonne 0.27 0.27 – N/A

Condensate bbl 1,378 1,288 90 N/A

Production (by business unit)

Oil boe 352,588 176,734 106,683 66%

Wet Gas boe 158,234 15,525 90 N/A

Total Production boe 510,822 192,259 106,773 80%

Sales revenue

Oil A$000 42,345 22,375 16,669 34%

Gas “Sales volume” A$000 2,074 194 – N/A

LPGs A$000 2,079 227 – N/A

Condensate A$000 1,843 119 8 N/A

Sales revenue (by business unit)

Oil A$000 42,345 22,375 16,669 34%

Wet Gas A$000 5,996 540 8 N/A

Total Revenue A$000 48,341 22,915 16,677 37%

Avg Realised Oil Price A$/bbl 116.1 123.2 109.2 13%

Avg Realised Condensate Price A$/bbl 90.9 92.1 91.0 1%

Avg Realised Gas A$/boe 17.9 16.1 – N/A

Avg Realised LPG Price A$/boe 90.0 101.1 – N/A

Direct operating expense (by business unit)

Oil A$000 12,542 4,911 6,037 -19%

Wet Gas A$000 2,284 256 533 -52%

Total direct operating expense A$000 14,826 5,167 6,570 -21%

Oil & gas asset expenditure (by business unit)

Oil A$000 19,575 7,717 2,673 189%

Wet Gas A$000 3,704 262 1,252 -79%

Total oil & gas asset expenditure A$000 23,279 7,979 3,925 103%

Exploration & evaluation expenditure (by business unit)

Oil A$000 37,472 16,486 13,110 26%

Wet Gas A$000 30,778 23,265 3,923 493%

Unconventional A$000 5,662 454 4,407 -90%

Corporate A$000 5,196 871 3,727 -77%

Total exploration & evaluation expenditure A$000 79,108 41,076 25,167 63%

Financials

Cash & Cash Equivalents** A$ mil 41.4 41.4 83.3 -50%

Debt A$ mil 100.0 100.0 100.0 0%

Remaining Oil Hedge (Put floor@A$86.55/bbl) bbl 100,800 100,800 339,779 -70%

Note: * December quarter includes information for Acer Energy from 1 November 2012. ** Cash and cash equivalentys include $20 million debt service cash reserve.

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Q3 DRILLSEARCH ENERGY LIMITED March 2013

Further informationFor further information please contact: Brad Lingo Managing Director Ph: +61 2 9249 9600 Email: admin@drillsearch.com.au

Or visit the website www.drillsearch.com.au

Level 16 , 55 Clarence Street

Sydney NSW 2000

Australia

P: +61 (02) 9249 9600

F: +61 (02) 9249 9630

E: admin@drillsearch.com.au

www.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.

Competent Person StatementAny reference to Reserves and Resources in this release follows guidelines set forth by the Society of Petroleum Engineers – Petroleum Resource Management System (SPE - PRMS). The Reserves estimates used during this interview were compiled by Mr David Evans, Chief Technical Officer of Drillsearch Energy Limited, who is a qualified person as defined under ASX Listing Rule 5.11 and has consented to the use of the Reserves figures in the form and context in which they appear in this presentation.

Media enquiries to: Justin Kelly, Director, Mercury Consulting, P: +61 2 8256 3350 E: justin.kelly@mercuryconsulting.com.au

If you would like to register for email alerts, please register on the home page of our website.

DRILLSEARCH PERMIT AREA, COOPER-EROMANGA BASIN

Source: Drillsearch Energy Limited

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