Detectives believe a man on bail for drug charges, who was fatally shot in the head in a quiet street at Port Stephens, was the victim of a targeted attack.
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Among their inquiries, police are investigating whether the killing of 45-year-old David William King at Salt Ash at the weekend was the result of a drug deal gone wrong.
The gunman remained at large and the weapon used to kill Mr King was still unaccounted for on Monday evening.
Investigators believe the gunman was a passenger in a Ford Raptor ute being driven by Mr King, which crashed into a tree just before the Tanilba Bay man was found dead.
The Newcastle Herald understands there was no indication that the shooting was part of a robbery, but one of several lines of inquiry that investigators are following is whether the apparent murder was drug-related.
Emergency crews were called to Hideaway Drive, not far from Salt Ash Public School, about 1.45pm on Sunday after reports of a single-vehicle crash.
Police and NSW Ambulance paramedics found Mr King's lifeless body next to the driver's side of the Ford.
Port Stephens-Hunter Police District commander Superintendent Chad Gillies said on Monday early investigations indicated a man with a gun was seen leaving the ute after the crash and was collected nearby by a white Hyundai Santa Fe.
A vehicle matching that description was found burnt-out on Masonite Road at Heatherbrae - about 20km from the scene of the shooting, near the Pacific Highway - on Sunday afternoon.
Superintendent Gillies said police were continuing to investigate whether the burnt-out Santa Fe was connected to the Salt Ash crime scene.
Investigators were conducting line searches at both Salt Ash and Heatherbrae on Monday as the search for the killer went into its second day.
Police said in a statement detectives were treating the shooting as a "targeted attack".
A post-mortem on Mr King's body is expected to be conducted this week.
Mr King was previously known to police and was before the courts on charges when he was killed - his case was most recently mentioned before a magistrate last Monday.
According to court records, he had pleaded guilty to one count of supplying a prohibited drug greater than a small quantity but smaller than an indictable quantity, as well as two counts of possessing a prohibited drug.
He had pleaded not guilty to one charge of dealing with the proceeds of crime, valued less than $10,000, and was due to face Raymond Terrace Local Court again on November 5.
Mr King was granted bail on July 4.
Court records show he was previously handed a jail term of three years, with a two-year non parole period, from July 2018 for four drug supply charges.
Superintendent Gillies said detectives were following several "strong lines of inquiry", but it was too early to speculate on a motive for the shooting.
State Crime Command Homicide Squad investigators and Port Stephens-Hunter detectives have formed Strike Force Breve to investigate the killing.
"The early indications are the [shooter] was in the car with Mr King. We can't confirm definitively how many people were in the car at the time of the collision. That's one thing our investigators are working through," Superintendent Gillies said.
"Investigators are working around the clock to try to identify those responsible for the incident.
"What I can say is the firearm used in the incident has not yet been recovered.
"We've been inundated so far with information from members of the public."
Investigators have conducted an extensive canvass of CCTV from the areas around both scenes and are appealing for anyone with dash cam footage from Masonite Road or Hideaway Drive between 8am and 3pm on Sunday to get in touch with police.
Anyone with information can contact Crime Stoppers through the online portal or by calling 1800 333 000. Tips can be given to police anonymously through Crime Stoppers.
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