Despite the poor start in listed trading, the company's IPO went very well and closed early oversubscribed. It raised $6 million through the offer of 30 million ordinary new shares at 20 cents with one free attaching new option for each new share.

Australian Oil Company, which trades on the ASX under ticker-code AOC, seems to be the victim of recent sharemarket jitters.

The company's first well is expected to begin drilling within two months. AOC plans to drill up to 13 wells during its first two years in prospects in the Cooper Basin and Carnarvon Basin.

"There has been strong support for the offer and its strategic timing enabled the capital raising to be completed in a short time frame, oversubscribed," managing director Grant Jagelman said.

"This now allows us to get launched immediately into our exploration programs."

AOC has farm-in agreements for two permits, one in the Cooper/Eromanga Basin (PEL 182) and one in the onshore Carnarvon Basins (EP 435).

The company has commitments for a total of 13 wells over the two permits and expects to drill six wells before the end of the year.

AOC's first wells will be drilled in permit PEL 182, South Australia which lies on the west flank of the Patchawarra Trough and surrounds the Coongie Lakes National Park about 60km north of the Moomba production hub and close to pipelines.

The permit is operated by Perth-based Eagle Bay Resources NL. AOC will earn a 12.5% interest by funding 25% of the cost of the first five wells, all of which are slated to be drilled this year.

The two largest prospects lie in the permit's south-west corner near the basin margin, in a similar orientation to the Christies, Sellicks and Charo oil discoveries further to the south.

Eagle Bay has delineated two other prospects and a string of six oil and gas leads running down the eastern edge of the permit close to various Santos finds.

Several Santos-held production licences and pipeline infrastructure are also within the exploration permit boundaries.

AOC's second block is another farm-in, this time in the onshore Carnarvon Basin.

Permit EP435, operated by Empire Oil and Gas NL of Perth, contains the Parrot Hill and Roberts Hill oil discoveries and three untested prospects. The Rough Range oil field production licence is also within the permit but excluded from the farm-in deal.

AOC will gain a 25% interest in the permit after funding 50% of the cost of one new exploration well.

Empire's mapping suggests the best potential for commercial oil discoveries are in three prospects – Parrot Hill East, Pundan and Dune. These are on the eastern side of the major Rough Range fault and are believed to have been formed during the early Cretaceous period before oil migration into the region.

AOC also has several other prospects under negotiation around Australia and expects to quickly expand its exploration activities after listing.

The company has a experienced board led by managing director Grant Jagelman who was previously chief executive officer and chairman of Moage Ltd, Claremont Petroleum NL, Beach Petroleum NL and Woodbine Petroleum US Inc. He is also a 50% shareholder/owner of unlisted Timor Oil Ltd. He will hold a one sixth shareholding in AOC.