Sentry chief executive Alan Hart said the Nasdaq-listed, Colorado-headquartered company had completed due diligence on ATP 865 and numerous leads had been delimited, in particular the Sherwood Park prospect.

"Though our assessment of Sherwood Park is preliminary, the potential of the prospect is significant," Hart said. "Even a modicum of success here will have a significant impact on Sentry."

ATP 865 lies in central Queensland's Adavale Basin, a proven petroleum basin of roughly 57,000sq.km.

This lightly-explored region has had fewer than 60 exploration wells drilled to date, and most of those without the aid of modern technology.

Sentry president Raj Rajeswaran said the company's new permit was within 30km of the 13 billion cubic feet Gilmore gas field and 40km east of fields containing over 15 million barrels of recoverable oil.

"This clearly indicates that ATP 865 is prospective and with pipeline infrastructure transecting our block, we have ready and quick access to market," Rajeswaran said.

"The recent announcement of an eight billion dollar LNG facility in Gladstone puts Queensland on the world stage and enhances the potential value for the region's explorers and producers. We couldn't be happier to conclude this acquisition."

Sentry acquired the permit from Medina Group, a China-based company that was awarded the block in the 2007 Queensland competitive bid round.

The transaction is subject to regulatory approval and Medina's retention of a 0.5% royalty after the transaction.

Sentry is also negotiating to secure stakes in the Cooper Basin.