Under the agreement, the joint venture is expected to drill one exploration well in December with Orchard Petroleum Inc earning an option to participate with NEG in future exploration wells on the Bakersfield Arch.

"Bakersfield Arch, together with Orchard's recently announced gas project adds two high impact projects with moderate risk potential to Orchard's portfolio of assets," said Orchard executive director, Stephen Warrener.

"Orchard is now in a position to drill two wells - Theta and El Quartal - before the end of the year with Ming to follow in January 2003.

"Bakersfield Arch has produced several billion barrels of oil to date. The joint venture's exploration area is covered with an existing 3D seismic data set and a significant number of prospects have already been identified on the data set with prospect sizes ranging from one to 50+ million barrels of oil."

The Santiago prospect is now expected to be drilled in early 2003.