VicPet informed the market it has entered into a farmin agreement with a private company, which will see the junior explorer having a significant free carried interest through the drilling of the North Giligulgul, Rookwood South and Don Juan Prospects commencing late March and going through to September.

VicPet said the three prospects are all to be drilled in the central and western sections of the Queensland's Surat Basin.

"The North Giligulgul Prospect in ATP 574P has the potential to contain recoverable oil reserves of up to 16 million barrels of oil, if oil is present," the company told the stock exchange.

"The Rookwood South prospect in ATP 608P has the potential to contain up to 12 million barrels of recoverable oil, if oil is present. The Don Juan Prospect in ATP 593P has the potential to contain up to 6 million barrels of oil, if oil is present."

Under the terms of the farmin agreement VicPet will have a 30% free carried interest through the drilling of North Giligulgul-1, a 29.69% free carried interest through the drilling of Rookwood South-1 and a 24% free carried interest through the drilling of Don Juan-1.

Under the terms of the agreement, the private party farminee has exercised its option to proceed with the drilling program with a payment of a $60,000 option fee to VicPet on 20 January, which will be used to fund the pre-drilling work of the first three prospects.

VicPet added the agreement also provides to the farminee additional drilling options which if exercised will provide VicPet with additional significant free carried drilling through a further two wells in separate portions of permits ATP 574P and ATP 608P. These two option farmin wells are to be drilled by 31 December, VicPet said.