Last month Beach moved from 22% ownership in the block to 94.75% after purchasing Oil Company of Australia's 72.75% interest for $16.5 million.

As part of the transaction with Santos, Beach will also acquire, subject to pre-emptive rights, a further 5.8% interest in PL 184 (which covers the Thylungra gas/condensate discovery) and exploration permit ATP 269P.

"Combined with Beach's existing petroleum production and exploration areas, total ownership of the Bodalla Block oilfields is an important step towards our goal of becoming a significant presence in the Australian oil and gas industry," said Beach Petroleum chief executive, Mr Reg Nelson. Beach's entitlement to Santos' production share from the Bodalla block is effective from January 1, 2002

Mr Nelson said the short term focus was to develop its promising onshore oil and gas prospects. These included the current four well exploration drilling program for gas in the Victorian section of the Otway Basin due for completion by the end of February.

Beach will begin its exploration program in South Australia's Cooper Basin next month in a joint venture drilling of the Acrasia-1 oil well with Stuart Petroleum NL. Beach has four other tenement blocks in the Cooper Basin and has scheduled a three well exploration program for the middle of the year.

The search for gas in Victoria's onshore Otway Basin began with the spudding of the Buttress-1 exploration well in early January. Beach Petroleum has a 10% interest in the well, while Santos has 90% and is the operator. The exploration well is aimed at building on gas discoveries made in the area last year by the two companies.

Subject to pipeline construction schedules, Beach Petroleum expects the first deliveries from the 2001 discoveries to flow into Melbourne's gas markets within the current March quarter.