“This is the fifth exploration well to be drilled in the 3D seismic grid, the fifth to establish the presence of hydrocarbons and the fourth to be productive,” said managing director Eric Streitberg.

“It will be necessary to wait for the results of further production tests for estimates of the potential long term flow rates and reserves volume. But early indications are that the field is of commercial size, and we will be moving to develop it as soon as practicable.”

Streitberg said it was very encouraging to find oil at Centella, as the location was interpreted to be in the gas prone portion of the licence.

“This discovery has the potential to now open up additional targets in the area that may also contain oil,” he said.

The well has been perforated over a 13.3 metre interval at the top of the 18.5 metre oil column in the Dongara Sandstone reservoir and an initial clean-up flow has been undertaken. The clean-up flow period resulted in an oil flow into the well with approximately 1500m of oil in the tubing.

There was no associated gas and the oil gravity was estimated at 39 deg API. The lack of gas and the regional reservoir pressure reduction means the well is unlikely to flow to surface but it should be able to be produced on pump.

Arc said the wellhead pressure was continuing to build. More wireline work will be undertaken shortly to establish any change in fluid level and to take a larger oil sample for more detailed analysis.

Further tests are now planned over the next few weeks to establish the well’s production potential and to aid in the estimation of reserves.

The Centella-1 well is located 6.5 kilometres east of the Hovea Production Facility and 1.3 kilometres northwest of the Mondarra Gasfield.

Participants in L1 and L2 (excluding the Dongara, Mondarra and Yardarino fields) are ARC Energy Limited 50% (Operator) and Origin Energy

Developments Pty Ltd - 50% (a wholly owned subsidiary of Origin Energy Limited).