Under the agreement Mosaic will immediately case the Canberra 1A well and, as soon as possible, conduct a cased test. Mosaic will earn 50% of any oil recovered from the Canberra 1A well and 10% overall interest in the Canberra prospect.

The prospect is stratigraphic – a type of trap where Mosaic has acquired “considerable expertise” in Queensland, according to Mosaic CEO Dr Howard Brady.

“There is a chance that this well missed some oil in the Patchawarra Formation and the possibilities are open for horizontal drilling where we have expertise,” Brady said.

“This test is high risk. But it gives us a low cost entry into what we see as an exciting prospect with high upside potential. We will operate the test but then the operatorship will stay with Victoria Petroleum. Our main focus remains in Queensland.”

Drilling at Canberra-1A has been completed with some oil shows reported. The Canberra prospect (PEL 115) – located about 80km southeast of Moomba – covers about 12 square kilometres. It has the potential to contain 10 million barrels of recoverable oil, according to Victoria Petroleum managing director John Kopcheff.

“The Canberra Prospect is a pure stratigraphic trap, which by definition is high risk, but where successful this type of prospect can hold substantial oil reserves,” Kopcheff said.

“Victoria Petroleum is pleased to see Mosaic Oil join in the testing program of the oil shows observed in the Permian sands of Canberra-1A, given Mosaic Oil’s recent success in evaluating and bring into production similar Permian sand reservoirs in the Surat Basin.”

Following the completion of the cased hole testing program by Mosaic Oil, interests in the Canberra prospect will be: Victoria Petroleum N.L (operator) 36%, Roma Petroleum N.L. 18%, Impress Ventures Ltd 13.5%, Entek Energy Ltd 11.25% and Tacnas Pty Ltd 11.25% and Mosaic Oil 10%.