Nuenco is also building a large capacity pipeline to connect to a major grid owned by Shell and ExxonMobil to the west of its new field discovery – the SE Lost Hills project.

After joining the project in September last year with an initial 25% interest, Nuenco and its partners have drilled two successful discovery wells and four successful appraisal wells in an extension of the Lost Hills oilfields. Deeper gas and oil potential also exists in addition to these initial shallow gas targets, said managing director Anthony Kain.

More recently, the company sold its Australian assets to increase its stake in the Californian projects to 37.5%.

“Success on gas alone will lead to a significant re-rating of the NEO share price,” said Kain.

“If the new pipeline is filled, NEO could generate revenues in excess of its current market cap (A$22 million) in a year.”

Test wells have flowed up to 1.5 million cubic feet per day from the Jack Hamar 3-13, said Kain.

He said the company had chosen California for its maiden US project because it was a “major proven petroleum province with a high probability of exploration success.”

Kain also said the state’s extensive feeder infrastructure, meant low delivery costs. When combined with high gas prices and low drilling costs due to shallow targets, this offered strong profit margins. The area also had a “good fiscal regime and no sovereign risk,” he added.

In the presentation, Nuenco quoted Chevron material published in 2001 saying the Lost Hills Project, discovered last century, had only recovered 5% of its 2.6 million barrels of in place oil. The material predicted the field held enough reserves to last for another 100 years of production.

The Lost Hills Field is currently producing 31,000 barrels of oil per day.