The company, which holds 100% interest in the permit, conducted a drill stem test with no fluid to surface and recovered gassy mud and water in the test tool sample chamber.

Company secretary Chris Blamey said the Showgrounds Sandstone was interpreted to be on the edge of a significant structural closure at Narrene-1A.

“The Showgrounds Sandstone was also intersected with good gas shows during the drilling of Overston 1 but was not tested,” Blamey said.

“Therefore the strong hydrocarbon indications at this level augers well for the up-dip potential of the Showgrounds Sandstone closure.”

Drilling is now planned to a depth of about 3,050 metres, in which targets, including the primary objective Tinowon Sandstone at 2750 metres, will be evaluated along the way. Sunshine expects to reach the Tinowon Sandstone between late this week and early next week.

Narrene-1A, about 6km southwest of the Overston Gas Field, will address a potential 91 billon cubic feet of conventional gas-in-place.