Aurora said the gas pay had similar log characteristics to the pay zone encountered in the discovery well.

Dolores-1 was halted in pay about 180ft above the gas-water contact in the discovery well to reduce the risk of fracture stimulation penetrating down to water and reducing production, the company said.

Yesterday morning, the operator Texas Crude Energy was preparing to set a retrievable packer at a depth of 13,320ft near the base of the seven-inch casing.

After the temporary packer is set, the rig will be released and a completion rig mobilised to run tubing and conduct open-hole production tests. Following this, the reservoir will be fracture stimulated down casing and tested again. If satisfactory, Aurora said the well would be hooked up to the sales line via the gas treatment plant.

Dolores-1 was the first of five initial development wells planned on the West Black Lake gas discovery. Dolores-1 is located about 4000ft northeast of the discovery well, which intersected a 300ft gas-bearing limestone reservoir interval at a depth of about 13,670ft.

Aurora will earn a 20.15% working interest and 15.1125% net revenue interest in the initial five wells by funding 40.3% of each well until individual well payback.

According to operator estimates, the first five wells are targeting about 30 billion cubic feet of potential recoverable reserves.

Once the development drilling program is complete, Aurora has the option to pay $US1 million ($A1.3 million) to acquire a 10% working interest in the remainder of the project, which has 600Bcf of gas potential. It would participate on a 1:1 basis thereafter, while maintaining a 20.15% interest in the initial five wells.

Executive chairman Jon Stewart said West Black Lake had the potential to be a significant and long-term producing asset.

“The remainder of 2006 is set to be a very active year for Aurora with two development wells now underway, one here at West Black Lake (gas) and the other at North Belridge (oil) in California,” he said.

“Further development wells are planned for both projects as well as at Flour Bluff and a rig to drill our major exploration well at Sugarloaf is expected to be onsite late July or early August.”