Under the deal, Legend will initially drill five wells in the Terrebonne and Vermillion Parishes in Louisiana in which Alto will earn-in between a 7.5% and 10% stake in the wells.

Alto said its share of the program is about $1.3 million with the potential to generate 3 billion cubic feet net reserves from the Miocene-age Formation.

“The drilling program is an exciting commencement to a new focus for the company in the conventional oil and gas projects in the Gulf coast and there are significant new opportunities we will be seeking to capture in the short term,” managing director Jim Trimble said.

Alto said the prospects are based on 3D seismic and absorption interpretations and the wells are in a mature area with ready access to pipeline infrastructure ensuring early cash flow.

The company said Legend has “extensive experience” in onshore Gulf coast exploration and has been successful in identifying targets in southern Louisiana’s mature producing areas.

It has also refined its exploration techniques with new software and a strong database, Alto said.

The first well is scheduled to be drilled early next month, with the program expected to be finished by January next year.