Pooled development fund MEC Resources told the Australian Stock Exchange yesterday it would provide the initial funding so that investee Asset Energy could team-up with Bounty Oil & Gas to drill the Biggus exploration well in oil and gas permit PEP 11, offshore Sydney.

Under the farm-in, Asset will earn an initial 25% interest in PEP 11 by paying $US498,000 ($A657,700) towards purchasing 1500km of seismic and related data on the permit from Norwegian company Fugro-Geoteam. Asset can also earn a further 60% for drilling the exploration well.

Bounty Oil & Gas managing director Tom Fontaine was bullish about the development.

“With this farm-in, Bounty will be free-carried through the drilling of what will probably be one of the most high profile and exciting wells to be drilled in Australia in recent time,” he said.

“The Biggus prospect has the potential to contain about 1.2 Tcf of recoverable gas, directly adjacent to one of the largest energy markets in the country.”

MEC director Charles Murphy described the project as “exciting and ambitious.”

“Asset Energy has started well by negotiating with Fugro-Geoteam to offset $US800,000 in upfront seismic data-related costs until after an appraisal well is drilled,” he said.

“PEP 11 covers a large, totally unexplored basin with unique proximity to existing infrastructure and Australia’s largest potential gas market.”

The permit has one large, well-defined gas prospect and several additional leads. Six other large leads, each with significant potential gas recoveries have also been identified elsewhere in the permit.

MEC said offshore Sydney Basin is a “significant” exploration area, with large-scale structuring and potentially multi-trillion cubic feet gas and condensate-charged Triassic and Permian reservoirs.

The company said its board would continue to assist Asset Energy in negotiations with leading international oil and gas companies for the provision of a rig, drilling services and partnership opportunities.

Asset Energy or its partner has the capacity to become operator of the project through the drilling program, it said.

Under the agreement, drilling is required to occur by the third quarter of 2007.

MEC said it is also in discussions with potential Australian and international partners to participate in the drilling program.

Covering about 5000 square kilometres, the offshore Sydney Basin extends from southern coastal New South Wales to Central Queensland.