The Victorian-based company today said the first operation in the program is the re-entry and sidetrack of Megascolides-1, designed to evaluate the oil zone in the Rintouls Creek Sandstone.

It said the second well will test the crest of the Megascolides structure and the third well, Raniformis-1, will test another structure 5km to the west.

Megascolides is named after a threatened species of giant Gippsland earthworm, growing up to a metre long. Raniformis is another vulnerable species; it also known as the Southern Bell Frog.

Karoon said it has contracted drilling and development service Upstream Petroleum to assist with the program and has signed a drilling contract with Century Drilling for the project.

The company said in the 2004 exploration well, Megascolides-1, it encountered a 10m gross oil-bearing zone.

“Success in Megascolides-1, the first deep well in the Narracan Trough section of the Gippsland Basin would open up a new oil producing fairway in the onshore Gippsland Basin,” Karoon said.

“The previous Megascolides-1 well uncovered an oil zone which was not flow tested due to a washed out hole and the lack of availability of suitable testing equipment.”

The well was suspended for re-entry and a 250km 2D seismic program was run to map this new oil prospective interval, it said.

Karoon has a 100% registered interest in PEP162, covering an area of 2950 sq.km, in the western onshore Gippsland Basin.

The company said the permits are 100km east of Melbourne and are close to existing oil and gas pipelines and infrastructure moving oil and gas from Bass Strait to the Melbourne area, making any discovery commercial at small quantities.