The company, which floated on December 12, is a spin-off of all the conventional oil and gas assets belonging to coal seam methane producer Eastern Star Gas.

Orion said it has signed a letter of intent with rig operator Ensign Australia to secure Rig 20 to start the campaign with the Willaroo-1 exploration well in Surat-Bowen Basin permit PEL 6.

"Whilst we realise the inherent risk of drilling exploration wells, the large resource potential of the Willaroo Prospect and its proximity to existing oil and gas production makes a compelling case for the drilling of the well," managing director Barry Smith said.

"Satellite prospects in PEL 6 provide Orion with follow-up drilling opportunities that underpin the substantial petroleum potential of this area."

With multiple reservoir objectives, the well is targeting 40 million barrels of in-place oil resources in the Precipice Sandstone and 160 billion cubic feet of gas in-place in the Back Creek Formation.

Drilling of Willaroo-1 is due to start in late March and is expected to take two weeks to reach a total depth of 2000m.

The Willaroo prospect is located immediately north of proven natural gas reserves near Narrabri in NSW.

Following Willaroo-1, Orion's next well is planned to be Nyngynderry-1 in the Darling Basin in northwestern NSW, with drilling to begin using a higher capacity rig in late May or early June.

"Nyngynderry-1 will be the first comprehensive test of a valid hydrocarbon prospect in the Darling Basin and Orion is excited to be involved in this high potential well," Smith said.

Orion is paying for its drilling program with funds raised from the initial public offering and says it is also seeking farm-in partners to meet the costs of its future exploration program.

The company has the rights to seven licences in northern NSW.