The company said early drill work suggests the target organic rich sediments could stretch as much as 40km in length and are at shallow depths of 7-15m.

About 22 of the 33 drillholes encountered 7-30m thicknesses of black organic mudstones, and eight holes along a 5.5km traverse in the northern portion of the target area encountered black organic mudstones between 20-30m thick, the company added.

Executive chairman Greg Solomon said the initial test results from a hole that returned the equivalent of about 118 litres of hydrocarbons per tonne, are encouraging, but its still early days.

He said an analytical process known as pyrolysis gas chromatography had been used to test the first sample and indicated good potential for oil generation.

Solomon also said the company would begin an immediate follow-up work program involving sampling and analysis of the existing holes, and further broad-spaced drilling to determine the distribution and thickness of the organic rich mudstones.

The company plans to contract an international expert with experience in oil shale deposits to review existing data and advise on future testwork.