The company today said drilling of the well would be funded from current earnings. Carpathian’s operating revenue in 2006 from gas net of direct production costs is forecast to be $1.9 million.

Mo-1 Skotnice lies between the depleted Kremlin gas field to the north and the Priobor-Klokocov field to the south, which reportedly produced 23 billion cubic feet of gas between 1945 and 1984.

Carpathian said the Skotnice prospect has been defined by a detailed study of some 28 coal exploration holes, 0.5-1km apart. The targets are Tertiary sandstones in a potential trap at a depth of about 400m and sandstones in the Carboniferous section not far beneath.

The company said it is very close to and updip of a coal exploration hole from which a gas flow of about 2.8 million cubic feet per day was recorded in 1961, some two years after it had been drilled.

“While this open flow rate might not be sustainable, an economic analysis indicates that given the strong gas price and the proximity of the gas transmission network, sustainable flow rates of as little as 10% of this figure could be economically attractive,” Carpathian said.

The company is listed on both the Australian and London stock exchanges.