BHPB told the market today that its Cascade-1, which commenced drilling in January, encountered what it described as an "encouraging" hydrocarbon column in the Cascade prospect, which lies about 60km south-south west of the Mad Dog and Atlantis oil and gas discoveries.

BHPB told the Australian Stock Exchange the significance of the well will be assessed following further evaluation of drilling and resource data. It added further drilling will be needed to determine the size of the find.

BHPB has a half stake and is the operator of Cascade while Petrobas and Devon Energy Corporation each hold a 25% interest in the prospect.

Last month BHPB announced it would spend up to $US355 million developing the Atlantis field, which is due to come on stream in 2005 at a rate of 50,000 barrels of oil per day. The company also planned to drill up to 10 exploration wells in the Gulf of Mexico over the next two years.