Although the oil show at 1,895m is considered to be uneconomic because of the small (less than one metre) sand interval the intersection provides evidence of the movement of oil through the Eucalyptus Prospect. Target horizons in the Eucalyptus-1 well are Triassic sandstones.

Some encouragement for the oil bearing potential of the Eucalyptus Prospect is provided by the combined oil flow rates of 3,210bopd reported from the Triassic sandstones of the Santos James Oil Field discovery well, James-1, 14km to the west of the Eucalyptus-1 well location.

The Eucalyptus-1 well is testing the seismically defined Eucalyptus structure, which has been interpreted to have the potential to contain recoverable reserves ranging from a mean of 4 million barrels of up to 9 million barrels of oil, if oil is present.

With the current exploration success rate of 45% in the South Australian Cooper/Eromanga Basin for the ex-Santos acreage, highlighted by the most recent Cooper Energy NL/Stuart Petroleum Worrior-1 oil discovery, further success may be forthcoming.

Eucalyptus-1 partner Victoria Petroleum is now the largest gross holder of exploration acreage over the South Australian/Queensland portion of the Cooper/Eromanga Basin.

The company's South Australian Cooper Basin program will become an immediate core area of focus for Victoria Petroleum with up to 11 wells to be drilled over the next 3 years, with the next drilling following Eucalyptus-1 being the 3 "back to back" wells planned for PEL's 104 and adjoining PEL 111 in March 2004.

Victoria Petroleum is earning a 10% interest in Eucalyptus-1 and PEL 88, with Cooper Energy acting as operator for PEL 88 and the drilling of the Eucalyptus-1.