As previously announced, Matris is raising up to US$8 million to take a third stake in the Bakersfield Arch Play (BAP) and the San Joaquin Valley Play (SJVP), with Orchard's other US partner, the Nahabedian group.

The effect of this deal will be to provide Orchard with a significant stake in a well-capitalised company focused on developing Monterey oil - without the funding obligations.

Orchard and Matris will jointly control the joint venture created to develop these proven oil producing zones on more than 7,000 acres where successful drilling programs have been conducted on nearby leases.

This includes the Lost Hills area where, north of the JV acreage, Ivanhoe Energy, Inc has announced it will test the Monterey with horizontal drilling. The Monterey Shale is an oil saturated source rock that is common throughout the Southern San Joaquin Basin and has a strong track record of producing high gravity oil from a large resource base.

Shell, Exxon, Chevron/Texaco and other successful oil companies have been active developers of the oil rich Monterey Shale in the San Joaquin Basin over many years. OP Inc, Matris and NEG have been successful in gaining access to areas on trend with current production.

"Orchard now has a good mixture of oil as well as gas exploration opportunities in its Californian acreage which it will begin testing in the coming months," said Orchard managing director, Stephen Warrener.