An extensive joint technical review of the two areas using 3D seismic data has meant that a drilling program will commence in the second quarter of 2004 with a multi-drilling program at Forbes and a single program at Monterey. Both areas are in the San Joaquin basin in California with the prospect size at Forbes believed to be between 1 bcf to 100 bcf. No figures were available for the Monterey prospect.

Under the terms of the agreement, which covers both areas, OP Inc and Matris will have a 50-50 working share with NEG holding royalties to both sites. Each well is estimated to cost around US$350,000 to drill with Matris partially carrying OP Inc on the first four wells.

According to Orchard executive director Stephen Warrener, "The new agreements being finalised with NEG and Matris are part of our overall strategy to bring high impact projects into Orchard's portfolio. Both projects are clear winners given the technical data available - low finding costs, strong oil and gas prices, and high energy demand in the local markets."

"In addition, combining the excellent talents of all three companies and thoroughly examining each project before making long-term commitments, we have clearly enhanced our chances for success and, in this case, reduced our up front capital requirements as well," added Warrener.