Today’s ASX announcement builds on their recent farmin with Nido Petroleum regarding the North Sea.

Norwest told the ASX that it had signed a Heads of Agreement (HOE) and Area of Mutual Interest (AMI) with US-based Golden Triangle Energy Inc (GTE) to jointly develop acreage in the Appalachians.

Norwest will spend US$1 million on drilling and further acreage leasing costs to earn a 70% interest in the joint venture which currently owns 7150 leased acres with options over further areas and additional targets identified.

The Appalachian Basin, which boasts similar geology and production potential to the hugely successful Barnett Shale area in Texas, is one of the world's oldest hydrocarbon provinces and since 1859 has produced over three billion barrels of oil and 40 trillion cubic feet of gas.

Norwest chief executive Joe Salomon said the US project achieved one of the company's goals, namely to secure access to the prolific and highly profitable US gas industry.

"The Appalachian projects are within a proven area where the combination of low project risk, low entry costs, high gas prices and increasing natural gas demand in the US, the biggest market in the world, provides a huge leverage position

“It gives Norwest the potential to add significant value to the company through long term cash flows and substantial growth opportunities. This is a very exciting opportunity for Norwest and is part of our overall strategy to build a portfolio of quality acreage in Australia and internationally that provides a good balance of low to moderate risk against moderate to high return for shareholders."

Salomon, who has also just been appointed a director of Norwest, said the Appalachian Devonian shales currently produced 120 bcf of gas per year. The Norwest-GTE project areas were adjacent to the Big Sandy gas field, which was discovered in 1890 and still producing with an ultimate expected recovery of 3 tcf of gas.

Salomon said the risk of a dry hole was very low and, though expected initial production rates per well were modest – in the range of 300-700,000 cubic feet per day – wells typically produced for a minimum of 15 years with low decline rates. They were extremely economic at current and forecast gas prices.

“Hundreds of wells can be drilled on this acreage to establish a significant project," he concluded.