The parties will soon conclude a fully termed farm-out agreement, said Nexus.

Nexus also intends to farm-out a further 25% interest of the Gippsland Basin permit to a third party, leaving the company with a 50% participating interest and none of the forecasted well costs.

Designed to test an anticlinal structure at the Top Latrobe and Intra Latrobe levels, Galloway-1 will be drilled as a deviated well, using an onshore land rig to intersect the offshore target.

Seismic data suggested the structure was oil-bearing and contained a recoverable volume of about 28 million barrels.

Nexus managing director, Ian Tchacos, said reservoirs in this region were historically highly productive and only a single well would probably be needed to extract the entire reserve.

If successful, the Angus target would be drilled with a land rig as a follow-up prospect to Galloway-1. This target is predicted to have a recoverable volume of up to10 million barrels.