The drilling activity, which involves three wells in the Otway Basin and nine in the Taranaki Basin, will start in the third quarter of this year and run through to the end of 2007, AWE said.

AWE managing director Bruce Phillips said this would be the largest drilling campaign in the company’s history and constituted a significant investment in its future growth.

“The environment for offshore drilling rigs has changed dramatically recently and long commitment times are now becoming a reality in this industry segment,” Phillips said.

“The exploration program will also retain some added flexibility to allow for additional drilling in the committed time frame. This will allow some limited appraisal activity in the event of a discovery.”

Bruce said AWE would retain a high level of equity in the program, following the recent acquisition of New Zealand Overseas Petroleum, which included an increased exposure to the Tui Area oil development and the nearby exploration prospects. AWE will operate eight of the 12 wells in this near continuous drilling program.

The company's three Otway wells - Henry-2, Netherby-1 and Pecten East-1 - are part of of the Santos-operated Casino gas project.

Before this activity takes place, AWE will drill two to three exploration wells in the Perth Basin, Western Australia, in the next quarter.