Essential said overnight analysis of wireline logs showed that the highly porous sandstones, which earlier recorded elevated background gas readings, were water-bearing.

A velocity survey has confirmed that the well has reached the reservoir sands of the Flaxman Formation, the deepest objective, and as a result the well will be plugged and abandoned, Essential said.

Last week, the company announced the well had failed to encounter oil shows in its primary target in the Pebble Formation. However on Monday, Essential said the well had confirmed the presence of an active hydrocarbon system in the Lower Sherbrook Formation.

Despite the non-commerciality of the well, Essential managing director John Remfry was upbeat about the results.

“Pritchard-1 is the first well to be drilled and logged to the Flaxman Formation in this part of the Portland Trough and demonstrates the company’s view that excellent reservoir and seal potential exist within the lower Sherbrook Group in PEP 151,” he said.

“The results also demonstrate that favourable sand shale ratios can be predicted from geologic evidence and seismic interpretation.”

Remfry said the major reservoir units identified in the Pritchard well were distributed throughout PEP 151, and the adjacent permits, PEP 150 onshore and VIC/P46 offshore, and would subsequently be an ongoing focus for the company.

“Reservoir units identified in the Pebble Point and top Paaratte have also exceeded expectations demonstrating the potential in this unit,” he said.

“This is particularly significant for PEP 150 where the depth to the Pebble Point is optimal.”

He added that the company was well advanced in its application to acquire more seismic in the region and viewed Pritchard-1 as the beginning of an intensive exploration effort to prove an exciting new play.

The Pritchard-1 joint venture comprises Essential Petroleum (50%), Bass Strait Oil Company (25%) and Inland Oil Resources (25%).