Lancer-1, which is in PEL 115, is targeting recoverable oil reserves of up to 500,000 barrels of oil in the primary target Hutton formation.

VicPet said it expects to find similar volumes in the Birkhead, Murta, McKinlay and Patchwarra formations.

Defined by the Mirage 3D data set, the Lancer prospect is a four-way dip anticline with multiple reservoir objectives, and is south of the Mirage oil field's production facilities.

"Victoria Petroleum is pleased to have started drilling at Lancer-1 to test for the presence of possible oil in the multiple Jurassic target horizons in the Lancer prospect, oil productive in the Santos Narcoonowie oil field 4 kilometres to the northwest," VicPet managing director John Kopcheff said.

"Exploration success in the deeper Permian section, if oil, would prove up a new significant Permian oil resource in the southern part of the permit," he said.

He added that any producing oil discovery at Lancer could be tied into the Mirage oil field production facilities, about 5km to the south.

VicPet is operator and holds 40% in PEL 115, while partners Impress Energy and Roma Petroleum hold 40% and 30% respectively.