The company estimates its onshore and offshore tenements contain more than 5 trillion cubic feet of recoverable gas and over 2 billion barrels of recoverable oil.

In addition, it has “significant exposure” to the Discovery Bay High play fairway, which Essential said was gaining recognition for having the potential to be the next major hydrocarbon province in southern Australia.

“The analysis of the petroleum systems and play fairways associated with the Discovery Bay High has led to the identification of several major prospects,” Essential managing director John Remfry said.

“A discovery in any one of these high risk and high reward prospects would be a company maker.”

Proceeds from the capital raising will be used to help fund the drilling of up to three exploration wells in the first quarter of 2008 in the recently awarded permit PEP 168.

Additionally the money will help: fund a workover and extended production test of the Killanoola oil discovery in PRL13; pay to secure seismic vessels for VIC-P50; undertake seismic surveys in PEP 150 and PEP 151; and process 3D seismic data and other pre-drill costs in VIC-P46.

Essential will raise the $10 million via the placement of new ordinary shares, in a non-renounceable rights issue to existing shareholders and a public offer.