Spudded on February 23, the Kilwani North-1 well was drilled to a total depth of 2030m from the Songo-Songo Island offshore Tanzania using the Caroil-6 land rig, which also drilled the earlier unsuccessful Kiliwani-1 well.

Key told the market yesterday that the well had encountered the gas column in Neocomian sandstones, the same producing reservoir as in the nearby Songo Songo gas field.

Electric logging and formation pressures taken within the well have confirmed the presence of gas, the company said.

Key said the well would be immediately completed as a future gas producer, as it was located less than 2km away from the producing Songo Songo field.

Managing director Ken Russell said the result had exceeded the JV's pre-drill expectations.

"The fact that the well can be completed as a production well is very significant for a young company such as Key Petroleum," he said.

"This well adds to our understanding of the area and provides us with substantial technical information to assist us in our investigations of the potential of the Nyuni block."

Russell said the well had also confirmed the presence of potential sandstone reservoirs in the Tertiary section, which may be a target in future wells.

"Further appraisal drilling will be required to confirm the actual size of the Kiliwani North structure but Key Petroleum believes that this success enhances the prospectivity of the east coast of Tanzania," he said.

"A number of companies, large and small, have begun to target this area in recent years.

"Key Petroleum is looking forward to further developing its presence in this area."

Operator of the two-well program is Ndovu Resources, with a 39% stake, while Key holds a 20% stake and Bounty has 6%.