Through its fully owned subsidiary companies NGE owns 100% interests in six petroleum exploration licences in PNG's onshore Papuan Basin. All of these permits lie within a known oil and gas region with proven reserves and large hydrocarbon potential, Towner said.

The licences collectively cover about 52,810 square kilometres - giving NGE one of the country's largest acreage holdings.

The company's exploration inventory includes 59 prospects and leads plus six drillable prospects, and the company's 10 top leads are currently being evaluated for upgrading to drillable prospect status, according to Towner.

"We have an extensive portfolio and many targets that we can drill," he said.

"We also have about another 20 features of interest in our new licences in the south and in the highlands."

When NGE first entered PNG, it was surprised to find most of the exploration ground was still available.

"We hand-picked these assets because we consider them the most prospective, either by reason of previous work or by the fact that they are close to existing infrastructure, which is one of the most challenging issues in PNG for mobilising equipment," Towner said.

NGE targeted PNG as it believed that country's significant hydrocarbon potential would make its portfolio particularly attractive to large oil and gas entities seeking supply security in the energy deficient Asia-Pacific area.

The blocks lie in the Papuan Basin petroleum system where other explorers have discovered about one billion barrels of oil and condensate liquids and 15 trillion cubic feet of gas.

"The attraction of PNG is that at the moment it has about a 1 in 3 success rate, and is underexplored yet has some pretty big discoveries, particularly on the gas side," Towner said.

Asian markets are hungry for LNG and PNG looks set to have one or two large LNG projects and possibly one or two small ones as well. These projects will increase the demand for gas in PNG and hasten the development of infrastructure.

In addition, there are numerous oil seeps and other oil targets in the company's exploration portfolio.

Acreage to supply the oil and LNG industries is one of hottest investments in the region at the moment, according to Towner.

"Large acreage is hard to find and even when you do find it, negotiating a purchase is a very, very long and drawn-out process," he said.

"We are in the enviable position of being a 100% owner of very large acreage in a country that is very stable politically, relatively easy to negotiate deals with and with excellent petroleum fiscal terms, being the third-best in the region and the eighth-best in the world.

"PNG has been overlooked and we got in there at the right time. The prices have skyrocketed since."

NGE is pursuing two avenues in parallel - proving up the potential of its acreage and seeking farm-in partners.

"We are looking at bringing in some more expertise and increasing our work program," Towner said.

"At the moment we haven't got a huge expenditure budget and we're looking at satisfying our minimum work expenditure by the end of our current program to the end of 2009 when our wells are due.

"Our minimum expenditure is for two wells and we are looking to beef that up to around six wells with farm-in partners at this stage, if not, then with an equity injection if investors offer the right price."

While the company continues with its greenfield target programs, it will also be appraising a known discovery on the Tarim prospect in PPL 269, as well as an extensive oil seep trend it has identified in mapped structures in PPL 267.

"The oil seep trend is a new play type in PNG," Towner said.

"Our oil seep at Panakawa is flowing naturally to surface at five barrels a day. It is 35.26°API black oil."

To date NGE has spent about $17 million on exploration while acquiring and developing an extensive database of geological information across its licence areas and the Papuan Basin in general. It has analysed information available in open files from previous explorers plus new data acquired from an exploration program of field mapping, airborne gravity and magnetic surveys and seismic surveys.

"We've mapped 50 prospects and leads," Towner said.

"We have a big bank of drilling targets. Our licences also surround existing discoveries and developments. We are on trend in one of our licences and one other is surrounded by major discoveries, and we are very well positioned relative to infrastructure."

Most of NGE's exploration licences are located in western PNG and follow the Ok Tedi Fly River export route, an area with relatively benign terrain and good road and river transport facilities.

Infrastructure has been developed in the region over recent years to support western PNG's resources and forestry industries, and NGE believes that the existing infrastructure makes exploration and development costs lower than in other areas of PNG.