The wildcat drilling program has been designed to be low-cost and to help derisk its interests in the South American nation, following on from seismic and corehole drilling.

Petrel's managing director David Casey said Petrel (51%) and partner Schuepbach Energy (49%) had made significant process in working with potential partners over the past year, so the 2-4 well program is designed to address any remaining concerns raised by potential farminees about the risks inherent in the frontier project.

Casey said the time was ideal to take advantage of cut-rate drilling costs, and while Petrel expects Schuepbach will fund its share of drilling costs, it is also open to acquiring more of the asset by funding a greater share of the costs of a scaled back two well program.

The targets have been selected to derisk the source rock quality and extent in areas where Petrel's coreholes, drilled some 30km apart, have proven reservoir quality sands with Darcy permeability.

Work by Petrel has indicated an unrisked gross prospective resource in the Salto and Piedra Sola concessions of up to 910 million barrels and 3.1 trillion cubic feet, or 464MMbbl and 1.58Bcf net to Petrel's 51% interest.

The first program covers the Panizza-1 (J structure) well and the Salto shallow AVO well, which Petrel is hopeful it will have the capacity to fund itself if the privately owned Schuepbach fails to meet its cash calls.

If Schuepbach comes to the party the JV will spend $4.7 million adding in the contingent Permian Cerro Padill- 1 (21MMBbl OIP) and Devonian Archar-1 (460MMbbl OIP) wells.

"Furthermore, while not the primary objective, we are also very fortunate that three of the four wells being drilled are also targeting structures with potential for oil and gas trapped in either the same sequence or up-dip of oil shows and/or oil weeping from core samples, while the fourth well is targeting a very material AVO gas anomaly," Casey said.

Success could lead to early production in the best case scenario.

The drilling will be conducted with a new build rig that is being imported from the US. After the drilling the rig is expected to stay in the country.

Petrel is working with Patersons Securities to raise the $5.3 million via a renounceable rights issue offering one share for evert share owned at an issue price of $0.01 per share.

There will also be one free-attaching option for every two rights issue shares taken up.