Under the agreement, Dallas-based Ascent Energy will earn a 42% interest in both the project and the area of mutual interest, Norwest chief executive Joe Salomon said.

Ascent had already done several studies related to the project and its aims and approaches were aligned with Norwest’s, he said.

Norwest and Alto had been seeking a good operating company after they had secured a large acreage of leases over the target area, Salomon said

Ascent will fund 100% of the drilling cost and the completion of three wells to the base of the prospective shale section, or to 1,280 metres, and by paying its 42% share of previous leasing costs over 8,000 acres.

The partners currently have about 30,000 acres of leased land in the project area.

When these farmin terms are met, Ascent will obtain a 42% interest, leaving Norwest and Golden Triangle with 29% each, Salomon said.

Continued acreage leasing of more than 75,000 acres would result in Ascent’s interest increasing to 50%.

The three wells, costing about $US1 million, are planned to be finished by the end of October. Ascent will obtain specified data in one of the bores and the joint venture members will also fund the tests to decide the most effective drilling, fracing and well completion techniques for the wells.

The partners will also proportionally share the costs of equipping the wells for production.

Norwest’s interests in the project will be held through its wholly-owned subsidiary NWE (Appalachians) LLC. Alto’s will be held through its US subsidiary, Golden Triangle.

Alto is due to list on the ASX in coming months.

Norwest’s other Appalachian projects include a recently completed five-well program in Tennessee (Norwest 37.5%) where the wells are waiting for fracing and testing, and a Kentucky project (Norwest 70%) at which the wells may be drilled within a month.