Gas flows are being tested with perforation and fracture stimulating at the OL Hill A23-12 well in Hughes County, Oklahoma after gas was found in two primary target formations.

“We are pleased with the progress on our first well in this prospect,” Sundance Energy’s managing director Jayme McCoy said.

“The formations produced the kinds of gas shows we expected, and we learned a great deal in terms of our drilling practices, all of which will be quite valuable as we drill the next five to seven wells in this prospect’s 2005 drilling program.”

A23-12 is the first well in the company’s six to eight-well Ashland Prospect drilling program.

McCoy said “good” gas shows had been encountered in the Caney and Woodford Shales.

Drilling logs indicated the Caney Shale is 54.86 metres thick, while the Woodford Shale logged in at 46.63m.

A23-12 reached 1842m in the 23 days after it was spudded.

The ASX-listed company also said it had started negotiating gas sales arrangements and constructing a pipeline to take production from A23-12 and the other planned wells.

After running and cementing production casing at A23-12, the casing will be perforated and fracced.

This will take about four weeks and Sundance anticipates initial production will come on line in early August.

A second well, Price A22-7-10, is expected to be spudded later this week, the company said.

Sundance listed less than two months ago and this was its second well. The first hole, a high-risk Cooper Basin well called Kitson-1, was a duster.

A23-12 interests: Deka Exploration (operator) 5.8%, Sundance Energy 55%, Mack Energy 20%, T.H. McElvain Oil & Gas 7.8% and others 11.4%.