The two companies are already partners in part of PEL 106 - the Smegsy Block - and have just signed a gas sales deal to commercialise that field's reserves.

Under their latest farmin agreement, Enterprise Energy will fund 25% of drilling costs to earn a 12.5% interest in any subsequent commercial discovery.

The first two wells, Rossco-1 and Udacha-1, will be spudded between late October and early December this year.

Great Artesian said locations of the remaining two wells would be finalised when the outcomes of the initial wells were assessed.

The agreement is conditional upon Enterprise successfully completing a capital rasing with Bell Potter Securities.

The agreement also allows Enterprise to delay its commitment to drill in ATP 539P within the designated timeframe, after the company was unable to locate a suitable drilling rig. The revised terms would see the company earn up to a 50% participating interest in this permit subjected to its 50% or 100% funding of the Planet Downs well, scheduled to be spudded in 2006.

Meanwhile, Great Artesian Oil & Gas and Enterprise Energy have signed their first gas sales agreement with South Australian Cooper Basin Producers.

Under the agreement, SACBP can purchase gas, LPG and condensate on a flexible production basis for up to three years, said Enterprise Energy managing director Warren Leslie.

The agreement covers imminent production from the Cooper Basin gas discovery well, Smegsy-1, for which contracts will be called next month to build a four kilometre pipeline link connecting the well to the Basin’s main gas processing grid.

“This is the first contract of this type entered into by the SACBP with a third party and it demonstrates that junior explorers, like Enterprise Energy, can discover and commercialise gas accumulations in an area where production has historically been exclusively controlled,” said Leslie.

“It provides a negotiating starting point which we can employ to commercialise any further discoveries.”

Smegsy-1 is a single well-head gas field located in PEL 106, 45 km west of Moomba.

Discovered in July last year, Smegsy-1 flowed up to 8 million cubic feet of gas per day from reservoirs within the Patchawarra formation. Initial production from the field will be made on a test basis to optimise flow rates and first expected revenue from maiden production is expected by the end of this year.

Interests in Smegsy are Great Artesian Oil & Gas (75%) and Enterprise Energy (25%).