Livingstone said it has agreed to pay California-based Nahabedian Exploration Group 60% of the well costs to earn a 40% interest in the Tennis well.

Meanwhile, Pacrim will earn a 20% interest by paying 30% of the costs. Nahabedian will keep the remaining 40% and is the operator.

The estimated total dry hole cost of the well is $US960,000 ($A1.25 million). If successful, total completion costs are expected to be $425,000.

The Tennis prospect was developed on 2D seismic data, with the well location chosen to test multiple targets, according to Livingstone.

Each target zone, which has 1-8 billion cubic feet of potential, has seismic amplitude and amplitude variations with offset (AVO) anomalies associated with it, indicating an excellent chance of finding gas in a Forbes reservoir, the Perth-based company said.

“This well represents a larger target than most within our existing Forbes joint venture area, although at somewhat higher risk,” Livingstone executive director Craig Burton said.

“The multiple zones, the potential size of the zones, and the potential for follow-up wells means Livingstone is highly leveraged in the event of a successful Tennis well.”

The Tennis well is located about 8km south of Livingstone’s existing Forbes JV project area, and is a similar-style target.

Having already contracted a drill rig, Nahabedian proposes to spud the well in about two weeks time.

The well is expected to take 15 days to reach a total depth of 9500 feet (2895m), with the first Forbes target is at 7900 feet. The nearest gas pipeline is only 2km from the drilling pad.

If the Tennis well is successfully completed, Livingstone will earn an additional 53.33% working interest in about 5788 acres surrounding the Tennis drill site.

This would enable the Tennis participants to drill several follow-up and extensional targets in the area. The additional acreage is also covered by 2D seismic data with numerous amplitude and AVO anomalies, indicating excellent prospectivity, Livingstone said.

In partnership with Orchard Petroleum, Livingstone has a six-well drilling program planned to start this July at the Forbes Gas project.

Pacrim owns more than 50,000 acres of leases in the Northern Sacramento Basin.