In a statement, Otto said the Koyustu-1 well, located in the Edirne Licence of the Thrace Basin, would be drilled to a total depth of 650m.

“We will endeavour to commercialise any discovery as rapidly as possible to generate positive cash flow which is a key target for Otto in 2007,” the company said.

An independent expert has estimated the Koyustu prospect, which neighbours Otto's Bati Umur-1 gas discovery, contains up to 3.1 billion cubic feet of gas if 10m of pay is encountered in the Osmancik Formation at about 500m depth.

But Otto believes that just a 1-1.5bcf find would be commercial in this area, given the favourable gas price of over $US6.50/mcf ($A8.32/mcf).

Wireline logs indicated Bati Umur-1 had encountered several zones of potential gas pay, but the well was not flow tested due to severe winter weather at the time of completion.

Otto said both the Bati Umur and Koyustu prospects have positive geochemical anomalies at surface, which indicate mini gas seepage from the underlying structure, as well as amplitude anomalies on seismic coinciding with interpreted reservoir intervals.

Once operations at Koyustu-1 are complete, the rig will be moved to flow test Bati Umur-1. If both wells prove worthy of production, the operator will undertake a feasibility study to identify the best way to commercialise these fields.

The joint venture is currently completing the interpretation of the final lines recorded in the 185km seismic survey to select a second prospect for drilling, following the Koyustu/Bati Umur program.

Otto, which holds a 65% interest in the licence with Incremental (15%), described the early interpretation results as encouraging.