The company yesterday said it encountered abnormally high-pressure formations at the first well in St Gabriel 1 before reaching its total depth of 10,800 feet (3291.8m).

Austin said the high-pressure gradients made it “unfeasible and imprudent” to continue drilling and it was unable to reach the targeted “W” sands.

“Obviously we are disappointed with this outcome, as we had very strong geological and 3D seismic evidence supporting the project and were encouraged by three gas shows during drilling,” the company said.

“The company remains committed to exploring in new locations within this same field, which has been a prolific producer over a long period of time.”

To date, the field has yielded 83 billion cubic feet of gas and 35 million barrels of oil.

Austin said it is now moving forward on its St Gabriel II project and is re-entering a well Shell Oil previously drilled and produced there.

“Shell produced the oil, but left the gas reserves at a time when the gas market in the United States had not developed,” it said.

The “W” sand in this well was subject to a limited entry drill stem test flowing gas at a rate of 5.8 million cubic feet per day with a flowing pressure of 4800psi with no water at a depth of 11,150ft.

Austin said site work would begin in the middle of this month, while well work is due to begin in early April.

Venus Investments will own a 20% working interest in the well after payout.

Meanwhile, in the company’s Australian operations at the PEL 73 prospect in Yorketown, South Australia, drilling has progressed to 832m after the surface casing was set and cemented.

“We are pleased to report progress is going well and we anticipate reaching our target depth of 1855m by March 20.”

The company said it is also in discussion to negotiate the acquisition of several “income producing” properties and is seeking low risk, quality tenements.