Wellington-headquartered Austral today said it had reached agreement with a number of "arms-length" accredited investors to privately place up to 14 million equity units at US50c each.

Chief executive Thom Jewell said the funds raised would be used in the company's current and future drilling programs, as well as other working capital.

Austral earlier this month spudded Cheal-A6, the first of two additional wells in the Cheal field that could double oil production to about 1000 barrels per day.

The Cheal-A7 well is scheduled to immediately follow the drilling and completion of Cheal-A6, and results from Cheal-A6 are expected within 10 days.

Austral wants to fully utilise the Cheal production station by drilling up to 10 additional wells within the Cheal mining licence PMP 38156 and surrounding area, including the Kahili and Cardiff projects, in the next two years or so.

Each of these new equity units comprises a common share and a 15-month half-warrant, each full warrant being exercisable at $US1 per common share.

Jewell said that about $US5.6 million (about $A5.9 million) of the funds had already been received and the balance was expected to be in-hand before the targeted closing date of June 23.

The shares and any shares issuable on exercise of the warrants will be subject to a four-month resale restricted period in Canada.

But the securities are not being offered or sold in the United States and will not be registered under the US Securities Act of 1933.

The Cheal partners are operator Austral (69.5%) and Canadian listed junior TAG Oil (30.5%).