The company will have a 10% stake in the Kettleman Middle Dome oil field (KMD), a 50% farm-in of a proven gas project in the San Joaquin Basin and a 50% working interest in five further oil and gas exploration projects.

Managing director Gerry McGann said he is excited about the potential in California because many oil and gas opportunities have remained undeveloped due to major companies leaving the area and the perceived difficult environmental regulatory regime.

According to Incremental, the KMD is comparable in size to many Middle Eastern oil fields and has more than seven proven productive formations, which have produced hydrocarbons at commercial rates at some time in the past.

The KMD had only been produced sporadically in the 1930s and 1950s, having been plagued by infighting between various acreage holders and lack of an export pipeline, the company added.

McGann said the company's partners in the US venture have solved both of these issues in the last few years.

"We are fortunate in that we'll be working with partners in the US who we've known for several years from our early exploration activities in Turkey," he said.

"These guys have been working in California for over a decade and this gives IPM a real edge over companies who have to find new partners to work with.

"The Californian KMD project will start modest production in 2008 and is expected to grow substantially each year."

In the San Joaquin Basin, Incremental will be the operator and will drill two shallow wells in the area, linking them to a nearby pipeline.

From 1950 to1970, three wells were tested in the area and flowed gas at rates between two and three million cubic feet a day, but the gas was never produced as the operators were looking for oil, Incremental said.

The company said it would twin these old wells and commercialise the gas reserves.

Incremental also has major assets in Selmo, the second-largest oil field in Turkey.