“Fingerprints of the Rockhampton High-1 and the Waggamba-2 Tinowon Sandstone crude oil are very similar,” said Mosaic chief executive Lan Nguyen.

“The presence of light oil in Permian sands in Rockhampton High-1 is encouraging as it will be a key commercial consideration for development of the Rockhampton High discovery. The existence of a common source for crude oil along the Rockhampton High-Waggamba trend is very exciting as it suggests a regional hydrocarbon play in the southern Surat-Bowen Basin.”

Mosiac said it would undertake further specialised geological, seismic and engineering studies befoe making a decision on future development of the Rockhampton High discovery.

Reservoir quality remained the main geological risk, according to Nguyen.

But Mosaic’s expertise in vertical and horizontal underbalanced drilling expertise used in conjunction with proven seismic techniques would increase the odds of developing this reservoir for commercial production, he said.

Meanwhile Mosaic has completed the first drilling phase at Waggamba-1H.

After cutting a window in the existing steel casing at 2350 meters, a directional hole has been drilled to 2633 metres measured depth with about 64 degrees of inclination. A five-inch liner was then installed and cemented in place.

The BJ Coiled Tubing unit will be moved onto the well over the weekend to begin drilling the horizontal underbalanced section next week.

The Waggamba-1 discovery well produced gas and condensate on an intermittent basis between 1981 and 1991. It was plugged-off in 1994 due to a mechanical failure of the packer during well operations – using coiled tubing as a horizontal underbalanced well.

"This technique should enhance well productivity compared to the original, conventionally-drilled well," the company said.

Before being plugged, Waggamba-1 had produced 0.39BCF of gas and 22,000 barrels of oil/condensate without any water production.

Mosaic has 100% stakes in ATP 709P (Rockhampton High-1) and PL 202 (Waggamba-1H).