As part of a major gas purchase and development agreement signed today, Santos will pay Mosaic $1.4 million to reimburse costs of the Churchie-3 and Norkam-1 wells, which were sole-risked by Mosaic.

Under the agreement, Mosaic and Santos have also agreed to jointly develop the Churchie Gas Field, which in June recorded gas flows at over 20 million cubic feet per day.

Santos said it will also buy some of Mosaic's gas from the Churchie-1 and Churchie-3 wells, which Mosaic said should help towards field development and allow time for the Joint Venture to properly market gas from the area.

The partners said they also intend to re-drill the Churchie-1 well using nitrogen circulation methods. Currently, the JV is awaiting approval by the Minister for Natural Resources and Mines for a production licence for the Churchie Field.