The deal was made with Strike Oil and Santos on behalf of AWE's wholly owned subsidiary, Peedamullah Petroleum, for a cash payment of $1 million.

The Casino gas field has already been subject to 3D seismic coverage, a discovery well (Casino-1) and a further appraisal well (Casino-2).

AWE has accelerated discussions with the permit operator, Santos, to enable the drilling of the Casino-3 appraisal well, which will be designed to prove up commercial gas volumes as soon as possible.

"If we are successful with the Casino-3 appraisal well, AWE will work very closely with Santos to commercialise the Casino gas field in the shortest possible time frame," said AWE's managing director Bruce Phillips.

"Discussions to that end are underway and we are pleased by the constructive relationship we are developing with the operator."

The Casino gas field was discovered by a joint venture including Santos (50% and operator) and Strike Oil (50%).

The initial discovery was made in September 2002, with the Casino-1 well encountering a 50m gas column in the Waarre Formation.

The Casino-2 well, completed in October 2002 successfully appraised the discovery by penetrating a 38m gas filled sand, downdip from the discovery well.

The planned Casino-3 well will further appraise the discovery and is designed to add to the proven recoverable gas reserves in the field in order to move quickly to a commercial development decision.

Participants in Vic P/44, following completion of the transaction will be Peedamullah Petroleum 50% and Santos (operator) 50%.