Austral has also welcomed energy retailer Genesis Energy onboard as a fully fledged participant in the deep petroleum rights over the same PEP 38738 licence.

Austral chief executive Dave Bennett said he was pleased to announce that the last outstanding farm-in details with Genesis had been concluded, with the receipt last week of Energy Minister Pete Hodgson’s consent to these agreements.

Genesis is now a 40% permit holder with deep petroleum rights in PEP 38738 - along with operator Austral (25.1%), IRM (19.8%) and Cheal Petroleum (15.1%) - and will fund the drilling and testing of Cardiff-2 in return for first rights to any commercial gas discovered.

The separate shallow PEP 38738 joint venture - operator Austral (36.5%), IRM (33%) and Cheal Petroleum (30.5%) - reported the results of the initial production test of the Miocene-aged Mt Messenger pay at the Cheal-A3X well and that a pressure survey was now underway.

The lower Mt Messenger interval produced a total of 6972 barrels of sweet light waxy crude and 4.96 mmscf of gas, with no recognised formation water, during the 30-day test.

The oil, with an API gravity of 38 degrees, had been sold to Swift Energy New Zealand and trucked to Swift’s nearby Waihapa oil production station. Bennett said the associated gas was very rich in LPGs.

Preparations were now underway to test the shallower Urenui pay zone and, following the pressure survey, Austral planned to flow the Mt Messenger and Urenui zones together to establish an optimal flow regime.

The shallow joint venture would shortly order pipes sufficient to connect the gas to nearby gas processing infrastructure and pipeline construction was anticipated during the next few months. Also, a further well, Cheal-A4, was being considered.

Regarding Cardiff-2, contracts were being finalised to employ the Parker Drilling Rig 246 (which spudded the strategic Radnor-1 well in PEP 38752 on Monday) to drill Cardiff-2.

Bennett expected Cardiff-2 would spud in November to test the deep gas potential of an Eocene-aged prospect from which previous wells had produced gas, but the Cardiff structure had remained undeveloped.

The Kahili gas-condensate field in PEP 38736 was expected to start commercial gas production by mid-August, with NGC Holdings the gas purchaser.

"The positive progress on Cardiff, Cheal and Kahili projects is positioning Austral to rapidly build its production revenue base and reserves position. We welcome Genesis into the exciting Cardiff project, where the upside potential for all participants is excellent,” added Bennett.

Meanwhile, in offshore Western Australia, Austral's Australian subsidiaries had now transferred their combined 50% interest in AC/P26 to current participant Hardman Resources Ltd, in exchange for the granting of an option to participate in the drilling of the Anson West Prospect, when and if drilled by Hardman. Austral no longer held an interest in AC/P31.