Shares in oil and gas explorer Enterprise Energy have shot up following news that the company's Yellowbank Creek-4 well being drilled in Queensland's Surat Basin is to be capped and suspended as a potential oil producer.

Shares in the stock hit a high of 40 cents in morning trade and at 2.30pm AEST were up 7.5 cents or 27 per cent to 35 cents. Enterprise Energy listed in May.

“We expect the well to be brought on line quickly and to contribute to cash flow by the end of December, due to the availability of existing infrastructure associated with previous discoveries in the Yellowbank Creek Field, Enterprise Energy’s managing director, Warren Leslie, said today.

“This will be our first oil production and follows the company’s maiden gas exploration success with the Smegsy-1 wildcat well which made a commercial discovery in the Cooper Basin in July/August this year,” Leslie said.

“Importantly, Enterprise Energy will receive 85% of the net revenue from the oil well, resulting in the quick recovery of drilling costs,” he said.

Leslie said Enterprise had declared the Yellowbank Creek-4 well as a future oil producer after a second successful drill stem test conducted over an oil interval in the Surat Basin target.

“The well intersected the target Showground Sandstone at 1,842 metres and drilled 6 metres of friable to cemented sandstone with fair to good visual porosity and containing good oil staining throughout,” he said.

“This 6 metre interval compares favourably with Yellowbank Creek-2 and Yellowbank Creek-3, where this unit is 4.5 metres thick and 5.5 metres thick respectively.

“Results indicate that the Showground Sandstone is probably at “virgin” reservoir pressure and has not been depleted by the production from the Yellowbank Creek 2 and 3 wells.

“Oil and mud filtrate recovered on test show the oil is similar in appearance to that produced by those two Yellowbank Creek wells.”

As previously stated, the Yellowbank Creek oilfield has estimated remaining reserves of approximately 5.2 million barrels of oil.

Interests in the licence at the completion of drilling will be Enterprise Energy NL 85% (reverting to 50% after pay-out) Brisbane Petroleum NL 25% after pay-out, and Delbaere Associates Pty. Ltd 25% after pay-out.