Wellington-headquartered Austral told the New Zealand Exchange this morning that Douglas, in permit PPL 235, appeared to be “an exciting gas discovery”, and was also expected to lower the exploration risk for other identified prospects and leads in the licence.

Austral chief executive Rick Webber said the partners intended to proceed with a detailed feasibility study to determine a commercialisation strategy, following “excellent” initial downhole results.

“The drilling and wireline logging results have now been fully evaluated and the conclusion drawn by the joint venture's technical committee is that the Douglas well appears to be an exciting discovery," he said.

Douglas appeared to be a significant resource of potentially several hundred billion cubic feet of gas contained in a structure exceeding 40 square kilometres.

The Douglas-1 well reached a target depth of 1978m in late May. Results from the drilling record, wireline logs, and multi-formation tester (MFT) indicated there were two reservoirs (Alene and Toro) of sweet gas with good deliverability and likely moderate condensate content.

The partners had initially considered flow testing but given the logs and MFT, as well as data obtained from nearby wells, now believed they had sufficient understanding of the formation and fluid properties to proceed without the cost of flowing the well.

They also plan to acquire additional seismic data to determine the extent of the Douglas structure, and define the best appraisal well sites and exploration drilling locations on other prospects.

In the fourth quarter of 2006, they plan to shoot and process 50km of new 2D seismic data which, when integrated with existing data, will increase their understanding of the prospectivity of the licence.

“This will be critical in determining the best locations for future drilling and enable the joint venture to maximise the return on its investment,” said Webber.

The PPL 235 partners are operator Austral (35%) and Rift Oil (65%).