The company said it expects the well, which is due to be completed by the first half of 2008, to have a relatively good chance of yielding the results necessary to make progress in discussions with Alcan South Pacific.

Rift is aiming to sign a binding agreement with ASP to supply about 800 billion cubic feet of natural gas over 20 years to ASP's Gove refinery in the Northern Territory.

However, Rift will have to sole risk the drilling of Puk Puk-1 after PPL-235 partner Austral Pacific Energy said it would not participate in drilling the well.

The company added Puk Puk-1 site preparation is underway and the rig is expected to be flown in from Douglas-1 after the refurbishment work is completed.

Puk Puk-1 is about 25km northwest of Douglas-1.