The shares in Stuart Petroleum and Beach Petroleum dropped sharply in recent days after well reports indicated some of the target formations were poorly developed and drill stem tests found little traces of oil with lots of water.

This morning however the partners reported oil had flowed at a daily rate of 90 barrels during the test of the deeper mid-Tinchoo formation of the well, sparking a share price recovery. At press time, the Stuart share price was around the 57-58c mark after having recovered from a fall to below 50c on Monday. It finished last week over 70c, evidence of the severity of the fall.

Stuart said today that the oil flow represented a new pool discovery for the Acrasia structure. "It is now planned to case the Acrasia-2 well as a potential oil producer," said Stuart's operations director, Rod Hollingsworth.

"However, the full significance of the oil accumulation can only be evaluated by electric logs run when drilling is completed."

The Acrasia-2 appraisal well was this morning at 2,206 metres and is expected to drill to its total depth of 2,380m within the next 48-hours.

The latest oil flow - which was accompanied by a water flow rate of 200 barrels per day - follows the successful Acrasia-1 oil exploration well in April this year, which resulted in the discovery of a 3.7 million barrel oilfield.

"As a consequence of this latest discovery, the equivalent zone in Acrasia-1, which was not evaluated at the time, will now be re-examined after the completion of production testing there," said Mr Hollingsworth.

Production testing at Acrasia-1 is due to commence shortly. The Acrasia interests include Stuart Petroleum (75% and operator) and Beach Petroleum NL (25%).