Bow, as operator, drilled the Don Juan North-2 well to a total depth of 360m, where oil shows were encountered over a 12m interval.

However, VicPet said air drilling indicated the upper part of the zone was tight and only formation water was recovered at 336m with no live oil present.

"The oil shows are interpreted as residual and all live oil appears to have leaked from the structure," the company said.

"The well was suspended as a future water well for the landholder."

Now that it has finished at Don Juan North-2, the rig has started moving to Orallo North-3, the third of the production wells to be drilled towards reserve certification in ATP 771P, located halfway between Carnarvon-1 and Orallo North-1.

Meanwhile, the drilling crew had halted work at the Orallo South-1 core well until March 25 due to mechanical problems.

So far, the well, which is targeting the Walloon coal measures, has been cored to a depth of 195m.

Once the rig finishes here, it will move to the fourth core hole in the reserves certification program, Carnarvon West-1, 4.2km away from Carnarvon-1.

Phase one of the Don Juan project area involves flow-testing the initial three pilot wells, plus a 14-well program of coring and additional pilot wells as required to achieve commercial reserve certification over an initial target area of 320 square kilometres.

The Don Juan CSM project is immediately west of Sunshine Gas' Lacerta CSM project, which has 469 PJ (2P) to 1097 PJ (3P) of certified reserves.