The permits were originally supposed to be the cornerstone project of Deltana, which has recently withdrawn its $12 million IPO due to a lack of investor interest.

Deltana chief executive Geoffrey Bone told PNN that the company planned to re-launch a revised prospectus with a view to list in either February or March.

Bone said the failed IPO meant it was unable to make payments to Ascent for the farm-in deal.

"Jaap Poll, one of our former directors, recommended the project to Otto - it's a good project and they have the money for it," he said.

"In the end it worked out okay for us, because we had always intended to farm-down our stake and this way we still have a right to claw back 15%"

Otto chief executive Alex Parkes said the Bastiglia-Centro exploration permits were considered highly prospective and relatively low risk.

“This new acquisition is a perfect fit for Otto as we continue to build our portfolio of onshore and offshore oil and gas assets with a pipeline of projects that span across exploration, development and production,” he said.

“The Gazzata prospect alone could be worth up to $A200 million to Otto in the event of a commercial discovery, and there is significant follow-up potential in a variety of different play types, some of which could hold up to 1 trillion cubic feet gas resource potential.”

With drilling to start next September, the first well, Gazzata-1, will target more than 100 billion cubic feet of prospective gas resources.

In order to earn its 50% stake, Otto has agreed to spend at least $10 million in the two permits, by purchasing $3.65 million worth of existing seismic and paying to drill the Gazzata-1 well at an estimated cost of $6 million.

In addition, it will reimburse Deltana $400,000 in direct costs.

Deltana has an option to acquire a 15% working interest from Otto – exercisable up to March 31 – by sharing the terms of the farm-in on a pro-rata basis.