Several international news agencies reported yesterday that Irish outfit Island Oil & Gas had farmed-out a 25% stake in the 4200 square-kilometre Durresi Block, which lies along the Adriatic coast of Albania, to Beach for costs.

Then this morning, Beach issued a statement to the market confirming the farm-in, saying it represents a further expansion of its international exploration activities.

The Durresi Block contains one gas-condensate discovery, A4-1X drilled by Chevron and Agip in 1993.

There are several other oil and gas prospects and leads along the northern edge of a geological feature known as the Apulia Platform.

"Although initial exploration will focus on relatively low risk/reward targets in shallow water and close to shore, Beach considers that subsequent exploration, which will target deeper water prospects, will have the potential to yield reserves in excess of 100 million barrels of oil equivalent, net to Beach," the company said.

"This western portion of the tenement contains the extension of a trend, which is currently the focus of renewed exploration and licence activity in the adjacent Italian offshore region."

Beach added that the 2008 exploration program is expected to involve shooting seismic, with an exploration well to be drilled in 2009.

Island, which is headquartered in Dublin, has granted Beach an option to increase its stake in the block to 45% by paying for 55% of the dry hole cost of one well.

This is Beach’s second European farm-in arrangement in as many months.

On November 6, the company announced it was taking a 25% stake in four gas-prospective blocks in Spain.

This follows a decision made about 12 months ago to expand its exploration activities outside of Australia and New Zealand.