Lakes said the permit is located strategically below the Yallourn Valley's Loy Yang Power Station, where an inconclusive well, Loy Yang-1 was drilled in 1995. Lake said the joint venture will review the results of that well with a view to re-drilling the prospect.

"The location of Loy Yang-1 was below one of Victoria's major power stations," Lakes said. "It is therefore important that this large anticline "The Loy Yang Dome" be fully evaluated as quickly as possible."

AusAm is currently farming into PEP 156, 157 and 158 onshore Gippsland Basin for a 50% interest in all three permits. However, for AusAm to earn a 50% interest in the three permits, it must spend a total of $10 million.