Smegsy has been flowing up to 8 million cubic feet of gas per day from reservoirs in the Patchawarra formation.

Great Artesian and junior partner Enterprise Energy NL are currently in negotiations for the sale or tolled transmission of gas from the field.

Engineering studies are progressing for a 3.5km pipeline to link the field to existing pipelines and the Moomba processing facilities.

Interests in the Smegsy gas field are Great Artesian Oil and Gas 75% and Enterprise Energy 25%. Both partners said Smegsy would be a turning point for their companies.

“This outcome is a milestone for Enterprise Energy, just 15 months after listing on the ASX and now establishing the foundation for a gas revenue stream and gas business for the company,” said Enterprise managing director Warren Leslie.

Great Artesian managing director Ray Shaw said the company expected to start generating revenue by the start of 2005/06, which would be used to underpin future exploration, according to Shaw.

Great Artesian said it was pursuing a policy of conservation of available funds, preferring to negotiate either individual or bundled packages of farm-ins on our highly prospective drilling targets. The company said it was negotiating with both Australian and overseas companies.

The company's exploration program in 2005 includes a joint venture with operator, Beach Petroleum Ltd to drill two wells, targeting structures around the Lake Hope field in PEL 107. Beach will also farmin into various prospects in PEL 106.

Great Artesian will also invite Oilex NL to earn a 60% stake by drilling in its offshore Otway Basin prospect in July or August according to rig availability.