Chief executive Michael Masterman said announced that the PL2C zone in the Sillaro-1d well had flowed 5.4 million cubic feet per day on a 5/16” choke – the highest gas flow from the levels tested to date.

The latest test result is in addition to equally strong “above-expectation” gas flows from the well’s two other gas bearing levels that were reported yesterday.

These included a flow of 4 million cubic feet per day on a quarter-inch choke from Sillaro-1d’s newly discovered PL2A level, and 3.5 million cubic feet per day on a 5/16 inch choke from the target level, PL2B.

“Today’s results from the third zone of Sillaro-1d deliver a total flow output for the well of 12.9 million cubic feet per day from 25 metres of perforation within an overall 100 metre interval between 2160 metres and 2257 metres depth,” Masterman said today from Italy.

“We were expecting one gas-bearing level producing about 1 million cubic feet per day. The Sillaro deviation well has delivered three gas bearing levels with combined flow rates over 10 times that targeted level.”

At Italian gas prices this aggregate flow rate is equivalent to A$3.8m in revenue per month, according to Po Valley.

“The well is clearly economic and we will proceed forward with the objective to put this well in production in 2006,” Masterman said.

In other developments, Masterman said a production test run on the Santa Maddalena field – also in northern Italy near Bologna - had confirmed production flow rates and good pressure recovery.

“Going into 2006, both Sillaro and Santa Maddalena should be able to tap into the exceptionally strong European gas prices ,” he said.