The Perth-based company says it will earn a 32.5% interest in the first 10 wells in the San Joaquin Basin’s North Belridge Oil Field until payout, then 16.25% after payout. According to Aurora, the field has potential P50 reserves of 60 million barrels of recoverable oil and 40 billion cubic feet of gas.

Aurora executive chairman Jon Stewart said the recently discovered field is expected to enter the first stage of development drilling by the end of the month.

“We expect North Belridge to be a significant and long-term oil producing asset of the company,” he said.

“The remainder of 2006 is set to be a very active period for Aurora with the first development well scheduled to spud imminently at North Belridge in California.”

Stewart added that a rig has been secured to drill the first two wells in an initial 10-well drilling program.

The North Belridge discovery well has recently completed two months of continuous production testing from one of three potential production zones, according to Aurora.

The company will pay about $US1.2 million to drill and complete the first North Belridge development well, which has a proposed total depth of about 3300 m (9800 feet).

Subsequent development wells are expected to cost significantly less, as Aurora says less testing and data gathering would be required, based on similar drilling at nearby analogous fields.

Aurora will also contribute about $US750,000 ($A995,500) towards acquiring new 3D seismic data and constructing a pipeline.

Project operator Texas Crude Energy has estimated the initial 10-well program has the potential to recover 6 million bbl of oil.

After the initial drilling program is completed, Aurora has the option to pay $1 million to acquire a 7.5% working interest in the remainder of the project.

Upon the successful development of a 60 million bbl oil field, Aurora expects peak field production could be more than 25,000 bbl of oil per day, with its share at 5 million bbl.

Further drilling and the planned acquisition of new 3D seismic data will further delineate the significant additional reserve potential indicated by existing 2D seismic data, according to Stewart.

Stewart said Aurora has a good working relationship with Texas Crude Energy, which operates its existing three Texan projects.