Drilling of St Gabriel-1 stopped in March about 500 feet shy of total depth, after encountering an abnormally high pressure formation at 10,300ft.

The high drilling costs and risks associated with this occurrence saw Austin opt for a farm-out agreement with Drillmar.

Deepening operations are due to start shortly, Austin said.

Under the JV agreement, Austin and its private investors will maintain a cumulative 20% working interest after pay-out, while Drillmar will take on 100% of the ownership, rights and obligations related to the well, the unit leases and the adjoining leases.

The agreement does not impact Austin's ability to drill new wells in this area.

Drillmar has reprocessed the 3D seismic data at its own expense and will present Aus-Tex, Austin's wholly-owned subsidiary, with a subsurface map delineating the seismic anomaly related to the proposed deepening of the well.

Recoverable resources at the St Gabriel-1 prospect are estimated to range from 1.82 million barrels of oil and 13.6 billion cubic feet of gas, up to 5 million barrels of oil and 36 billion cubic feet of gas.

This range is based on an independent geological assessment.