The company told the stock exchange on Friday that the Thomby Creek Oil Field has produced less than three per cent of an estimated 2.5 million barrels of original oil in place and that the well would be the first to be drilled in the field since 1981.

Bounty said that an independent evaluation has estimated that up to 300,000 barrels of oil may be recovered by this well. Bounty said it intends to use horizontal drilling technology, in which the well bore penetrates the oil reservoir laterally, to optimise oil recovery.

Under the terms of the option agreement with production license operator Brisbane Petroleum, Bounty told the exchange it would receive 85 per cent of production revenue from the well until payout of costs, earning 50 per cent of all production revenue thereafter.

Bounty added it can earn additional interest in PL 18, which also includes the Yellowbank Creek Oil Field, by drilling a further two wells within the production license.