The partners said the decision to move forward with the progressive development of the field had been made after the success of the three wells drilled to date on the Hovea Field. These included Hovea-1, Hovea-2 and Hovea-3 (ST1), which hit a substantial oil column and is currently being deepened to test the extent and nature of the Hovea-2 gas pool.

"We are delighted that our perseverance, and our belief in the prospectivity of the Perth Basin, have now led to success," said Arc Energy managing director, Eric Streitberg.

Since discovering the Hovea Oil Field in October last year, the joint venture, with the cooperation and assistance of the West Australian Department of Mineral and Petroleum Resources (MPR), has been undertaking extensive production testing and development planning for the field.

"The confirmation of a substantial oil column in the Hovea 3 well means that, with the concurrence of the MPR, we can now put this planning into effect and immediately move forward with getting the field on to production," Arc Energy said.

"Our targets are to be producing the field at rates up to 2,500 barrels of oil per day (bopd) by December this year and moving up to 5,000 bopd by early next year. Achievement of these production rates will generate very substantial cash flows for Arc and will allow us to aggressively explore the numerous other prospects we have in our licences.

"We will also be progressively refining our reservoir model over the next six to eight weeks using the production data and the results of the reprocessing of the 3D seismic volume over the field obtained as part of the integration of this data with the adjoining Hibbertia 3D seismic volume. This will allow us to make a more definitive estimate of the potential reserves of the field.

"Further appraisal and development drilling is planned as soon as rig availability allows and the results of this drilling will also aid in establishing the long term production profile and reserves of the field."