New World Oil and Gas has unveiled amendments to the Blue Creek farm-out agreement (FOA) entered in 2011 with its joint venture partner, Blue Creek Exploration (BCE).
As per the new terms, New World proposes to proceed with drilling and commence production earlier than schedule.
The agreed amendment is set to cut the drilling programme costs by a third to $13.5m against the earlier projections of $20m.
This is due to a reduction in target depth to 5,500ft at the Yallback Formation rather than 11,300ft at upper Margaret Creek.
New World CEO William Kelleher said, "Under the new and more favourable terms, if we elect to undertake a drilling programme we can now drill to the Yallback, a formation already producing in nearby fields that is located at approximately half the depth of our original target," he added.
"As a result, our drilling costs will be materially reduced and, should a commercial oil discovery be made, lead to oil production commencing at Blue Creek much sooner than anticipated, minimising the time required to enter into cash flow."
New World currently holds a 25% stake in the project and has the option to own the entire interest after the completion of a revised staged work programme.
Completing drilling on the first of the three wells will earn an additional 21.6% stake in the project, with the remaining two each earning 21.7%.
Three wells will be drilled through the base of the Yallback Formation as opposed to the two previously targeting the Hillbank and Margaret Creek Formations.
A fourth well will be spud to 200ft below the Margaret Creek formation from cash flow derived from one or more of the three obligation wells.