Tap Oil has entered into a deal with Rusa Resources to participate in the exploration of a large acreage position in the onshore Carnarvon Basin, Western Australia.

The deal with Rusa involves two special prospecting authority (SPA) applications, STP-SPA-018 and STP-SPA-021, fully owned by the company.

As per the deal, the companies will undertake exploration work, including geochemical surveys, over the 38,000km² SPAs, covering a large part of the Palaeozoic Merlinleigh Sub-basin, and the entire Byro Sub-basin, including associated shelfal areas.

Troy Hayden, Tap managing director, said the agreement with Rusa provides the company with an early stage exposure to an unconventional play type in the Carnarvon Basin.

"We see this as a logical extension for us, given our experience in the Western Australian gas market and the northern Western Australian oil and gas upstream business in general," added Hayden.

The exploration work will focus on delineating the preferred acreage for conversion to exploration permits in 2013.

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The deal also covers options to convert up to 50% of the SPA areas into exploration permits, after which Tap will get the right to have a 20% stake in the exploration permit, with an option to earn a further 15% in each permit.

Tap Oil stated the acreage will be primarily explored for unconventional plays, with the main targets being Permian shale gas and Devonian shale oil.

The prospect is located close to the Dampier to Bunbury natural gas pipeline, connecting to the growing Western Australian domestic gas market, or the LNG export market, which Tap Oil expects could help commercialise the potential discovery.