New World Oil and Gas will commence drilling operations at one of three drill-ready prospects identified on the Blue Creek Project located in the Petén Basin in Northwest Belize.

The company also announced the arrival of ThermaSource drilling rig #104 at the location.

ThermaSource International, the drilling contractor, has provided the drilling rig pursuant to a farm-down agreement.

The agreement calls for a 5% working interest per well for the first two wells in exchange for a 25% reduction in drilling costs.

The rig arrived in 65 containers and was transported to the drill site in the Blue Creek area for assembly. Once the rig is set up it willbe fully tested.

Drilling is expected to commence on or around 1 October 2012.

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Drill-ready prospect B Crest is estimated to hold a P50 un-risked prospective resource of 92.1MMbo (Y1 and Y2 intervals) and a P50 un-risked NPV10 of S$2.4bn.

B Crest is the first of the drilling programme at Blue Creek, the company said.

New World CEO William Kelleher said that Blue Creek is the company’s most advanced project.

"Having reduced the geologic risk of our Belizean prospects by 60% through a multistage seismic programme, we will be in a position to judge whether we have made an oil discovery by mid to late November 2012," said Kelleher.

"This is a hugely significant milestone for the company and we are delighted to have reached it ahead of schedule and at a 53%-reduced cost following our amendment to our Farm-Out Agreement and our Farm-Down to our drilling contractor.

"With an update to the Competent Person’s Report for our Danica Jutland Project and our Blue Creek Project as well as the commencing of drilling in Belize in Q4 2012, the remainder of the year will see a continuation of a highly active news cycle, and I look forward to updating the market on our progress at this exciting time for the company."