A high-risk exploration target offshore Western Australia has paid off and could lead to a major rush in commercial interests, a consultant group said Thursday.

Australian companies Quadrant Energy and Carnarvon Petroleum announced surprised results of a drilling operation at its so-called Phoenix blocks off the coast of Western Australia state. At its first well, dubbed Dorado, the joint venture partners announced they ran through a 393-foot column of oil while searching for natural gas.

That would quantify as a major oil discovery, with as much as 150 million barrels of commercial prospects possible.

"The commerciality of this will be assessed in time, but it is the oil in Dorado and potentially successful adjacent structures that will now become our immediate focus," Adrian Cook, the managing director at Carnarvon, said in a letter to shareholders. "And we expect this to be highly profitable for shareholders in due course."

Analysis from consultant group Wood Mackenzie said it's been more than a decade since Australia posted a major oil discovery. While final reserve estimates are still pending, regional analyst Daniel Toleman said the Dorado prospects are a game changer.

"The Dorado find has shown companies what the next big thing in Australia could be," he said in an emailed report. "We are anticipating exploration in the area to return with a vengeance."

Carnarvon in its letter said the Dorado well was a high-risk exploration target that paid off because of its low drilling cost and the potential for "large volumes of hydrocarbons." Cook added that the results, which are due out before the end of September, may be "truly spectacular."

The next deciding factor may be the quality of oil discovered at Dorado. Conventional oil would be the best-case scenario for the joint venture partners. An ultra-light form of oil called condensate would be more capital intensive.

For processing, Wood Mackenzie said floating infrastructure would be the best option considering the low cost.

"However, drilling the wells, purchasing subsea equipment, and buying or leasing floating production storage and offloading facility would still require significant upfront investment," Toleman stated.

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