If Rawson finds gas in South Australia’s Otway Basin, it’s already got a customer on the hook for it.

The oil and gas explorer (ASX:RAW) has signed a non-binding deal with gas retailer Weston Energy.

The deal is over the Nangwarry‐1 exploration well, expected to be drilled next year and is a step towards a commercial agreement.

If Rawson finds commercial quantities of gas, Weston will buy up to 4 petajoules a year for five years and a potential $6 million prepayment to enable Rawson to fund further exploration.

A final agreement is expected to include conditions such as gas transport arrangements.

Gas prices in the Mt Gambier area are currently as high as $15 a gigajoule, the company said, so they expect to be able to sell at a slightly cheaper rate.

Rawson shares over the last 12 months.

The Nangwarry‐1 exploration well is located 9km south of a recent Beach Energy discovery and 4km from an existing gas pipeline which is currently mothballed.

“In the event of success at Nangwarry‐1 we will have a foundation customer to work with as we sell gas into the South Australian market,” said Rawson chair Allister Richardson.

“Drilling of the Nangwarry‐1 well is planned for FY19 and if we find gas we will be working to have the discovery on production as early as possible.”

In May Rawson upgraded its resource estimate for the Nangwarry prospect from 33 billion cubic feet to 57 billion cubic feet.

Rawson acquired the full Otway prospect in 2014, but has held part ownership for over a decade. It has also worked in New Zealand and PNG.

Stockhead is seeking comment from Rawson.