The Colter discovery, off England's south coast, is adjacent to Wytch Farm, the largest onshore oil field in Europe, where more than 450mln barrels of oil have been produced.
A previous well at Colter encountered a 10.5-metre oil column and following seismic work in the area the new well will target a location up-dip from the original site.
It is scheduled to be drilled later on this year, evaluating a prospect estimated to contain 22mln barrels of recoverable oil.
To earn its 8% interest, Andalas is funding 10.67% of the well’s cost, which is expected to be around £7.5mln. After the first well, it will be obliged to cover 8% of the development costs.
Chief executive Simon Gorringe said the company’s latest acquisition means it has a portfolio of short, medium and long-term value catalysts I the UK and Indonesia.
“With this transaction and recent fund raises we have completed the first phase of the transformation of Andalas into a well-funded and well-diversified oil and gas company,” Gorringe added.
“We are acquiring an interest in a fully funded well, planned for the Q4 2018, which is targeting a significant oil prospect that is attractive due to its significant resource potential and also its proximity to the Wytch farm oilfield and its facilities.”
To raise the £800,000, Andalas issued shares at 1.15p – just below Thursday’s closing price of 1.18p. For every two shares bought in the placing, investors were given a warrant, exercisable at 2p for the next three years.
Shares were broadly flat at 1.17p on Friday morning.