Europa Oil & Gas has started drilling at the Kiln Lane-1 exploration well in northeast Lincolnshire, the UK.
The well, which is located on licence PEDL 181, will be a straight hole, about 2,500m deep. It is designed to test a 2.9 million barrel oil target.
It is targeting oil in Upper Carboniferous sandstone reservoirs. The company said success at Kiln Lane has the potential to open up several other exploration prospects in the area.
"We are delighted to commence operations on the Kiln Kane conventional oil prospect and we look forward to updating shareholders with the results from this well towards the end of March."
Europa has a 50% working interest in PEDL 181 licence, which covers an area of more than 540km2 in the East Midlands Petroleum Province.
Egdon Resources and Celtique Energie Petroleum each have a 25% stake in the licence.
Europa Oil & Gas CEO Hugh Mackay said: "We are delighted to commence operations on the Kiln Kane conventional oil prospect and we look forward to updating shareholders with the results from this well towards the end of March.
"We are encouraged by the recent discovery of oil at the neighbouring Wressle well and we hope that Kiln Lane will be similarly successful and provide another opportunity to build on our existing oil production and revenues from conventional oil fields in the East Midlands Petroleum Province."
Europa produced 165 barrels of oil equivalent per day in the UK during the 2013/2014 financial year.
The company has interests in three producing assets onshore UK that currently produce 165 barrels of oil per day.