* Discovery could hold more than 150 mln bbl oil-analyst
* Find could be biggest in area for more than 20 years
* Oil find boosts gas-focused Quadrant - analyst
* Carnarvon shares soar 25 pct to 9-year high
* Wave of M&A expected in Australia oil and gas sector (Recasts with Quadrant context, adds analyst comments)
By Sonali Paul
Aug 8 (Reuters) - Australia's Quadrant Energy and Carnarvon Petroleum CVN.AX have found an oil field off Western Australia that analysts said could be the biggest discovery in the area for more than 20 years, potentially turning both into takeover targets.
Describing the find as "truly incredible", junior joint venture partner Carnarvon said on Wednesday more oil had been found in the Dorado-1 well, with the thickness of the oil column now measured at 132 metres. That was up from the 80 metres indicated in a drilling update in July.
Carnarvon shares rocketed to a nine-year high after the announcement, and last traded up 25 percent at 60.5 cents, valuing the company at A$720 million ($535 million).
Unlisted Quadrant was potentially worth A$3 billion before the Dorado find, with bankers saying its 50 percent owner Brookfield Asset Management BAMa.TO is looking to sell its stake.
Private equity firms are expected to drive a wave of merger activity in Australia's oil and gas sector, hunting for assets in a market with good access to China and southeast Asia, where energy demand is rapidly growing. consultants Wood Mackenzie said they saw the discovery as the biggest in Western Australia in more than two decades, in an area better known for its gas. Without knowing the boundaries of the reservoir, they estimate it could hold well above 150 million barrels of oil.
"I think easily it would be above 150 million barrels, and I think it's heading much further north than that," said Wood Mackenzie analyst David Low.
Carnarvon, with a 20 percent stake in the venture, said it was excited about the prospect, now being assessed by operator Quadrant, owned by Brookfield, Macquarie Group MQG.AX , Wesfarmers WES.AX and mining heiress Angela Bennett.
Quadrant Energy Chief Executive Brett Darley said the early results were "extremely promising", in an emailed comment.
"The oil discovered in the Caley Member (of Dorado-1) is very significant in terms of its likely scale and in proving that this play works in the basin," Carnarvon Managing Director Adrian Cook said in a statement.
Wood Mackenzie's Low said the find would boost interest in both partners in the project.
"It looks like there's a lot of upside for Carnarvon. It could be interesting for someone who wants to get into oil in Australia," Low said.
Bankers say Quadrant had considered an IPO, but scrapped the plan early this year, with Brookfield still looking to sell its stake.
Low said the Dorado oil find would now boost the value of Quadrant, as oil would be cheaper to develop than gas and would have a ready market in Asia.
"It definitely makes it a bit more attractive. It's now got more of a diversified portfolio. It has an oil play now," Low said.
Quadrant supplies more than a fifth of the domestic gas market in Western Australia and does not need more gas yet in a region with abundant gas reserves vying to be developed.
($1 = 1.3468 Australian dollars)