The company on Friday said a “good” gas flow from the target coal section was encountered prior to reaching a total depth of 434m.

“An accurate gas flow rate was not able to be obtained, however, this is a very encouraging sign and demonstrates the presence of free gas in the coals,” Sunshine said.

The company said wireline logs had been acquired, the target coal seams have been under-reamed and production casing run to total depth.

The well will now be completed before a production-testing program to assess the economic viability of the Lacerta CSM project.

The four-well pilot program is designed to test the productivity of the Walloon Coal Seams identified in the Lacerta core-hole program conducted by Sunshine Gas earlier this year.

The target seams at Lacerta produce gas in the adjacent Coxon Creek CSM field. Once drilled and completed, the Lacerta pilot wells will be placed on extended production test to dewater the coal seams and determine whether the subsequent gas flows are economically viable.

These tests will also provide data towards Lacerta’s reserve certification program.

Each pilot well is expected to take about six days to drill, case and suspend.

Sunshine reiterated that it currently believes the CSM project contains some 230 billion cubic feet of contingent gas resources.