Additional gas sale memoranda of understanding are under negotiation and further options are being assessed that could result in early cash flow, according to Metgasco.

The company has also begun a reserves certification process for its South Casino CBM project, aiming to obtain certification for reserves of 10 – 12 PJ which would be sufficient to supply the proposed 12 MW power project.

“The first well in the program – MSC-03 - was spudded on 31 March [and] reached total depth of 680 metres on 7 April,” Metgasco said.

“MSC-03 is located four kilometers south of Casino and has targeted the Jurassic age Walloon Coal Measures. Down-hole logging has confirmed the presence of multiple gaseous coal seam intervals.”

The well intersected 14.6m of net coal and gas monitor readings undertaken while drilling recorded methane over all net coal intervals.

“Preliminary data suggests that the coals intercepted during drilling are gas saturated but carry lower volumes of water than comparable Walloon Coals in Queensland,” Metgasco said.

Metgasco said it intended to drill and complete an additional four production test wells and one core hole during the next quarter. These wells would be placed on production test.

In addition, the company has now completed reprocessing of pre-existing seismic data.

“The pre-existing seismic data covers approximately one third of the area of PEL 16,” Metgasco said.

“This data has further confirmed the presence and continuity of the Walloon Coal Measures over the area of seismic coverage within PEL16. These very early results are encouraging indicators for the success of the step out drilling program at South Casino.”

Metgasco holds 100% of PEL 16 located near Casino and Lismore in northern NSW.