Currently at a depth of 294m, the corehole has already intersected several anticipated thin gassy seams and thick tuffaceous intervals marking the upper Craven Subgroup in the Gloucester Coal Measures, Molopo said.

LMGC1 is also targeting several thick underlying coal seams in the lower portion of the Craven Subgroup and Avon Subgroup.

With a planned drilling depth of about 700m, the corehole will seek to recover coal cores for gas and coal testing, and be made available for downhole permeability testing.

The well is one of two fully cored coalbed methane exploration holes, which aim to test the southern and northern continuity of the thick, highly gassy coal seams of the Gloucester Coal Measures in the Stratford CSM Prospect in the Gloucester Basin. It is estimated that Gloucester contains 200 square kilometres of coal-bearing sequences.

Molopo said this new drilling has the potential to significantly increase the current estimated 90 petajoules (PJ) of gas-in-place at Stratford.

Nine previous CSM cored wells drilled from 1993 to 1997 have already demonstrated an estimated gas-in-place resource of 90PJ in the 5sq.km Stratford Prospect, the company said.

Last month, the company announced its other CSM exploration well, LMGO3, had recorded big production flows on test, peaking at 666,900 cubic feet of gas per day.

At the time, managing director Stephen Mitchell said if maintained and repeated, these production rates were well above the expected minimum threshold for a commercial project.

The Gloucester Basin permit, which covers 1050sq.km, is located 100km north of Newcastle, which Molopo described as a “very desirable market for gas in which premium prices were expected.”

Molopo’s joint venture partner in the Gloucester Basin project is Lucas Coal Seam Gas (70%), which is also the project’s operator. Molopo holds a 30% stake in this permit.