The company said the MSC-9 well has been producing water at higher than expected rates of about 147 barrels per day.

“This suggests a greater area of influence surrounding the well than had previously been assumed and that a larger area is currently being dewatered,” chief financial officer Glenda McLoughlin said.

“The production of water rates in excess of the reservoir model may have positive implications for future gas production.”

But Metgasco described its MSC-10 well as an “inconsistent performer” over the past month, after it displayed good water and gas buildup followed by sudden drops in production.

“The company considers that this erratic performance has been caused by degraded elastomer in the downhole pump,” McLouglin said.

“This well is currently suspended pending replacement of the pump, which will be installed over the coming week.”

McLouglin said the different performance between the two horizontal wells indicates that the company has achieved one of the key technical milestones of this drilling program - to identify a preferential fracture direction within the Walloon coals at PEL16.

Metgasco is currently re-assessing permeability data based upon the enhanced permeability observed in MSC-9.

Over the past month, gas gathering lines have been installed in the field. During the past week, these gathering lines have been connected and pressure and safety testing completed.

An AJ Lucas workover rig has also recently finished working-over vertical wells MSC-06 and MSC-07. While these wells were shut-in, the company said it observed a significant build up in pressures to over 350 psi. These wells are currently being brought back on line and gas will be flowed to the central flare line.

Metgasco has also applied to the Department of Minerals Resources to drill an additional core well, south of the South Casino pilot. This well will meet the initial farm-in obligation for PEL 13 and is due to be completed by the end of next month.