The first well, Mungi-22, would trial two relatively short 750m in-seam laterals in two seams.

Drilling operations were expected to last about two months, before moving on to drill two longer length triple lateral wells later in 2007, the company said.

The three wells would be connected to the Mungi gathering and processing systems and were expected to add significantly to production from the field once all three were completed in 2008, Molopo said.

The company will have 100% of all gas produced from these wells.

Inseam Australia and Wellserv Australia will provide a drilling rig and directional drilling services for these activities into next year.

Molopo recently announced a transaction that will lift its overall equity level in the Mungi field and surrounding ATP 564P and ATP 602P acreage from 25% to 50%, through the acquisition of Helm Energy’s 25% interest.

This transaction is expected to be approved by Molopo shareholders at tomorrow’s 2007 annual general meeting.

Mungi and the surrounding CSM gas fields represented the closest production to the Gladstone-Rockhampton industrial hub, Molopo said.

Molopo has sales contracts in place for up to 1.6PJ per annum with Anglo Coal and is investigating the potential for additional production from Mungi.

Current independently certified 2P reserves for Mungi are 58PJ, of which Molopo will have slightly more than 50%, with successful implementation of the sole risk wells likely to increase these volumes.

Total Mungi gas in place ranges from 300-400 billion cubic feet, with an estimated likely recoverable volume from horizontal wells of about 180-280bcf.

Molopo’s technical team estimates that Mungi has the potential to supply 30 million cubic feet per day of gas on plateau, and plans to increase the field offtake by about 8-10MMcf/d over each of the next three to four years.