Eastern Star managing director David Casey said the results of Dewhurst-2, which intersected 18m of coal, were in line with expectations and validated the company's developing model of the permit's geology.

"The outstanding results from the Dewhurst 2 corehole have confirmed that a multi-lateral pilot will be drilled at Dewhurst later this year," he said.

"Seismic data to be acquired around mid-2008 will be utilised, together with the corehole data, to optimise the design of wells drilled at Dewhurst."

Eastern Star plans to shoot 150km seismic program in PEL238 to help finalise the location of future coreholes and design future production pilots.

The company has now started drilling Dewhurst-3, the second corehole of the upgrade program, about 3.5km east of Dewhurst-2.

Under the 2008 program, up to 20 coreholes will be drilled to expand on current reserves in the Bibblewindi and Bohena areas, as well as to evaluate the CSM potential across additional portions of the lightly explored PEL 238 permit.

This is aimed at meeting the Eastern Star's 2P (proved and probable) reserves target of 600 petajoules by 2009 and potential sales commitments of more than 1000PJ under two agreements signed with Macquarie Generation and Babcock & Brown.

As well as the coreholes, the company is proposing to establish four multi-lateral production pilots in May.

The multi-lateral configuration involves drilling two or more lateral wells from a single location, reducing the need for vertical drilling.

Each lateral will intersect vertical wells through which dewatering and gas production will take place.