Sydney Gas said in a statement to the exchange that the aim of the core hole is to gather data on the reservoir characteristics of the Upper Permian Coal Measures in the Hunter region for mine degasification and coalbed methane production.

"Study of the cores will provide information on various coal seams of interest, gas content and composition, coal grade and rank, gas absorption and saturation, permeability and rock mechanical properties of seams, roof and floor rocks," Sydney Gas said.

The main targets for coring are the Malabar, Mt Ogilvie, Mt Thorley, Burnawood and Foybrook coal seams, which contain a total of 20 coal seams.

The coring operation on Knight-1 will be run on a single 12 hour shift, seven days a week over the next three weeks.

Sydney Gas also announced because of its upcoming activities in the Hunter, a new wholly-owned subsidiary has been formed to operate in the area and will be known as Sydney Gas (Hunter) Operations.