"Under-reaming through the Maddingly coal seam has been completed in three wells, and forward operations include coal under-reaming in the remaining two wells, followed by a water enhancement application and flow testing of all five wells," ESG said.

"The wells will then be placed into simultaneous test production with the installation of submersible pumps. The current operation is waiting on water enhancement and testing equipment."

ESG said it anticipates that continuous production testing will commence during February.

ESG said the aim of the pilot production project, which is Australia's first brown coal CBM project, is to establish the viability of natural gas production from the extensive brown coals that occur at shallow depths in the company's Victorian licence areas.