The company said the well is the first of two wells being drilled back to back within the Waggamba production licence 202, which covers over 75 sq kms.

Whinstanes-1 is situated 3km south of the Waggamba-2 well and the expected total depth is 2560 metres.

The program is aimed at proving up the production capacity of the Showgrounds Sandstone which was discovered to be gas bearing in the Waggamba-1 and 2 wells earlier this year.

Mosaic has a contract to supply up to 21 petajoules (PJ's) of gas over the next five years to the Queensland Electricity generator CS Energy.