At the end of last week, the Tipton-16 well was producing 459,000 cfd after coming on stream five days earlier with 280,000 cfd – 80,000 cfd more than required for a 2P reserves certification.

This indicated potentially increased operating margins, the Tipton partners Arrow Energy (80%) and Comet Ridge (20%) said.

Total production for the project now exceeds one million cfd.

“We are very pleased with the results from the Tipton-16 well,” Lydyard told EnergyReview.net.

"It shows the Walloon Coals can produce at rates well in excess of those assessed to be needed for commercial development.

"The Walloon Coals players - Queensland Gas Company, Arrow and Comet Ridge are fine-tuning their completion techniques and continualy improving their results. The companies in this area now have commercially significant reserves."

Other wells in the Surat Basin project, 20km south of Dalby, have continued to perform with Tipton West-15 achieving greater than 300,000 cfd, Arrow said.

Appraisal well Tipton-17 is now being drilled four kilometres north of the pilot wells with the aim of adding more 2P reserves.

But significant gas production from the Tripton-17 is not expected because of its isolated location.

Comet Ridge managing director Andy Lydyard said memoranda of understanding for 123 PJ of gas reserves from Tipton West may now move to sales agreement negotiations.

A financial close could be reached by the end of September, but the first gas sales would take a further 12 months to start.