Comet said prior rig commitments, the holiday season and bad weather had delayed the project.

The earning program, which will comprise three wells, is designed to further assess the commercial viability of the project, the company said.

Comet Ridge, which currently holds 20% in the project area in northern ATP 337P, has exercised its option to earn a further 20% by funding two additional coreholes – Mira-1 and Humboldt-1 – along with the twinning of Mahalo-1 to test the interpreted free gas encountered during drilling.

Mahalo-2 will initially be drilled to a point immediately above the Bandanna coals. The well will be cased and suspended until a workover rig arrives to drill into the prospective coals and carry out the testing program, according to Comet.

The workover rig is expected on site shortly after completing the initial drilling program. The well test is designed to assess the productivity of the Bandanna coals and provide initial reserves for the project, the company said.

In addition, Mira-1 and Humboldt-1 wells are designed to validate the most likely gas resource volumes for the farmin area.

In March last year, Santos determined potential volumes of gas in place, ranging from a minimum 181 billion cubic feet up to 990 BCF.

But Comet Ridge said the most likely volume was estimated to be over 400 BCF. After considering a 40% recovery rate, the company said between 70 and nearly 400 BCF of gas might be recovered. However, recovery factors of 60% to 70% have been recorded in several US CBM developments, it said.

Comet Ridge managing director Andy Lydyard said Mahalo was a “highly encouraging” project.

“Our decision to increase our equity reflects the confidence we have in Mahalo and its potential to host significant gas reserves that can be rapidly commercialised,” Lydyard said.

“Gas reserves developed within the ATP are well positioned to be transported into the significantly increasing Gladstone gas market.”

The Mahalo Project, about 100km north along structural trend, is targeting the same productive coal seams as those produced at the Spring Gully and Fairview CBM gas fields.

The Spring Gully and Fairview CBM gas fields contain 1300 petajoules of 1P reserves and 1947PJ of 2P gas reserves. The Northern Denison Trough gas pipeline -part of the Wallumbilla – Gladstone pipeline - passes through the western edge of ATP 337P.

Santos (Operator) and Origin Energy CSG will each own 30% in the Mahalo CSG project, after Comet Ridge earns its 40% interest.