The US company on Friday said it had committed and funded about $US6.5 million ($A8.6 million) for its 75% interest in the 10 CSM wells, which are being operated by CBM Resources, a subsidiary of Geostar.

Gastar said the 10-well program would include the establishment of two “5-spot” pilots, with one incorporating the two previous wells. Another two wells will be designed to test for the presence and production potential of the coals at additional locations within the licence area.

The two previously drilled wells are also scheduled to have larger capacity pumps installed to facilitate de-watering operations, it said.

Gastar chairman and chief executive J. Russell Porter said the company was “pleased” to begin a more active exploration and testing program on its Gippsland Basin holdings.

“Gastar believes that EL 4416 contains significant CBM resource potential,” Porter said.

“This property is strategically located near existing infrastructure and the large gas markets in eastern Australia.

“Our expectations are that this 10-well program will help us evaluate the CSM potential on EL 4416 and formulate additional plans for assessing and quantifying optimal drilling and completion techniques, the potential for commercial rates from individual wells and the size of the potential resource.”

Gastar is carrying out CSM activities in the Powder River Basin in Wyoming and in Australia’s Gunnedah Basin (PEL 238) and Gippsland Basin (EL 4416) in New South Wales and Victoria, respectively.