Testing of four of the existing Argyle wells is now underway, with the wells producing gas and water in increasing quantities.

QGC managing director Richard Cottee said that the initial results exceeded expectations and the joint venturers would continue testing over the next month before a decision could be made committing to a pilot development at the site.

"Early results from the Argyle production testing indicate a presence of free gas in the Walloon coals. However, the rapid increase of gas rates from the Argyle #4 well indicates the coals are already desorbing gas.

"While the initial results are very encouraging, we intend to continue production testing to confirm stabilised gas rates. We will also continue de-watering to confirm desorption is occurring from the coals," Cottee said.

The wells were originally drilled in 2000 and completed with open-hole designs addressing different coal seams. Three of the four Argyle wells were put on test from 29 November.

The Argyle wells are located in ATP620P, with Queensland Gas Company holding a 59.375% interest and Pangaea Oil & Gas Pty Ltd 40.625%.