Under the agreement Planet Gas will acquire a 100% working interest (80% net revenue interest) of the Ferguson/Bannon Ranches leases in Cowley and Elk Counties, Kansas.

Known as the Skull Creek Project, these leases, which cover 28,598 acres, are located in the western portion of the Cherokee Basin of southeastern Kansas near existing infrastructure and convey all CBM, oil and gas rights to the Planet Gas.

“The acquisition is another step to build our US production base. We believe the Cherokee Basin is one of the key emerging CBM regions in the US and are justifiably pleased with the result of the negotiations,” said Planet Gas director Norman Seckold.

The newly-listed Planet Gas has targetted the more profitable American market with the new acquisition adding to the company’s existing assets at Esponda, Whisky Draw and Oriva in the Powder River Basin, Wyoming.

Nearly two dozen Pennsylvanian aged coals can be found in the Cherokee basin with thickness ranging up to nine metres, but more typically up to four metres with gas contents ranging from 150 to 375 standard cubic feet per tonne.

An initial payment of US$500,000 earns the company a 33.33% interest which is increased to a 50% working interest upon completing six test wells during a six month evaluation period and an additional payment of US$250,000 within 60 days of completion of the test wells.

“The initial farm in will allow us to test the project and to confirm our estimates before committing the majority of funding,” said Seckold.

The company's working interest will then be increased to 75% by completion of a five well pod within six months of making the US$250,000 payment.

Planet Gas will then earn its 100% working interest in the un-drilled leasehold area by making a final payment to O’Neal of US$750,000 or by incurring certain additional project drilling and well completion expenditures.