The permits, Vasse SPA 2/03-4, Collie SPA 3/03-4 and Wilga SPA 4/03-4, cover about 720 sqkm.

WGP managing director Stephen Thomas said the Collie and Wilga Basins were known to contain coal, while previous exploration in the Vasse area had found large quantites.

“[Coalbed methane] gas was also observed by drillers, but was not considered important,” Thomas said.

“Seismic surveys conducted by the company have delineated a number of possible drill locations in all of the application areas. For the first time, WGP will be drilling the Collie coals to determine the amount of [CBM] in the area.”

Last year, the company conducted a seismic survey of the Vasse area. It now plans to drill at least two wells to a total depth of 350 metres.

“The company is using local contractors wherever possible to foster a positive relationship with local communities,” Thomas said.

WGP expects the sub-bituminous coals in the Vasse have a gas saturation of between 200 cubic feet per ton and 350 scf/t. The combined thickness of the coals is 20m and the study area is 30 sqkm.

WGP said this translated to about 60 million cubic metres of coal or 792 million tonnes. Assuming a gas recovery rate of 50% then the potential gas resource is between 79.2 billion cubic feet to 138.6 BCF, the company said.

WGP floated last March as Western Australia's first dedicated coalbed methane company. Its business plan centres on finding CBM and using this to become a niche electricity supplier. It plans to market its gas and power to established power retailers, as well as local government, farmers and wine growers, minerals processors and other commercial users in south-west WA.

The company had an issue price of 25 cents,and closed at 13 cents on December 31, down 48% for the year, a notable exception to the rule of successful energy floats.

It opened today at 12 cents.