In a statement to the market, Sunshine said the Crocker Gully-2 exploration well would be drilled to a total depth of 600m and cored in the primary objective.

The well is north of Santos' Scotia CSM field, in an adjacent permit, which entered production in early 2003.

ATP 685P also contains the undeveloped Tardum CSM prospect.

Four CSM wells have been drilled in the permit to date.

However, Sunshine said each well had failed to acquire quantitative measurements of gas content, gas saturation and permeability.

"Data fundamental for completion design, resource estimation and development planning will be acquired from coring and testing of the Upper Baralaba coal seams in the Crocker Gully-2 well," the company said.

"The information will be used to determine the optimum drilling and completion strategy within the project area and formulate a forward work program."

Santos and Sunshine each hold a 50% stake in ATP 685P.