In a third quarter activity report released today, the company said the JV with AGL Energy is currently dewatering eight wells before they are brought on production.

At the end of the third quarter, 120 wells were drilled in the project area, of which 72 are now producing.

The average production from the JV Camden project was 201 terajoules per day of CSM gas - 16% more than a year ago, Sydney Gas said.

The company said the JV is planning to complete the drilling of two in-seam wells and achieve a production rate more than 450TJ per month gas sales target.

"This is expected to be achieved with the production from eight wells that are being currently dewatered and from the production of the in-seam well SL09 that is being currently drilled," Sydney Gas said.

SL09 was spudded in February and is targeting the Balgownie seam due to difficulties in entering the initial Bulli seam target.

The company said the well would be the first horizontal in-seam well to be drilled in the Balgownie seam and will provide valuable reservoir data.

In the Hunter area, the JV is planning to drill additional coreholes in permits PEL 4 and PEL 267 to speed up gas development in the area.

Sydney Gas said four coreholes would be drilled in PEL 4 and the remaining six in PEL 267.

The technical review of the Sydney Basin area to identify additional corehole locations in PEL 2 and PEL 5 continued during the quarter.

Sydney Gas also signed a research agreement with the University of Wollongong to identify potential hydrocarbon ‘sweet spots' in the Lapstone Structural Complex in PEL 2.

Preliminary results from the study would be available in August, followed by a final report in March 2009.