The company told the market yesterday that through its wholly-owned subsidiary St Helens, it had executed a lease purchase and exchange agreement with the CSM-focused consortium, headed by Oklaco Holding.

“The transaction will accelerate further delineation and development of Chehalis Basin coal seam gas project in Lewis and Cowlitz counties, southern Washington,” the company said.

Under the deal, Comet will divest three-quarters of its 40% working interest in its existing landholding, covering 75,000 acres of the Sehalis Basin.

In return, it will gain a 10% stake in a further 65,000 acres, resulting in a 10% project-wide interest.

In addition, the consortium will pay Comet $463,064 cash up front and free-carry the company through the drilling of five holes – four are aimed at delineating a CSM resource and the remaining one targeting interpreted oil pay in a shallow sandstone reservoir.

Comet said the combined 140,000-acre lease position was largely contiguous and covered most of the western flank of the coal-bearing Chehalis Basin.

Coal exploration companies have extensively drilled these coals, where numerous gas shows and flows reported.

One well drilled in early 2000 tested 700,000 cubic feed per day from a sandstone reservoir lying between 222-225m, as well as encountering “good” gas shows in a number of other sands, the company said.

According to Comet, Oklaco and its partners have developed and expect to apply horizontal drilling techniques to the Chehalis Basin play.