Triple's agreement, its second in China, could give it access to two advanced blocks in the Ordos gas basin, Shaanxi province, and two first right of refusal over two nearby undeveloped blocks.

Triple has signed the non-binding letter with a local firm, Xian Moke Industrial Company, for the four blocks that cover 378sq.km, in what Underwood said was a culmination of two years of hard work for it and partner, Hong Kong-based Blue Sky Energy.

"They have fantastic contacts in China, and this is one of the first agreements we have been able to advance. It really does move us ahead two or three years," he said.

The Tongchuan Block already has eight CSG wells drilled to date with seven on test production.

The WangFeng Block has four wells drilled with two on test production and a full field development plan being prepared.

The 95sq.km Wang Feng block is just outside its namesake city, and is associated with a coal mining lease.

All road and rail infrastructure are in place and the coast seams have been extensively mapped at depths between 450m and 1000m in a simple relatively unfaulted structure.

The seams are interpreted to be stacked in two main levels, which are mapped as ranging between 2-6.5m thick with a gas content of between 10-15cu.m per tonne.

Development would require 45 horizontal fracced wells from 15 surface locations.

A reserves/resources report will be commissioned in the near future to verify the plan and to quantify the potential of the area.

Tongchuan covers 103sq.km over four coal mining leases, and the seams have also been extensively mapped.

The seven wells on test are constrained by pumping rates and are simply awaiting off-take agreements.

The coals are at similar depths to Wang Feng, but are thicker at an average of 7m for the Chenjiashan seams and 11m for the Xiashijie seams.

Triple believes a full field development concept has been prepared requiring six new horizontal wells to support a mini-power-generation station, which will be constructed nearby with the electricity being sold into the electrical grid, located just a few hundred metres away.

Underwood said Tongchuan is likely to be the first development, because of the power proposal.

While all the areas have overlying coal leases, the energy mineral is on the nose in China, and there is no guarantee coal will ever be mined in the areas, leaving Triple free to develop the gas unhindered.

Underwood admits he has heard and seen indications of depressed gas demand and reduced prices in China, which is why the power project is so important.

The Wang Feng block could be developed in the same way or for local distribution.

"Across China everywhere has different gas market dynamics, depending on what supplies are there and grid access, but gas is the fuel the government wants, so in Shaanxi we would be insulated from price depreciation, but until you sign the gas sales agreement you don't know," he said.

"But while prices are softening, they are still a hell of a lot better than anywhere else."

If the deal proceeds it will be completed for shares in Triple, which is looking at a Hong Kong listing.

Due diligence is ongoing, and the aim is to finalise the deal by the end of the year.

In the 80%-owned Aolong JV the Nioshan-1 well has been successfully cased and the Yixin-1 well was at 671m and was drilling ahead.