The company said the well in PL 202 flowed at a stabilised rate of 1.9 terajoules of sales gas and 160 barrels of free oil/condensate per day during an extended five-day flow test.

Managing director Lan Nguyen said the stabilised production rate from the horizontal well in the Waggamba Tinowon Sandstone gas/condensate pool has proved that development of the field using horizontal drilling technique is commercially attractive.

"We believe that we have again found the key in horizontal drilling to unlock the highly prospective Waggamba Field Tinowon Sandstone gas/condensate reservoirs as we have previously found the key in nitrogen drilling to unlock the Churchie Field Tinowon Sandstone gas reservoirs further to the north," he said.

In addition, Mosaic said the well has extended the lowest known gas in the Waggamba Field Tinowon Sandstone hydrocarbon pool to 2363m and extended the proven gas/condensate column from 21m to 43m over the vertical interval from 2320m to 2363m.

"At current product prices this incremental production from Waggamba Field is expected to make a significant addition to the company's estimated annual revenue from its existing production stream, with the well expected to pay out within 6 to 12 months."

Waggamba-4H is currently shut in for a pressure build-up survey and will begin producing by June 1.

CS Energy pre-paid $3.5 million for drilling the well and, in return, will receive 50% of gas production and 35% of the associated free oil and condensate production.

Following the completion of Waggamba-4H, the company plans to spud Waggamba-5H in early June.