Underwood, who founded Tap Oil, has been working on the project for more than two years, said the company could finally get to work on well site selection, well pad and road preparations with the plan to start drilling as soon as possible.
“We remain enthusiastic at the prospects of the production testing results later this year after drilling such that in the success case, the project may advance to production as soon as possible,” he said.
Under the terms of a previously announced binding memorandum of understanding with Hong Kong-based Blue Sky Power Holdings will pay for the drilling services and Triple will issue almost 600 million new shares worth around $3.5 million.
The two wells to be drilled in the Hegang area will target coal seams at depths of between 800m and 1000m near a working mine.
The wells will be fracced and production tested for six months, assuming they flow gas to surface.
The $6 million BSP deal was finalised in November, and the company has since pumped $790,000 into Triple and loaded it a further $500,000 to fund ongoing joint venture overheads and well planning.
A further $1.25 million share placement has been completed as part of the overall $6 million funding package.
Following shareholder approval and completion of the overall transaction, BSP will hold at least 58% of Triple.
Shareholders also need to give their approval for the transaction.
Triple holds an 80% interest in the Aolong Energy JV with Chinese coal miner LongMay.
In late 2013 Triple went head to head with the original vendors, who were subsequently trounced at the extraordinary general meeting, with Underwood calling the initial technical work on the project performed by the vendors as “sub-standard” and failing to demonstrate a real understanding of the oil and gas business.
He said the well plan contained basic errors, with drilling planned to test targets that were not present at the well location.
Rather than being drill-ready, and able to support 2-3 wells at $550,000 per well, Underwood said the company had only been able to drill the Xian-Xina-1 well.
Obviously Triple missed a few things in its own due diligence.
While not a raging success the JV's first well, last year's Xian Xian-1, intersected a total of 63.4m of coal seams of which 47.2m had thickness of more than 2m, while there were 36.8m of gassy coal seams at depth.
The Underwood-led Triple recapitalised in late 2011 from the shell of unsuccessful US oiler Tango Petroleum and took control of Hong Kong-based CFT following a failed $3 million capital raising and backdoor listing of ASX-listed CFT Energy and has been fighting uphill ever since.
