The oil and gas company is undertaking an 18-month exploration program for coal seam gas in the region.

Santos has acquired Gastar Exploration Limited’s 35 per cent interest in various Gunnedah Basin exploration permits and production areas operated by Eastern Star Gas.

It has also acquired a 19.99 per cent interest in Eastern Star Gas from Hillgrove Resources Limited.

The combination of operated CSG permits in the Gunnedah Basin will now cover an area of about 63,000 square kilometres.

The resource potential of this area is estimated to exceed 50 trillion cubic feet.

Santos entered the Gunnedah Basin in 2007 and is undertaking a 23-well drilling program.

ESG began exploring the area in late 2002.

Santos chief executive David Knox said it was a significant step in the Gunnedah Basin strategy.

“Combining the proven CSG expertise of Santos and Eastern Star with the ability of Santos to deliver major projects and develop various channels to market will advance the region’s potential as Australia’s next major CSG province, bringing jobs and investment to the area,” he said.

“We look forward to working with ESG towards this goal.”

• Feature story in today's paper, pg 31