Cottee, who launched Queensland’s coal seam gas industry through his development of QGC, wrote to shareholders to tell them that results from the company’s drilling at its Reid’s Dome project had “outperformed my expectations” with flow rates significantly exceeding the economic threshhold.

Investors piled into the stock this morning pushing its shares 14 per cent higher.

“The true potential of Red’s Dome, in which your board has strong faith, is now beginning to be revealed,” Cottee said.

“As with any new coal seam gas province, a large amount of effort is required initially to crack the code of new coals. Reid’s Dome was no different,” Cottee said.

He said the company was confident it had the right technique for gas extraction at the site and gas flow rates were approaching 500,000 sq ft a day, well above the indicative economic rate of 100,000 sq ft a day.

State Gas recently started its second phase of exploration and appraisal of Reid’s Dome, which is about 50km from Rolleston, and is exploring an area for the development of a pipeline.

“It would be an understatement to say that the results of our phase 2 program have been encouraging,” Cottee said.

He said the company was now aiming to confirm a single, wide-scale economic development of its acreage.

“The timing could not be more propitious in the light of the ACCC gas inquiry confirming the need for new gas supplies in 2023, which is expected to become critical by 2024,” he said.