Initial exploration for Coal Seam Gas (CSG) involves the use of geological surveys to identify areas of highest prospectivity. Exploration drilling is undertaken to depths of up to 1000 metres to identify the presence of seams that contain CSG in suitable quality and quantity. Tests are conducted to confirm the potential quality and produce-ability of any gas present. Where gas is identified further test wells are drilled to estimate the size of the potential gas field.

Exploration tenements are generally awarded by State governments which also licence the process of exploration and regulate any subsequent extraction of resources, in the same way as occurs with mining. State governments receive exploration fees and royalty payments if production commences.

In the case of CSG, the resource generally lies at depths of below 500 metres. The CSG field is identified and measured by drilling a grid pattern of holes approximately 750 metres apart. The drillings rigs are relatively small. Before commencing drilling Pangaea seeks agreement with local land holders on the least disruptive way exploration can occur.

In 2008, given continued uncertainties around the cost and availability of exploration drill rigs, Pangaea acquired a Schramm TXD 200 drilling rig. This rig is API compliant, meets Australian national standards and has a depth capacity of up to 2300m. It is capable of drilling horizontal wells, completion and work-over giving Pangaea the utmost flexibility both in terms of well design and work commitment programming.