Cougar Energy Ltd (ASX: CXY) said over the weekend that it is happy with the results of tests conducted by the Department of Environment and Resource Management (DERM) on the company's Kingaroy underground coal gasification (UCG) facility in Queensland.

DERM director-general John Bradley said on Saturday that test results from five of the eight bores where samples were taken, returned favourable results for Cougar Energy and found that in all cases the presence of hydrocarbons on water samples were within the Australian Drinking Water Guideline standards.

Mr Bradley said that the Queensland health department has advised that no adverse effects could be expected from the discovered levels in the groundwater but he added that DERM's earlier decision to keep Cougar Energy's Kingaroy plant from operating should stay for now.

DERM said that the preventive order would be in effect until such time that the state government has been assured by all parties concerned that the groundwater resources were being protected.

On its part, Cougar Energy said in a statement that it "welcomes the prompt publishing of this data by the government and looks forward to the remaining test results to enable the company to continue with its innovative UCG pilot plant and power station project."

The company also gave assurance that it would periodically provide updates to the market and release information as soon as test results become available on the water bores being tested by the government.