The key issues in the identification of coal bed methane (CBM) wells are the stress dependence of porosity and permeability and areal anisotropy of the horizontal components of permeability.The pseudopressure concept can be used to account for stress effects and the Palmer and Mansoori model has been used to characterise the stress dependence of porosity and permeability (sdpp).The simulation and interpretation of injection-falloff tests is considered and the pseudopresssure is incorporated into the pd function (model) so that nonlinear regression can be applied to the determination of rock mechanics properties particularly the effective porosity, fi.Derivative responses for both drawdown-buildup and injection-falloff are deduced from the sdpp model and it is shown that stress dependence in falloff is similar in form to no-flow boundary effects.Field examples from Australia demonstrate that boundary effects are common in CBM DSTs.It is shown that a test involving both a production-buildup and an injection-falloff allows the effects of both boundaries and stress dependence to be identified.Convolution for a constant terminal (wellbore) pressure than allows dewatering time to be investigated.Stress dependence of permeability leads to critical, choking rates in production and rate dependent apparent skin factors.The magnification of mechanical skin due to sdpp effects is demonstrated.In the case of areal anisotropy, a new method for the analysis of interference tests on an observation well triple is presented.Each interference is analysed individually for an equivalent, isotropic radius and the resultant data is interpreted for kmax, kmin and angle, q, using a new algorithm.Several field examples demonstrating the methodology are presented.