Very limited literature is available relating to gas production from ultradeep (>9000 ft [>2700 m]) coal seams. This paper investigates permeability enhancement in ultradeep coal seams of the late Carboniferous and early Permian to Late Triassic Cooper Basin in central Australia, using a time-lapse pressure transient analysis (PTA) approach for a pilot well. The gas production history and three extended shut-in periods are used to construct the time-lapse PTA for the study well. A new approach is introduced to construct a permeability ratio function. This function allows the calculation of permeability change resulting from competition between the compaction and coal-matrix shrinkage effects. Pressure transient analysis indicates that gas flow is dominated by a bilinear flow regime in all extended pressure buildup tests. Hence, reservoir depletion is restricted to the stimulated area near the hydraulic fracture. This implies that well-completion practices that create a large contact area with reservoirs, such as multistage hydraulically fractured horizontal wells, may be required for achieving economic success in these extremely low-permeability reservoirs. The permeability ratio is constructed using the slope of the straight lines in bilinear flow analysis. Because of uncertainty in average reservoir pressure, probabilistic analysis is used and a Monte Carlo simulation is performed to generate a set of possible permeability ratio values. The permeability ratio values indicate that coal permeability has increased during the production life of the wellbore because of the coal-matrix shrinkage effect. Permeability enhancement in this ultradeep coal reservoir has offset the effect of permeability reduction caused by compaction, which is beneficial to gas production.