As part of a multidisciplinary investigation designed to assess the implications of coal-bed methane development on water resources for the Powder River Basin of southeastern Montana, six wells were drilled through Paleocene-age coal bedsalong a 31-km east–west transect within the Tongue River drainage basin. Analysis of geophysical logs obtained in these wells provides insight into the hydrostratigraphic characteristics of the coal and interbedded siliciclastic rocks and their possible interaction with the local stress field. Natural gamma and electrical resistivity logs were effective in distinguishing individual coal beds. Full-waveform sonic logs were used to determine elastic properties of the coal and an attendant estimate of aquifer storage is in reasonable agreement with that computed from a pumping test. Inspection of magnetically oriented images of the borehole walls generated from both acoustic and optical televiewers and comparison with coal cores infer a face cleat orientation of approximately N33°E, in close agreement with regional lineament patterns and the northeast trend of the nearby Tongue River. The local tectonic stress field in this physiographic province as inferred from a nearby 1984 earthquake denotes an oblique strike-slip faulting regime with dominant east–west compression and north–south extension. These stress directions are coincident with those of the primary fracture sets identified from the televiewer logs and also with the principle axes of the drawdown ellipse produced from a complementary aquifer test, but oblique to apparent cleat orientation. Consequently, examination of these geophysical logs within the context of local hydrologic characteristics indicates that transverse transmissivity anisotropy in these coals is predominantly controlled by bedding configuration and perhaps a mechanical response to the contemporary stress field rather than solely by cleat structure.