O'Malley, who stunned Tiger Woods in the first round of the WGC-Accenture Match Play Championship last month, began the day in a tie for first alongside Ed Stedman and Sweden's Richard S. Johnson.
'I'm playing well, there's a few loose shots there but a lot of them were from misjudging the wind a bit,' said O'Malley. 'It would be nice to get back in the winner's circle, I've played well the last few weeks so that's given me a lot of confidence.'
The Bathurst native got off to a quick start at Kooyonga Golf Club with a birdie at the par-5 second but negated the shot with a bogey at the following hole.
He responded with a birdie at the fifth and added another at the par-5 ninth to make the turn at minus-six.
O'Malley got off to a good start on the inward nine as well with a birdie at the par-4 11th before running into trouble with a bogey at the 13th. The 36-year-old countered with a birdie at No. 14 and closed with his sixth birdie of the day at the last.
'It was a funny day, I didn't strike it that fantastically but I scrambled really well and when I hit the good shots I made some good birdies,' he said.
Coles was part of a logjam five strokes behind O'Malley before he birdied the ninth to close out the round at 4-under.
Bryce Molder posted an even-par 72 to finish in a tie for third at 3-under 141. He was joined by fellow American Douglas Labelle (69) and the Australian duo of Stephen Leaney (71) and Peter Fowler (71).
A group of six players were knotted at 2-under 142, including overnight co- leaders Johnson and Stedman. They were joined by a pair of New Zealanders in Richard Lee (73) and Gareth Paddison (71), Andre Stolz (70) of Australia and Germany's Alex Cejka (72).
The cut fell at 4-over 148 with 86 players failing to qualify for the weekend, including Aaron Baddeley. The 20-year-old, who struggled to a disappointing 12-over 84 in the opening round, carded a 1-under 71 to finish at 11-over 155.
Full field scores from the Jacob's Creek Open Championship