PERTH (miningweekly.com) – The shareholders of ASX-listed Metgasco on Wednesday agreed to sell three of the company’s Northern Rivers petroleum exploration licenses to the New South Wales state government.

In November this year, the state government approached the unconventional gas explorer with an offer to buy back the three exploration licenses for A$25-million.

The licenses had been at the epicenter of a legal struggle between Metagasco and the state government, as the company had decided to take legal action against the New South Wales state government, claiming damages for the suspension of its 2014 drilling programme and preparing a judicial review over two of its licences.

The company had been in discussions with the state government since the Supreme Court in April overturned a suspension of drilling at Metgasco’s Rosella exploration well.

Under the terms of the transaction, the state government would pay A$25-million for the return of the three licences, with Metgasco withdrawing its legal action in relation to the unlawful suspension of the Rosella drilling approval.

Metgasco chairperson Len Gill told shareholders at the company’s annual general meeting on Wednesday that while the sale of the Northern River assets was disappointing, the transaction was in the best interest of shareholders.

“The board considers that the acceptance of the A$25-million settlement proposed is a superior alternative to the likely sum of damages from the court action and the value of any project to develop its gas resource, taking into account the risk, noting that any project would require substantial funding to proceed,” Gill said.

He added that the company’s market capitalisation had been below A$25-million for some time, and that no other company had shown any interest in making an offer to the company.

“Acceptance of the government’s offer implies an increase in Metgasco’s market capitalisation of 57%, based on the 30-day volume weighted average price prior to the date of the announcement of the transaction.”

The motion was carried, with shareholders holding more than 152.4-million shares voting in favour of the transaction, compared with the 108.5-million share votes against.