Cougar Energy will be seeking legal advice on its joint venture partner Eneabba Gas as per a statement given to the stock exchange. The two companies had an agreement to develop the Sargon coal tenements in Western Australia.
The agreement for the joint venture was announced last year in June. The underground coal gasification technology to produce gas from coal seams was to be provided by Cougar Energy in return for a 50% interest in one of the tenements.
However last Friday Eneabba Gas announced that it has received a letter alleging that Cougar had repudiated the terms sheet for the deal. Cougar Energy said that it did not accept this allegation and was disappointed in the steps that Eneabba Gas had taken.
Eneabba Gas has said that it was still willing to use underground coal gasification technology in the Sargon tenements after a review of the sites and a proposed activation plan was set it by March 31. This is the second project of Cougar Energy to run into trouble.
The Kingaroy project in Queensland had been suspended last July as traces of carcinogens and other toxins had been found in bores nearby. The company has been struggling to get the project reactivated by the state government. A decision will be made on if the project with re start on January 28.