Taxpayers face an $80 million payout to energy company Metgasco after the NSW government confirmed it will not appeal a court ruling overturning its bungled suspension of the firm's gas drilling licence on the north coast.
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Energy minister Anthony Roberts has told Metgasco the government would not appeal the Supreme Court decision that an order by the Office of Coal Seam Gas to suspend drilling was "unlawful".
The suspension announcement in May last year came days before police were due to be sent in to break up a long-running protest blockade at the drilling site at Bentley on the NSW north coast.
It saw Metgasco's share price plummet by 40 per cent.
On Sunday, Mr Roberts said the decision not to appeal the court ruling "was made after careful consideration of all relevant issues".
Following the court decision Metgasco flagged seeking compensation from the government, a possible four-year extension of its drilling licence and indicated it expected police protection at the site.
But resumption of drilling could pose difficulties for the government and Metgasco due to the expected level of opposition from protesters.
One option understood to be under consideration is the government buying out Metgasco's drilling licence.
Metgasco has spent $120 million on its north coast gas licences over the past decade.
About $80 million of that was capitalised, indicating a settlement figure the company might accept.
Metgasco chief executive Peter Henderson would not comment on whether a buyout was under consideration.
But he welcomed the government's decision to not appeal the court ruling.
"We're pleased the government has chosen not to challenge the decision," he said.
"An appeal would have damaged investor confidence in NSW and wasted public funds. We're keen to sit down with the minister and talk about the future of gas in the northern rivers' region".
When he announced the licence suspension Mr Roberts said it was due to a lack of public consultation and concerns "about the way in which Metgasco has characterised its activities".
The trigger for suspension was understood to be Metgasco saying it was exploring for conventional gas rather than the more controversial "tight sands" gas.
But the court said the suspension decision was "invalid" due to a lack of due process for Metgasco.
As well, when deciding whether or not Metgasco had engaged in the appropriate community consultation at Bentley, the government took into account "the results of the consultation" - the protests - instead of how it was carried out.
On Sunday, Mr Roberts said the NSW government "continues to place a high level of importance on community consultation for resources projects".
