The directors of Red Sky Energy advise the farm-in to ATP 946 in the Eromanga Basin, in Queensland, with Resolve Geo has been mutually terminated.
As part of the agreement to terminate the farm-in, Red Sky is no longer required to drill two core holes at the permit, which would have cost approximately $2 million.
The settlement involves Red Sky issuing shares to Resolve Geo plus a small cash payment.
Commenting on the termination of the farm-in agreement, Red Sky Managing Director Rohan Gillespie said: "Since we entered into the farm-in March 2010, a number of adverse factors have impacted the onshore gas exploration industry in Eastern Australia. Regulatory costs have increased significantly, as has uncertainty around permitting, and asset sales have declined significantly. The prospectivity of ATP 946 does not provide sufficient incentive to offset these factors."
Red Sky will continue to assess other gas and energy opportunities as they become available.
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