The permit covers an area of 375 sq.km and is considered a highly prospective coalbed methane area with an average coal thickness of 20m at a depth of 500m. The company estimates the permit holds about 4.7 trillion cubic feet of gas and based on a 25% recovery factor, this equates to a potential reserve of 1,080 petajoules.

The deal is dependent upon completion of the company's underwritten rights issue as well as government approval. As for the rights issue, QGC this week announced it is looking to raise $9.7 million through a one-for-three renounceable rights issue at 30c per share. Company officials said about $6.7 million would be used to fund two of up to five multi-well pilot developments planned for this year as well as fund the Icon deal.

QGC said its area of interest in the Surat Basin contains up to 43.5 tcf of gas and if this were brought into production, it would be enough to meet Queesland's current gas usage for several hundred years.