The New South Wales (NSW) Supreme Court has reinstated Metgasco with the right to drill Rosella E01 well located in the exploration license PEL 16 in Australia.

The NSW Government suspended Metgasco’s licence in 2014 following protests by the local community.

The Rosella E01 well will test the conventional and tight gas potential of the larger Greater Mackellar structure.

"We believe that our decision to pursue legal action has been vindicated."

Covering an area of 260km², the prospect holds a potential gas volume of 1,304 billion cubic feet.

In the latest ruling, Justice Richard Button said the government’s move was unlawful and the decisions have damaged Metgasco substantially and exposed it to criminal sanction.

Commenting on the ruling, Metgasco managing director Peter Henderson said: "We believe that our decision to pursue legal action has been vindicated. We will be seeking compensation for the damage that has been inflicted on Metgasco and its 5,000 shareholders by the NSW Government’s unlawful decision."

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The company is planning to develop a gas business in NSW and work with the Government on the matter.

Henderson said: "Before recommencing drilling activities in the Northern Rivers region, we would appreciate the opportunity to talk to Government."

Metgasco currently has PEL 13, PEL 16 and PEL 426 exploration licences in the Clarence Moreton Basin.

The company’s major focus has been on coal seam gas, but it has also discovered significant tight and conventional gas potential in the basin.