According to analysts, this could be the first indication that Tap is going to walk away from its $60 million takeover bid for Arc.

Tap said its offer reflected the value of Arc's assets and took into account the risks and timing of the Hovea-2 well. Tap added it wasn't in shareholders' interests to effectively underwrite the value of Arc through this period by extending its offer.

Arc told its shareholders to reject Tap's offer because it believes its active drilling program, which includes the onshore Hovea-2 well to be drilled later this month, has the potential to substantially increase its value.

Some in the market still believe there is a chance of a counter-offer from either Hardman Resources, Origin Energy or Australian Worldwide Exploration.