He said the board had grappled with the decision to accept the government's offer, but said it was ultimately in the best interests of shareholders to accept it.
"Simply stated, the NSW government's $25 million settlement/buy-back proposal exceeds what we are likely to achieve when the risks associated with ongoing exploration and development in NSW are considered," he wrote.
"These include the chances of successful court action and the quantum of likely compensation."
He said the $25 million offer, while far short of the amount the company has spent in proving up the large CSG, tight and conventional gas resources in the Northern Rivers region, considerably exceeded earlier government offers.
"Members of the board have at times been as frustrated and angry over developments I n NSW over the last four years as many shareholders remain," he said.
"Having explored, in good faith, for more than 10 years, spent more than $100 million in exploration activities and having established significant gas resources, it is understandable that shareholders feel angry and disappointed with the treatment that your company has received from the NSW government," he wrote.
But he said it was the board's duty to recommend the offer that it saw as being in the best interests of shareholders.
"In this case, our view is that while strong feelings of anger and disappointment are understandable, they should not form the basis for considering what is in the company's best interests," he wrote.
Acceptance would see the company start 2016 with $30 million in the bank that it could use to invest in the oil and gas industry, by selecting growth areas not facing the risks inherent in NSW.
"Our strong cash position compared to juniors coincides with a once-in-20-years mergers and acquisitions market, with distressed sellers continuing to bring assets to market, exploration potential can be obtained for very low value on the back of producing asset acquisitions, and there are opportunities to assist cash-strapped minors with development funding," he said.
Several opportunities were being assessed, and one was likely to be finalised in the first half of next year.
Accepting the offer would allow it to decommissions and rehabilitate the remaining two wells near Casino, shut down its field office and terminate the employment of associated staff who are no longer required.
Legal costs would also be reduced, and the company could complete a strategic review.
Failure to accept the bid would mean the government's offer would lapse, and there was no certainty that the government is prepared to reopen negotiations or that an improved offer or, even any offer, would result, Gill warned.
Shareholders will meet in Sydney on December 12 in what is likely to be one of the most fractious junior company meetings in recent times.
Last week Keybridge Capital increased its interest in Metgasco from 6.42% to 7.65%, ahead of a vote by Metgasco shareholders on whether or not to accept a $25 million offer for the company's three New South Wales licences.
Keybridge became a substantial shareholder last month, around the time ERM Power sold down. Keybridge is also a substantial holder in cashbox Molopo Energy.
