As a result, the company said it had appointed Babcock & Brown Australia and PricewaterhouseCoopers Securities to do a strategic review, which could take some months to complete.

However, Sydney Gas warned there was no assurance that the review would lead to a transaction or new development arrangement.

Then Blue Energy announced on Monday that the two companies have held informal discussions about a "number of potential proposals."

It said the proposals were only at a preliminary stage and gave no further details.

Chairman Nick Stretch said to "disclose the nature of such preliminary discussions may have the effect of misleading the market." He added that the discussions "may or may not reach a stage where an announcement is appropriate".

Blue Energy, which earlier in the year changed its name from Energy Investments, wholly owns about 32,000 acres (12,950 hectares) of CSM-prospective acreage in Queensland.

It also holds non-operational stakes in several conventional oil and gas permits in the Cooper-Eromanga Basin in South Australia and Queensland.

Meanwhile, Sydney Gas is involved in the Camden CSM project near Sydney, which has been supplying AGL Energy with gas since 2001.

Sydney Gas is still without a permanent leader, following Bob Neil's resignation as chief executive after just two weeks in the job.

The company's previous CEO was Philip Moore, who lasted eight months as managing director before standing down on medical advice.

Prior to Moore's appointment, the company had a history of conflict and upheaval at board level.