Rey Resources told the Australian Stock Exchange on Tuesday that Arc had failed to meet its obligations by the required date and so it had instead farmed-out the relevant interests to majority shareholder, Gujurat NRE Mineral Resources.

Indian newspapers have since reported that Gujurat paid $A500,000 for a 90% stake in the two oil exploration blocks, with Rey to hold the remaining 10% stake.

Gujurat became Rey’s major shareholder when it acquired a 19.9% stake in the company last year.

The West Australian newspaper quoted Arc managing director Eric Streitberg as saying his company was considering its legal position to protect its rights to the permits.

“We feel we have a legally enforceable agreement and we’ll be taking whatever steps we need to enforce it,” Streitberg was quoted as saying.

Rey and Arc struck a deal in June that would have delivered Arc a 100% of the oil and gas rights to two Canning Basin permits, as well as delivering Rey rights to any coal seam methane discovered.