Announced yesterday, the changes came one day before the Australian Competition and Consumer Commission was scheduled to release its findings into potential competition issues surrounding the existing bid.

Under its new $710 million proposal, Santos would pay QGC shareholders $1.30 in cash for each of their shares in exchange for QGC’s Undulla Nose coal seam methane assets in southeast Queensland.

In addition, QGC shareholders would receive shares on a one-for-one basis in a new, Australian-listed company known as New QGC, into which Santos would inject $40 million in return for a 30% stake.

To be led by the current QGC board and management team, New QGC would own at least two of QGC’s highly prospective CSM tenements where appraisal work would begin immediately.

Santos said that unlike AGL Energy’s proposal its revised offer gave QGC shareholders an opportunity to exchange all of their shares at an attractive price.

“Santos’ proposal [also] draws on the skills, drive and experience of [QGC managing director] Richard Cottee and his team at QGC, which has a proven record in developing Queensland’s CSM industry,” managing director John Ellice-Flint said.

“We are confident the New QGC would increase commercialisation opportunities and result in greater volumes of CSM being brought to eastern Australian markets at an earlier stage than would otherwise be the case under the AGL proposal involving QGC.”

But QGC responded that Santos should not compare its "conditional and incomplete" offer to AGL's proposal until a "number of conditions" are satisfied and the terms outlined in an acceptable form.

"However elements of the Santos proposal appear to be attractive to QGC and its advisers are currently considering the proposal," QGC said.

"The QGC board continues to recommend the AGL proposal, subject to no superior offer emerging."

The New QGC is proposed to own 100% of ATP 621P and a 70% stake in ATP 651P, both of which QGC believes have potential to be the next Undulla Nose.

In addition, Santos says it would help the new outfit by agreeing to buy up to 60 petajoules of gas and assist with access to rigs, plant and pipeline infrastructure.

Subject to approval by QGC shareholders and the ACCC, Santos said its proposal follows confidential discussions with QGC. It will also allow its earlier $1.26 per share offer to lapse next week.