The Brisbane-based company also today reaffirmed its support for a bid by energy retailer AGL Energy, rejecting an $812 million rival offer from US investment fund TCW Group.

AGL is upping its offer for QGC shares by 16 cents to $1.60 per QGC share to take a 27.5% investment in the CSM producer.

This will increase AGL's payout to $327 million.

Under the previous deal announced in December, AGL planned to take the 27.5% stake through a share placement by QGC to AGL at $1.44 per share, for a cash outlay of up to $292 million.

"Our decision to increase the offer price for QGC shares comes after the company's announcement yesterday that it had upgraded its share of reserves by 27.5%," AGL managing director Paul Anthony said.

"What's more, the transaction remains a perfect fit with our recent acquisitions of Sun Gas and Powerdirect in Queensland."

Meanwhile, QGC has said TCW’s offer, a combination of 75% cash and 25% preference shares, is at the bottom of the independent expert’s range for a fair and reasonable offer.

“If the consideration offered by TCW was cash alone, the TCW offer would be close to the bottom of independent Expert Deloitte’s ‘fair and reasonable range’ for majority control of $1.49 to $2.0 per share,” QGC said.

“The board sees no reason for changing its recommendation in favour of the AGL transaction, in the absence of a superior offer.”

QGC has said if its shareholders do not approve the AGL deal by March 4, AGL would be entitled to terminate the transaction.

The company will proceed with its extraordinary general meeting on Saturday.

QGC yesterday said its total 2P reserves in the basin had increased by 191 petajoules to 883PJ.

The upgrade of commercial 2P reserves, certified by Netherland Sewell & Associates, followed a review of recent production testing results at the Kenya location in PL 228 and Kenya East in ATP 648P.

Managing director Richard Cottee said the latest upgrade suggested QGC’s growth acceleration strategy would yield 2P reserves over the 1000PJ goal, months ahead of the August target date.

“This brings us ever closer to our August 2007 reserves target with still a substantial portion of the growth acceleration strategy yet to deliver results,” Cottee said.

QGC yesterday began drill stem testing at Codie-1A, south of the Lauren pilot in PLA 180 at Kenya and during the week, started production testing at Ridgewood-2 in ATP 648P.

“Our appraisal activities in these areas, as well as at Bellevue (PLA 247), Berwyndale (PLA 211) and Aberdeen (ATP 621P), have all delivered encouraging results to date and further upgrades could be realised within a matter of months,” Cottee said.

QGC is operator and majority owner of these development areas (59.375%), in joint venture with Origin Energy (40.625%).