The government announced it had extinguished Pangaea's two petroleum exploration licences 437 and 476 covering about 15,600sq.km in northern NSW.
It is understood the government bought them back for around $200,000 each after the previous Labor government issued them for a fee of $1000.
PEL 437 extends from the Gwydir Highway to the Queensland border on mostly pastoral lands, while 476 covers much of the Manning River region surrounding AGL Energy's Gloucester CSG project and extends just over 1 million hectares north of Maitland including Taree, Tuncurry, Bulahdelah and Dungog.
"Under Labor, almost half of NSW was covered with PELs or PEL applications, for just a $1000 fee with no protections in place for our water, agricultural land or environment," Resources and Energy Minister Anthony Roberts said.
"The NSW Gas Plan has reduced this area to 15% [from about 60%]. We are fixing Labor's disgraceful legacy and mismanagement of the resources sector."
Unlisted player Pangaea, which will be paid compensation by the government, said it handed back the permit last month.
"Pangaea concluded its exploration and handed back its permits in February," a Pangaea spokesman said, adding it was up to the government to reissue the vacant permits or cancel them.
The NSW government has also legislated to extinguish all new licence applications, neutralising political issues in the state's southwest, far northwest and mid-north coast, and has wound back the area of the state under application or licence from 60% to15%.
The two buybacks bring the area of NSW under exploration licences back to 13%.
The Greens' Jeremy Buckingham called the latest cancellation a cynical political stunt to hide the Coalition's plans to roll out CSG across NSW after this month's state election, while Lock the Gate Alliance said there were still too many communities across NSW exposed to "the risk of CSG to their community health, their land and their drinking water".
"While the Minister has his red pen out, he should heed overwhelming community wishes and cancel the unconventional gas exploration licences across the Northern Rivers - no special treatment, no exceptions," LTG spokeswoman Georgina Woods said.
She said a more urgent concern was AGL's Gloucester and Santos' Narrabri projects which she said were near homes and beneath a recharge aquifer for the Great Artesian Basin.
"These projects have been allowed to proceed despite spills and scandals, and in the absence of the Chief Scientists' recommendations being implemented," Woods said.
"One of the key tests of the NSW Gas Plan will be whether it provides a safety net for all communities with existing or proposed coal seam gas projects, not just a lucky few.
"As it stands, the NSW Gas Plan currently falls well short of that test, does not meet the recommendations by the chief scientist and lags behind community sentiment on coal seam gas mining."
LTG has written to all parties contesting the NSW election asking for clarity on their coal and CSG gas policy for the state asking political parties to commit to sweeping reforms of mining and planning law to "restore balance", threatening more community action.
"Community unrest will continue until there's a NSW government with the courage to deliver the root and branch reform needed, not just action on the low-hanging fruit," Woods said.
