The deal means Rift captures Austral's 35% stake of PPL 235 and 50% of PPL 261, covering the Douglas and Langia gas discoveries and also includes the Coral Sea Drilling Rig which is drilling Puk Puk-1.

The settlement, made on May 22, will involve a transfer of $US2 million within five days, $US1.5 million after PNG Ministerial approval or within three months and $US1.5 million following Ministerial approval or within 12 months.

The settlement comes after former joint venture partner Austral failed to meet cost expenditures, which prompted Rift to consider legal avenues.

Rift said current debts from Austral exceeded $US5 million and future drilling and seismic cost obligations between the two companies will be cancelled on successful completion of the transaction.

Rift said it was pleased to have achieved a rapid conclusion to the dispute, which will allow it to focus on Puk Puk-1 in the Douglas gas discovery area.

Rift chairman Ian Gowrie-Smith said the company can now move forward.

"The recent dramatic oil and LNG price hikes has led to unprecedented interest in Rift's deposits in PNG," he said.

The agreement has also made Rift the sole Memorandum of Understanding partner with Rio Tinto Alcan for investigating the supply of around 40 billion cubic feet of gas per annum from Douglas through a direct pipeline to the Gove Alumina plant in Northern Territory, Australia.

Austral said the asset sale completes the company's exit from PNG and provides a valuable cash injection that will be used to further reduce the company debt profile and support drilling activities at Cheal, Kahili and Cardiff.

Meanwhile, drilling at Puk Puk-1 is at 560m of the total planned depth of 2100m.

Depending on drilling and testing progress, Rift expects results to be known in June and the Douglas-1 flow test in July.

Puk Puk-1 in PPL 235 is targeting estimated recoverable reserves of about 226Bcf and is targeting a separate structure 25km from Rift's Douglas gas discovery.