Falcon Oil & Gas (LON:FOG, CVE:FO) said Hess (NYSE:HES) has elected not to commit to a five well programme on the former’s Beetaloo Basin permits in Australia.

In a dramatic twist to events the American giant asked for an extension to the June 28 deadline in order to conclude a farm-out with a third party described as “one of the largest oil and gas companies in the world”.

This request was rejected, which means Hess forfeits their right to earn 62.5% in three Beetaloo permits having invested an estimated US$80mln exploring the area.

Falcon gets to keep 100% of four permits in the basin in Australia’s Northern Territory, which the AIM and TSX-listed explorer says leaves it in a “stronger position going forward”.

The group said it has already received “unsolicited interest” from major oil and gas companies.

More tangibly, Hess has transferred the licence to 3,490 kilometres of seismic to Falcon, which has some “extremely encouraging” pointers to the area’s potential.

Experts have identified a shale oil play in the northern portion of the permits in addition to shale gas and conventional plays throughout the acreage.

Chief executive Philip O’Quigley said: “We regard the Beetaloo Basin as a potential world class conventional and unconventional play with significant oil and gas potential.

“Hess requested a one month extension to allow them sufficient time to conclude a farm-out deal with a third party, which they described as one of the largest oil and gas companies in the world.

“Falcon’s rejection of their request and Hess’s subsequent decision not to elect by the agreed deadline was viewed by the board of Falcon as an opportunity for Falcon shareholders to increase their interest in what promises to be a very prolific basin enhanced and de-risked by the new seismic data.

“I would like to thank Hess for their significant contribution to the Beetaloo project both in terms of their technical input but also in terms of their financial investment which we estimate to be approximately US$80mln to date.

“I look forward to updating the market as we move forward on our extensive acreage in the Beetaloo Basin.”