Fortescue Metals Group Terminates Western Australia Shale Gas Deal

Fortescue Metals Group has terminated a proposed deal that would have seen the company diversify into Western Australian shale gas, Sydney Morning Herald has reported.

In November last year, it was announced by Oil Basin Limited that it has secured Fortescue Metals Group as a cornerstone investor. It was reported that Fortescue would take an 18 per cent stake, worth $4.2 million in oil and gas explorer Oil Basins.

“Cancellation of the proposed deal does not come as a massive surprise, given it was behind schedule and had attracted the attention of Australia's corporate regulator in relation to movements in the Oil Basins share price prior to it being announced,” the SMH said.

Suspicions that the deal may not go ahead started to grow when it was not finalised within five business days as flagged by Oil Basins.

Finally today, Oil Basins released a statement to the ASX confirming that Fortescue would not become its cornerstone investor.

"OBL advises that on 14 January 2013, discussions on the letter of intent were terminated by Fortescue," said the statement from Oil Basins chief executive Neil Doyle.