State Gas has launched a court case against its partner in the Reid’s Dome project in Queensland because it won’t hand over the remaining 20 per cent stake.

The junior explorer (ASX:GAS) told investors after market close Friday that Dome Petroleum Resources had failed to complete the transfer of its participating interest in the project to State Gas in accordance with the requirements of the joint operating agreement.

Shares dipped 3.3 per cent to a low of 88c on Monday morning.

State Gas said previously that the reduction of Dome’s stake to 20 per cent took it below the minimum interest stipulated under the joint venture agreement.

But Dr Bruno Denantes, a director of UK-based Dome Group, told Stockhead at the time that following talks between Dome and State Gas on a number of issues, Dome offered to sell a 20 per cent share to State Gas on certain conditions.

One of those conditions was that Dome would still have a 20 per cent share.

But State Gas disagrees and the pair will now battle it out in the Supreme Court of Queensland.

In early December, State Gas reported better-than-expected results from a well at its Reid’s Dome project that it was planning to plug and abandon.

The drilling results from the Nyanda-4 well indicated good gas shows from about 392m, and an overall increase in gas content with depth. Data suggested there were still gas shows at the total depth of 1200m.

State Gas director Greg Baynton told Stockhead in December that it could be “the biggest gas field discovery in many years in Queensland” and potentially compares with the Scotia Field owned by Australian oil and gas giant Santos.

He said the discovery was well-timed given the gas shortage on Australia’s East Coast.

Mr Denantes agreed the gas find looked to be “very considerable”.

He said State Gas and Dome previously agreed that the two companies would market separately their respective shares of the gas produced from the Reid’s Dome project.

State Gas inherited Dome as a JV partner when it acquired its initial 60 per cent interest in the Reid’s Dome project.

Dome was a joint venture participant from more than 10 years earlier when the permit was operated by other parties, including Senex Energy (ASX:SXY) – back when it was Victoria Petroleum.

State Gas says it understands that Senex gave up its interest in the permit due to difficulties with its JV partner at the time