Cougar Energy has ditched its multi-million dollar law suit against the Queensland State Government over the forced closure of an underground coal gas project.

Cougar was ordered in 2011 to shut down a trial underground coal gasification (UCG) project at Kingaroy due to environmental concerns, the company then announced it would sue for $34 million in losses caused by the closure.

Cougar Energy had alleged negligence and breach of statutory duty on the part of the Queensland Government, they now say an agreement has been reached and the case will not continue.

Coincidentally, after dropping the case the company found it had some money to spare, announcing a scoping study for an underground coal mine at the Mackenzie tenement in central Queensland, predictions hold the site could yield up to 200 million tonnes of coal gas.