AWE Limited has pulled out of the La Bella permit in the Otway basin it was working on alongside operator WHL Energy.

AWE farmed into permit VIC/P67 through its subsidiary Peedamullah Petroleum in September 2013, where it agreed to fund 75 per cent of a 3D seismic survey for a share of up to 60% of the project’s equity.

When the partnership was announced, WHL managing director David Rowbottam said the agreement would allow the company to take advantage of AWE’s “strong local knowledge and existing infrastructure”.

WHL embarked on a farm-out process in October to seek options to carry through the project’s exploration drilling phase, and following AWE’s decision not be involved, it will continue to seek joint venture partners.

The company said it remained engaged with a number of other oil and gas players and expected the process to continue through the first quarter of 2015.

WHL managing director David Rowbottam said the decision was disappointing but said many companies were reviewing their capital expenditure plans in line with declining oil prices.

“WHL Energy’s position remains that the strong demand for domestic gas on the east coast of Australia due to the growth in LNG exports together with the conventional VIC/P67 prospective resources could provide a cost-competitive gas supply to these markets,” WHL said in a statement.

Mr Rowbottam said WHL was confident VIC/P67 had significant value, and the company’s higher equity position meant its value was enhanced.

“The company also notes that any future joint venture arrangement or asset transaction will be simplified as an outcome of this decision and that AWE does not have any further claim against potential recovered costs,” Mr Rowbottam said.