METGASCO is negotiating with the state government over a rumoured $15 million out-of-court settlement to end its Bentley suspension woes.
But an industry source said there was "no way" the company would walk away from PEL16 for anything less than $120 million.
Yesterday the company confirmed it was in discussions with the government for a possible settlement.
Any deal would have to involve negotiations over the future of PEL16, and it's likely Metgasco would be seeking reinstatement of the licence as part of a settlement.
But a spokesman for NSW Resources Minister Anthony Roberts suggested the government "wouldn't compromise on that" if any deal was done.
The spokesman confirmed the negotiations were underway, but nothing had been "signed off on by government".
"If it didn't go to court we would still have to make some things very clear," the spokesman said.
"We still stand by the decision, if it did settle we wouldn't compromise on that ... in terms of our position, nothing's changed at this stage."
In a statement, the government said it stood by its previous statements to "pursue titleholders to ensure they maintain high standards of community consultation".
But Metgasco is very confident about its case in the Supreme Court, and has previously accused the government of trying to stall the case after it failed to produce evidence by a deadline two weeks ago.
"We continue to be very confident that the wrong decision was made and we would have that suspension lifted as part of any court hearing," Metgasco CEO Peter Henderson said.
"We believe the government has damaged our interests very badly and ... there's argument for damages accordingly.
"As the Minister confirmed we have had a couple of discussions but we're not in a position where we can speculate on the outcome."
Mr Henderson said the company lost $3 million directly as a result of the suspension, its shareholder losses were estimated at $18 million following the share price halving, as well as ongoing losses from being in a state of limbo.
The industry source said it would be a "coup" for the government to settle for $15 million given the damages involved.
Meanwhile, Lock The Gate spokesman Ian Gaillard said "it would cause a great lack of faith in people" for the government to "cut a deal".
"It would certainly lead people to wonder whether everything they have protested about was pointless."