Shares in Beach Energy and its Cooper Basin partner Icon Energy fell in morning trading March 30 in Australia as investors digested news that major Chevron decided not to proceed with the next phase of the Nappamerri Trough Natural Gas project.

Icon and Beach both released statements of Chevron’s decision to the market late March 27 after the market closed for the week, meaning investors were only getting a chance to react to the decision March 30.

Beach was trading 3.9% lower to A$1.03 (US $0.79) just before noon AEDT while junior Icon had receded 18.9% to A7.3 cents (US $0.56).

Beach said in its statement that Chevron informed it that while extensive technical evaluation confirmed a large gas resource and potential for further appraisal, at this point in time, the opportunity did not “align strategically with Chevron’s global exploration and development portfolio.”

Chevron’s decision not to proceed with a second stage of the Nappamerri Trough drilling venture comes after the U.S. major spent about US $190 million on the first stage.

“Chevron’s spending on exploration is being high‐graded and significantly reduced in response to market conditions,” Beach said.

As a result of this decision, all Chevron equity interests in the joint ventures will return to Beach for nil consideration.

Beach managing director Rob Cole said the company was grateful for Chevron’s significant contribution to the project.

“Beach considers that the Stage 1 program, designed as an exploration phase, achieved its primary technical objectives,” he said. “We have also proved the ability to fracture stimulate, successfully flowed gas to surface and tested deliverability. We look forward to progressing the NTNG project at a pace consistent with prevailing market conditions.”

The news of Chevron’s exit from the shale exploration venture came only a few hours after Beach advised on an upgrade of contingent resources in the ATP855 permit holding the Nappamerri Trough, by 943 billion cubic feet (Bcf) to 1,572 Bcf.

While Chevron’s decision is a blow for confidence in Australia’s shale sector, Icon managing director Ray James said Chevron’s exit wouldn’t mean the death of the project.

“We look forward to working with Beach in developing the 2015-2016 Stage 2 work program and budget,” he said.

As of Dec. 31, 2014, Icon had a cash balance of A$20.9 million (US$16 million), James said, adding “We are well positioned to meet our administration and exploration expenses going forward.”

Beach and Icon are currently reviewing stage 1 data and outcomes to determine scope and objectives appropriate for future activities.

While it is expected that further studies will be conducted over the remainder of fiscal year 2015 and into fiscal year 2016, Beach said they would occur at a “minimal spend.”

In line with its original strategy, Beach said it would pursue partnering opportunities for the NTNG project.

While Chevron’s decision will hurt the progress of the project, the move won’t come as a surprise to industry commentators given the energy majors cost reduction program to align with tougher market conditions. The company’s 2015 US$35 billion capital expenditure budget was 13% lower than last year.

“We are testing our short-cycle investments, particularly base business and unconventional assets, at current prices and are selecting only the most attractive opportunities to move forward,” Chevron chairman and CEO John Watson said in January.

While Beach and Icon unveiled the glow of shale gas promise during the comprehensive NTNG exploration program which comprised 18 wells, the program had become synonymous with ongoing frustration at cracking the code.

Chevron acquired an 18% stake in ATP 855 in 2013.

Lauren Barrett is an associate editor for Hart Energy’s Oil and Gas Investor Australia. She can be reached at lbarrett@hartenergy.com.