Comet Ridge (ASX:COI) restructured the terms of its acquisition of Santos' (ASX:STO) 42.86% stake in the Mahalo gas project in Queensland to reduce the up-front cash component and extend the completion date by three months, according to a Thursday filing with the Australian bourse.

The restructuring comes after recent uncertainty generated by the Australian government's disclosure related to a gas reservation policy that created suboptimal conditions for Comet Ridge to complete a funding initiative, the company said.

Under the revised terms, Santos will receive firm consideration of AU$28 million at completion, including AU$18 million in cash and AU$10 million worth of Comet shares. Up to an additional AU$30 million of contingent payments will be made based on the achievement of production milestones at the project.

The original agreement in December 2025 called for an upfront payment of AU$40 million and a contingent payment of up to AU$20 million.

"With these revised terms, Comet is confident it can use the time to execute a funding mechanism that will allow it to complete the acquisition agreement on terms that preserve value for Comet's shareholders," the company said.

Shares of Comet Ridge surged 21% in recent Thursday trade, while Santos was down more than 1%.