Australia's top energy retailer AGL Energy Ltd (AGL) and...

Australia's top energy retailer AGL Energy Ltd (AGL) and Queensland Gas Co Ltd (QGC) have both signalled material transactions, raising speculation that the two companies could be hatching a deal.

Shares of both companies were in trading halt pending announcements until the start of trade next Tuesday.

AGL said it expected to make an announcement about the transaction before trading begins on October 28.

"The reason for the trading halt is that AGL is in discussion concerning a possible material transaction," AGL Energy said in a statement.

Meanwhile, QGC advised takeover targets Roma Petroleum and Sunshine Gas to take no action in relation to its offers from until any announcement is made.

Each company made its own separate statement, neither linking to the other or making any other comments about the nature of the transactions.

AGL holds a 24.77 percent stake in QGC and there is some speculation that QGC might be moving to buy back the stake from AGL, which said in August it was considering selling it.

Credit Suisse said in a September 30 client note that AGL may consider swapping a portion of its QGC interest for controlling stakes in some of the company's coal seam gas fields.

"The better deal for AGL, and the deal AGL would prefer, would be to either take control of QGC or to have a substantial stake in QGC's underlying gas fields," said Matthew Spence, a utilities analyst at Merrill Lynch in Sydney.

"They would prefer that than an outright sale (of the QGC stake) at the moment because they are already expected to be very long on cash after the sale of their Papua New Guinea oil and gas assets."

AGL said in August that direct control over gas resources was an attractive proposition after flagging a possible sale of its interest in Queensland Gas.

AGL acquired the stake in late 2006 for about A$320 million. The investment has since more than doubled to about A$720 million, based on QGC's closing share price of A$3.20 on Thursday. Shares in AGL closed at A$13.40 on Thursday.

Merrill Lynch's Spence said that QGC might be prepared to sell stakes in some of its coal seam gas fields as recent acquisitions had substantially boosted its gas reserves.

"QGC has been very confident that even if AGL took a stake of its gas fields for domestic purposes, it would still have enough gas to support its LNG (liquefied natural gas) development and expansion," Spence said.

AGL managing director Michael Fraser told reporters last week that it would be keen on several acquisitions after wrapping up the sale of its 3.6 percent stake in a proposed LNG development in Papua New Guinea (PNG).

Analysts said that AGL's divestment in the PNG LNG project was expected to fetch between $900 million to $1 billion, and would help support the firm's participation in New South Wales state's power privatisation and potential acquisitions of some generation assets held by troubled investment fund Babcock & Brown Power Ltd .

QGC has a joint venture with BG Group Plc to commercialise its coal seam gas resources through a liquefied natural gas development on the Queensland coast.