Pan Petroleum Aje Limited (PPAL), subsidiary of London-based E&P company Panoro Energy, has entered into a binding agreement with the joint-venture partners in the OML 113 off Nigeria, to, inter alia, suspend certain ongoing litigation and arbitration proceedings among the partners.
The OML 113 holds the Aje field, operated by Yinka Folawiyo Petroleum. The other members in the Aje JV are New Age, Energy Equity Resources, Mx Oil, and PPAL. Panoro’s subsidiary holds 6.502% interest in the Aje JV.
Panoro said on Thursday that the agreement addressed several operational and financial issues and demonstrated the commitment of the partners to support the current oil project and to move forward with the development of the Turonian gas reserves.
John Hamilton, CEO of Panoro, said: “We are very pleased to have reached this meaningful agreement and believe this outcome is in the best interest of Panoro and our Aje JV partners. In the meantime, we will continue constructive discussions with our JV partners towards finalizing a full settlement of the outstanding arbitration and litigation as soon as possible.
“We look forward to working all together towards our common objective of making the Aje oil project successful while realizing the significant potential of the Turonian gas development.”
The main terms of the agreement state that, during a transitional period of approximately one year, all JV partners will participate in decision-making regarding operations in the field which will be solely funded from crude oil sale revenues.
Also, the partners agreed to a payment moratorium on any past unpaid and uncontested cash calls, and no Aje JV partner will require any other partners to withdraw from OML 113. Some partners including Panoro have outstanding amounts due which are now under a moratorium.
All JV partners agreed to suspend certain ongoing litigation and arbitration proceedings among the partners and will use best efforts to negotiate and enter into an amicable settlement of all such disputes as soon as possible.
Finally, the partners agreed to measures that will facilitate the further development of oil and gas reserves at Aje.
In addition, Panoro reported that efforts to reduce costs at Aje resulted in a material decrease in the overall operational expenditures. The company added that other commercial arrangements and adjustments were being implemented and were expected to improve operating margins for the Aje JV Partners.
The company ended by stating that Panoro was still exploring all options to maximise value at Aje including a partial or full divestment of its participation in OML 113.