Leni Gas & Oil PLC has announced that the fraudulent misrepresentation action against Mediterranean Oil and Gas Plc in the High Court of England and Wales, in regard to the Company sale of its 10% interest in Malta Area 4 PSC, has not been upheld.
Leni Gas & Oil (LGO), in July, 2012, sold its 10% share in the Malta Area 4 to MOG for 1$ for the interest plus $20,000 for its residual costs arising under the Joint Operating Agreement between the Parties associated with the acquisition of 3D seismic data in 2011.
Only weeks after the transaction, MOG entered into farm-in agreements with Genel Energy Plc, led by ex-BP CEO Tony Hayward, for a $10 million cash consideration and two well commitment on the offshore Malta Area 4 PSC.
LGO has taken legal action against MOG and has, since the farm-in deal, claimed it was tricked by MOG into selling its 10% share.
To remind, after buying Leni’s 10% interest in the PSC through its subsidiary Phoenicia Energy Company Limited (“PECL”) , MOG sold a 75% working interest in Phoenicia to Genel.
“Leni would not have sold its interest for $1 plus liabilities had it been aware of interest from Genel Energy or other potential farm-in partners,” Leni said in a statement last year.
Leni to appeal
As for the High Court’s ruling today, Leni says that an application for appeal is being considered in conjunction with the Company’s legal team.
“Today’s decision in the High Court has potential long-term and broad-reaching implications for all minority joint venture partners in the oil industry who need and deserve robust legal protection to ensure that their majority partners provide them with full information regarding the true value of the minority stake.”
“The Board is proud of the stand it has taken in seeking to protect the interests of its shareholders and the Company is naturally disappointed with today’s decision,” Leni added.
Mediterranean Oil & Gas has not issued a response on the ruling yet, but has, ever since the accusation by Leni took place, reiterated that the allegations made are unfounded and the company will defend itself and the interests of its shareholders rigorously.
Update: Mediterranean Oil & Gas response
MOG said it was is pleased to announce that LGO’s case failed at every stage and was dismissed by the Court with judgment being entered in favour of the Defendants, Malta Oil Pty Limited and Phoenicia Energy Co Limited.
According to MOG, in the opening section of his judgment, Mr Justice Males said: “…the claimants’ case fails at every stage, in particular,… there was in my judgment no question of any intention to mislead on the part of Dr Higgs.”
MOG’s Chairman, Keith Henry said: “The MOG Board is delighted by the strength of the court’s decision to rule on all matters in our favour. We never doubted that we would win this case and Bill Higgs would have his reputation as a straightforward businessman and honest person upheld.
“In 2012, LGO was not prepared to risk a relatively small sum of money to maintain its interest in Malta Area 4 and yet has been prepared to risk very substantial sums of money on High Court litigation. LGO’s strategy, including the issuing of certain RNS announcements, has been difficult to understand. Our strategy, when all else had failed, was to let the court decide based on the evidence as presented. With this episode now behind us, Bill and the MOG team can look forward to focussing on the much more positive aspects of continuing to grow the company.”
In the closing paragraph of his judgment Mr Justice Males, according to MOG, said: “To borrow the oil industry terminology… it may have seemed to LGO that the prospectivity for these proceedings and the amount at stake were such that the economics of this litigation were positive. However, litigation like the oil business is a high risk activity and LGO has failed to strike oil.”