24th Jan 2014 08:34
LONDON (Alliance News) - Victoria Oil & Gas PLC Friday said it has signed a settlement agreement with RSM Production Corp in relation to its cash-call dispute for the Logbaba gas project in Cameroon.
The oil and gas exploration and development company said RSM has now paid USD16.3 million towards the first cash call for expenses issued by Gaz du Cameroun SA, the Logbaba sites operator, on December 23, 2013, totalling USD24.0 million.
There also is a second cash call to GDC outstanding for January, which equals USD2.0 million.
The company said that the parties have agreed to an independent audit to determine the final balance payable by or to be refunded to RSM, which is due to start during the first quarter and be completed within 90 days.
The dispute relates to an arbitration proceeding brought by RSM in December, which made it clear that RSM should pay cash calls when due, at which point RSM paid an initial amount of USD4.1 million to GDC for a separate cash call.
During the initial proceedings, Victoria claimed that RSM's failure to pay cash calls meant that it has forfeited its 38% interest in the Logbaba oilfield in Cameroon, but Victoria lost the argument in December.
Earlier this month, Victoria Oil & Gas said that due to the failure to pay, GDC issued notices of default for each of the overdue cash calls on January 10. The notices of default served by GDC on RSM have now been withdrawn.
RSM also expressed an intention, earlier this month, to take the question of its liability over the cash calls to a separate International Chamber of Commerce arbitration. However, it has now withdrawn this request.
Victoria Oil & Gas said the 2014 work programme and budget for the Logbaba site have now been agreed with RSM.
"RSM have worked very constructively with us to find a solution. The agreement now allows all partners to concentrate on developing this outstanding asset," Victoria Oil & Gas' Chairman Kevin Foo said in a statement.
Victoria Oil & Gas shares were up 13% to 1.47 pence, putting it among the top AIM movers in early trading Friday. They touched 1.56p at the open.
By Tom McIvor; [email protected]; @TomMcIvor1
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