Oil and gas production company Nu-Oil and Gas PLC (LON: NUOG) has seen its share price dip following a statement of claim filed against its subsidiary Enegi Oil Inc, in regard to the Production Lease 2002-01A and interactions with its partner Company at the asset, PVF Energy Services Inc.
After signing a Production Sharing Agreement on the 30 January 2017, Enegi and PVF attempted to decide an appropriate course of action to progress the asset, following ‘issues arising during the work programme carried out by PVF’.
According to the Company, it received notice on the 10 July 2019 that PVF had submitted a Statement of Claim to the Supreme Court of Newfoundland and Labrador General Division on 26 June 2019. This was despite the Company having – as it described – made efforts to try to find a resolution within the bounds of the PSA. The sum claimed by PVF totalled C$1,122,325.73.
Nu-Oil and Gas statement
The Company’s statement continued,
“The PSA clearly states that PVF will carry out the work programme ‘at its sole cost, risk and perils’ and that costs properly incurred in carrying out the programme are reimbursable out of production from a well and not by Enegi. The Directors therefore believe that there is no merit in the Claim.”
“Further, the PSA provides for a clear process for the resolution of any dispute or claim arising out of the agreement. PVF has not followed the prescribed process. The Company has taken initial legal advice and is considering its options, one of which is, on this basis, to challenge the jurisdiction of the Court in this matter.”
“The Company does not believe that defending the Claim, against its subsidiary, will have any significant impact on its future activities.”
Executive Chairman of Nu-Oil, Graham Scotton, added the following comments,
“The Company has been attempting to work with PVF in good faith to find an appropriate way forward for Garden Hill, despite the operational issues encountered, and we are surprised and disappointed that PVF has chosen to take this action, in contravention to the terms for dispute resolution and cost recovery in the agreement signed by the parties.”
“The Company is obliged to notify the market of this situation irrespective of our opinion on the basis for the Claim. The situation will take time to resolve, however I do not expect it to affect our ongoing efforts to secure new assets or have any impact on the Company’s funding requirements. I look forward to being able to reappraise the options for Garden Hill, as part of Nu-Oil’s planned portfolio, once this dispute is resolved.”
Investor notes
Following the update, Nu-Oil and Gas shares have made a slight recovery but still sit 10% or 0.023p down on market opening price, at 0.21p a share 12/07/19 12:05 GMT.
Elsewhere in the oil and gas sector, there have been updates from; PetroTal Corp (CVE: TAL), Hurricane Energy plc(LON: HUR), TLOU Energy Ltd (ASX: TOU), Eland Oil and Gas PLC(LON: ELA), IGas Energy PLC (LON: IGAS), Anglo African Oil and Gas (LON: AAOG), Nostra Terra Oil and Gas plc (LON: NTOG) and Prospex Oil and Gas Plc (LON: PXOG).
