A legal dispute between two London-listed junior oil companies is brewing over a deal announced Thursday this week by Mediterranean Oil & Gas (MOG) to sell a 75-percent interest in its Area 4 Offshore Malta production sharing contract to Genel Energy.
On Friday, Leni Gas & Oil – which had previously owned a 10-percent stake in the Malta PSC – announced to the London Stock Exchange that it was "surprised by the content of the announcement and is seeking immediate advice from the company's litigation lawyers".
Leni announced at the start of August that it was selling its 10-percent stake in Area 4 to a subsidiary of MOG, Phoenicia Energy, for just a dollar. But MOG's more recent deal with Genel will see Genel pay it $10 million.
Genel – a $2.4 billion business whose major interests are currently in Iraq and which is headed by ex-BP boss Tony Hayward – also promised to carry MOG for 100 percent of the cost of the first exploration well in Area 4 and 100 percent of the cost of a second well up to a maximum of $30 million.
A source close to Leni commented to Rigzone that had Leni known about the Genel transaction, it may have taken a different view as to the value of its own deal with MOG earlier in the month.
MOG would not comment on Leni's raising the possibility of legal action Friday, but in its announcement the previous day MOG Chief Executive said of the deal with Genel:
"I am very pleased that we have been able to secure such a high quality and substantial partner as Genel to progress the exploration of Area 4 Offshore Malta with the drill bit. Genel has an excellent track record in international oil and gas exploration and development. We are excited about the opportunities within the frontier acreage of Area 4 and we are moving ahead with the planning of the first exploration well."
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