Empire Oil & Gas disclosed Friday that the Supreme Court of Western Australia has recognized that Empire increased its stake in the Red Gully oil and gas project in Western Australia as the result of last year's withdrawal of Wharf Resources from EP 389 in Perth Basin.
The Court's decision means that the register of interests kept by the Department of Mines and Petroleum can now be amended to show Empire's stake in Red Gully increased from 68.75 percent to 76.39 percent and ERM Gas Pty Ltd.'s (ERM) -- a wholly-owned subsidiary of ERM Power -- stake increased from 21.25 percent to 23.61 percent. This is because on its withdrawal, Wharf's 10 percent stake in the joint venture was split on a pro-rata basis between Empire and fellow joint venture partner ERM.
In light of the decision, Empire and ERM will seek to have distributed to them on a pro-rata basis the 10 percent of condensate sales revenue being held in escrow pending settlement of the dispute.
Empire's share of these funds stands at appoximately $554,460 (AUD 600,000). To date, Empire and ERM have funded 100 percent of the operating costs of the Red Gully Facility but received only 90 percent of the condensate revenue.
Along with the valid transfer of Wharf's interests in Exploration Permit 398, the Court recognized that Wharf's interests in Pipeline License 96 was also transferred to the remaining Joint Venture parties. These licenses house the Red Gully project.
Empire and ERM brought the claim in the Supreme Court to resolve the issue of Wharf's withdrawal from the EP 398 Joint Venture after Wharf failed to meet cash calls as required under the relevant Joint Operating Agreement.
Confirmation of Wharf's withdrawal means that previously lodged transfers of title to Exploration Permit 389 and Pipeline License 96 to the remaining Joint Venturers can now be registered by the Department of Mines and Petroleum.
Empire Chief Executive Ken Aitken said the Court's decision gave the Company certainty of ownership at Red Gully.
"This outcome allows us to progress our growth and development plans for the project with the comfort and security that comes from knowing that this ownership issue had bneen resolved," Aitken said.
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