Australia-listed Tap Oil Limited revealed Tuesday that it has recently provided an update on the status of its commercial relations with the Thai entrepreneur, Chatchai Yenbamroong, and his Northern Gulf companies, in its ASX announcement dated April 7.
The update included the status of a number of staged acquisition payments that were agreed with Northern Gulf Petroleum Holdings Limited (NGPH) and its subsidiary, Northern Gulf Petroleum Pte. Ltd (NGP) as part of Tap’s acquisition of its 30 percent interest in the G1/48 concession. An overview of the various staged acquisition payments is set out in Tap’s previous ASX announcements (see ASX announcements dated Feb. 27 and April 7).
As part of these agreed acquisition payments, Tap expects to make a payment to NGPH during 2015 based on the Operator’s 2P reserves estimate for the Manora oil field as at Dec. 31, 2014. Tap understands that the Operator (Mubadala Petroleum) is currently finalizing the 2P reserves estimate as at Dec. 31, 2014 for review by the joint venture. This estimate will form the basis of determining the amount of this year’s 2P reserves deferred payment owing to NGPH. The payment will be due within 30 days following the finalization of the year-end 2P reserves estimates for Manora – either through the joint venture process, or through a further reserves certification by an independent expert if required by either Tap or NGPH.
Despite this work being in progress, on April 13 Tap received a statutory demand from NGPH demanding payment of $14,614,500 in satisfaction of the Dec. 31, 2014 2P reserves deferred payment, which NGPH alleges is due and payable. Tap considers that this amount is not due and payable and that there is no proper legal basis for NGPH making this demand. Tap’s lawyers will now take the necessary steps to seek to set aside this statutory demand and seek payment of Tap’s legal costs. Tap also considers that this statutory demand is an abuse of the statutory demand process.
Tap notes that NGPH has sought early payment of this 2P reserves deferred payment from Tap for some time, including as early as December 2014 before the year-end evaluation date had occurred. Tap has repeatedly advised NGPH that Tap will comply with its obligations under the contractual process for determining and paying the 2P reserves deferred payment. This process was agreed with NGPH in October 2010 at the time of Tap’s acquisition of its 30 percent interest in the G1/48 concession.
The Tap Board considers that NGPH’s action in issuing the statutory demand is an example of the conflict of interests concerns which the Tap Board has in relation to Yenbamroong’s proposal to replace all but one of Tap’s existing directors with his own nominees.
Tap has served notice on each of NGP and NGPH regarding NGP’s failure to pay amounts owing to Tap in connection with NGP’s share of production from the G1/48 concession. The defaulted amounts remain outstanding and are accruing interest. Further amounts become payable to Tap each time oil lifting proceeds are received.
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