Australia's Red Emperor Resources NL referred Wednesday to its announcement April 14 and provided the following update with respect to its Georgian Project.
The Georgian Ministry of Energy has formally notified Strait Oil & Gas Limited (Strait) that the Production Sharing Contract (PSC) over Block VIb has been terminated. The Ministry cites the non-performance of obligations, specifically the requirement to drill a well in accordance with the stipulated procedure. Red Emperor notes that this obligation has been acknowledged by its Joint Venture partner, Range Resources Limited, both internally within JV correspondence as well as publicly.
The penalty to be imposed on the Contractor, Strait, is $1 million and payable immediately.
Red Emperor believes it has fulfilled its obligations with respect to Block VIb, specifically cash contributions towards the second well of a two well program, as per its Shareholder and Subscription Agreements (the Agreements). The Company continues to reserve any and all legal rights under these agreements.
This outcome does not, in any way, affect the validity of Block VIa.
Red Emperor has continued to act in good faith and endeavored to work with all parties to achieve a favorable outcome throughout its involvement in this Joint Venture. It is extremely disappointed that it finds itself in this position, but reaffirms that it has met all required obligations under the Agreements.
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