The Settlement Agreement provides that the FSA will be terminated and that Equator will retain a net profit interest of 5% in the Bilabri oil project and a paying interest of 12.5% in any gas development of the Bilabri and Owanare fields.
The Settlement Agreement also provides for Peak to assume the current and future liabilities of the Bilabri oil development and to reimburse Equator for all project costs paid by the Company since June 1, 2007. Peak is negotiating new contracts for the services and equipment required for the Bilabri oil development to continue.
Peak is expecting to conclude a financing agreement with a financial institution in the near term.
To date, Equator has invested approximately US$270 million in OML 122 including the Owanare discovery well. The directors of Equator have reviewed the potential financial implications of the Settlement Agreement for the Company and will be making suitable provisions to reflect a prudent view of any downside risk in terms of recoverability of the historical cost of investment in OML 122. The provisions will be recorded in the Company's financial statements, which are expected to be issued shortly.
Equator will be announcing its Interim Results for the six months to June 30, 2007 simultaneously with the Financial Statements for the year ended December 31, 2006 in the near term at which point trading in Equator shares is expected to recommence.
The Company will now focus on adding value to its exploration assets by pursuing additional farm-out opportunities. Further details of the Company's strategy will be included with the publication of the 2006 Annual Report and Financial Statements and the 2007 Interim Results.
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