Equator Exploration has issued an announcement to provide an update on the company's progress on its discussions with Peak Petroleum Industries Nigeria Limited concerning settlement under the Bilabri Settlement Agreement (BSA) between Peak and Equator Exploration (OML 122) Limited (OML 122 Ltd) and on the status of the Bilabri oil and gas developments.
On June 3, 2008, Equator announced that Peak had made several representations to Equator that it would be able to and intended to satisfy in full the terms of the BSA by the middle of June 2008. In addition, Equator announced that OML 122 Ltd was taking steps in the Nigerian courts to register the LCIA arbitral award issued in its favor.
On June 19, 2008, Peak made an announcement pertaining to its suit instituted before the Nigerian courts disputing the arbitration proceedings on the basis of there being no arbitral dispute with OML 122 Ltd under the BSA. The announcement also included a statement that the Nigerian court had dismissed "with substantial costs" an application made by Equator requesting the court to discharge an earlier court order. Equator is fully aware of Peak's claims which are currently being addressed by the Nigerian court and Equator's legal advisors are presently contesting Peak's position. Equator's legal advisors have also advised that the costs awarded so far in the court proceedings are nominal costs only.
During recent discussions, Peak has informed Equator that the claims and counter-claims being made by both Peak and Equator may be hampering progress on the financing efforts being pursued by Peak. Therefore, and without prejudice to the continuation of the legal processes, Equator reiterates that Equator's strategy is still to work closely with Peak to ensure that the financing required for the Bilabri oil development and to satisfy the terms of the BSA is secured within the shortest time possible. In this regard, Equator has been in direct discussions with Peak's financial advisers, and has received independent assurances that funding will be granted by the end of July 2008. Equator will therefore allow Peak until this time to conclude this financing initiative, before initiating conclusive steps in Nigeria to enforce the arbitral award.
Bilabri Oil and Gas Development
Over the past few weeks, progress has been made concerning the Bilabri oil and gas developments as several agreements have been entered into by Peak, as licence holder and operator of OML 122.
These agreements, in respect of which certain information has been made public already, include:
Equator is working closely with Peak to put in place definitive documentation to secure its carried interest of 5% in the oil development of Bilabri and its 12.5% paying interest in the gas development of Bilabri and Owanare.
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