Petrel Resources announced the settlement of all outstanding issues on the Subba and Luhais oilfield development in Southern Iraq. Petrel has handed over primary responsibility for the final phases of the work, in accordance with the original Joint Venture Agreement of December 2005, but maintains a role. Petrel no longer has any liability or exposure to any possible project losses but maintains a profit share. Mobilization for the project, which has been in suspension for 20 months, will begin shortly.
Under the terms of the agreement reached between Petrel, Makman, its local Iraqi partner, and SCOP, an arm of the Iraqi Ministry of Oil:
Petrel will now focus on developing direct oil exploration activities in Iraq.
David Horgan, Managing Director, commented, "I am delighted to report that all parties have agreed an amicable way forward for the Subba and Luhais oilfield development services contract in Iraq. Development work will re-start immediately. Under the agreement Petrel will receive $7 million in cash and carry no project liabilities. In accordance with our Joint Venture Agreement, Petrel now passes primary responsibility for the final phases of work to our Iraqi partners. We have effectively swapped Petrel's 50% holding for a 10% profit interest. This removes all uncertainty from the contract.
Successful resolution of all outstanding issues against a challenging background shows the goodwill that exists and determination of the authorities and our Iraqi partners to overcome all obstacles and realize Iraq's great potential."
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