Loon Energy Issues Update on Brunei Block L Judgment
Loon Energy has released information on the status of its interest in Brunei.
On April 24, 2007, Loon disclosed that on March 14, 2007, it had commenced legal proceedings in the High Court in London, England (the "High Court"), seeking appropriate declaratory relief to protect its 90% interest in the rights awarded by Brunei National Petroleum Company Senderian Berhad ("PetroleumBRUNEI") to Loon's wholly owned subsidiary Loon Brunei Limited ("Loon Brunei"), in respect of Block L in Brunei Darussalam ("Brunei"), against allegations made by Bumico Sendirian Berhad ("Bumico") and Integra Mining (B) Sendirian Berhad ("Integra") that those entities were entitled to a 40% interest in respect of Block L.
The proceedings were heard by the High Court on July 17 and 19, 2007. In the course of the proceedings, Bumico and Integra abandoned their claim to a 40% interest in Block L. The High Court issued its final judgment on July 31, 2007, and made the following declaration in favor of Loon:
"On a true construction of the contracts between the parties which are subject to English law ('the English Law Contracts') in the context of all the relevant agreements (including, for the avoidance of doubt, the Confidentiality and Non-Circumvention Agreement) and other relevant matrix, (Integra and Bumico) have neither an actual or contingent interest in Block L nor an entitlement to assert now or in the future any rights or claims against Loon or Loon Brunei in relation to Block L pursuant to the English Law Contracts, save for the First Defendant's entitlement under Clause 5.2 of the Trust Agreement."
The effect of this declaration is to confirm that neither Integra nor Bumico have any rights in Block L pursuant to the written agreements regarding Block L that are subject to English law (save for a residual entitlement of Integra to receive US$1.5 million out of 50% of Loon's entitlement to hydrocarbons produced and sold under the terms of the Production Sharing Agreement). The High Court declined to grant wider declarations claimed by Loon aimed to prevent Integra and Bumico from making claims outside the scope of the written agreements regarding Block L that are subject to English law. Importantly, however, Integra and Bumico confirmed at the trial that they do not currently assert that they have any other rights in relation to Block L arising other than pursuant to the written agreements that are governed by English law and the Confidentiality Agreement which is the subject of the arbitration proceedings commenced by Integra/Bumico.
Accordingly, following the conclusion of the High Court proceedings, the only continuing dispute between the parties is the Texan arbitration proceedings. Although this residual dispute will fall to an arbitrator to determine, the High Court referred to Integra's claim in those proceedings as "on any view, a strange claim," and remarked that if Integra succeeded in its latest claim in the arbitration, that "would truly be a remarkable and wholly un-commercial outcome."
In order to fully and expeditiously protect their legitimate interests, Loon will vigorously defend the arbitration.