By Alex MacDonald
LONDON--Shares in Oilex Ltd (OEX.AU) fell Thursday after the oil
and gas explorer confirmed that the Timor Lest government has
canceled its joint venture's production sharing contract and levied
a fine as a result.
Oilex already warned Wednesday that Timor Leste's Autoridade
Nacional do Petroleo, or ANP, was planning to terminate the
contract on its own terms after having rejected the joint venture's
request to mutually terminate the contract at no cost on
Monday.
Oilex's joint venture partners--Japan Energy E&P JPDA Pty
Ltd and Pan Pacific Petroleum N.L. (PPP.AU) with a 15% stake each;
and GSPC (JPDA) Ltd, Videocon JPDA 06-103 Limited and Bharat
Petroleum Corp. Ltd. (500547.BY) with a 20% stake each--initially
submitted a request to exit the contract in 2013 after Timor Leste
took the Australian government to arbitration over the cancellation
of certain maritime arrangements in the Timor Sea that raised
concerns about the contract.
ANP now wants the joint venture to pay a $17 million fine for
failing to fulfil exploration activities in 2013 that were part of
a previously agreed exploration budget. Oilex said the joint
venture actually spent $56 million more than originally budgeted
during the tenure of the contract but the ANP hasn't given the
venture credit for the extra spending. As a result the penalty
doesn't reflect the true spending on the project, the company
said.
The joint venture has until June 12 to submit a response. Oilex,
the 10% owner in the joint venture and operator, said it will
review the notice and submit a response in due course. Oilex's
share of the current penalty is $1.7 million.
Oilex's shares were down 7.4% at 3.13 pence a share, resulting
in a market capitalization of GBP21 million or $33 million.
Write to Alex MacDonald at alex.macdonald@wsj.com
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