Jadestone Energy has announced an award of monetary damages, plus a portion of the legal costs and expenses, as a result of an arbitration action between its wholly owned subsidiary Mitra Energy (Philippines SC-56) and Total E&P Philippines.
Mitra SC56 commenced the arbitration action in response to a breach of the 2012 farm out agreement between Mitra SC56 and Total (the 'FOA'), claiming that, among other things, Total failed to drill an exploration well on the deepwater Halcon prospect, located within the block covered by Service Contract 56 ('SC56') in the Sulu Sea, offshore the Philippines.
The tribunal found in favour of Mitra SC56, concluding that Total breached the FOA, awarding (i) monetary damages to Mitra SC56 of US$11,075,000, less specific expenditures incurred prior to the breach to be agreed or determined if the parties cannot agree; and (ii) legal costs of approx. US$4,300,000. The tribunal’s costs will be borne by Mitra SC56 and Total 25:75.
When considering the aggregate award, together with amounts payable by Mitra SC56 including legal fees plus repayment of a third party funding facility used to finance the arbitration action and other related fees, the Company anticipates it will not experience a significant change to its cash position.
Total remains the Operator of SC56 with a 75% interest, with Mitra SC56 holding the remaining 25%.
Paul Blakeley, President and CEO commented:
'The SC56 asset is not consistent with our strategy and was inherited from the former Mitra Energy management team. It has remained in the Jadestone portfolio solely as a result of the carried well commitment, which was intended to provide a cost-free option to further test this frontier basin. It was important for the Company and our shareholders to pursue our legal rights to a successful conclusion. With the satisfactory resolution of this matter, we can now refocus on our strategy to deliver exceptional value to shareholders, through investment in producing assets and discoveries which can be quickly developed for early cash flow.'
Source: Jadestone Energy