Jadestone Energy has commenced arbitration proceedings against Teikoku Oil, a wholly-owned subsidiary of Inpex Corp, in respect of Jadestone’s acquisition of an interest in Block 05-1 PSC, offshore Vietnam.
On August 9, 2016, Jadestone, as buyer, signed a definitive sale and purchase agreement ('SPA') with Teikoku, as seller, for the acquisition of a 30% working interest in Block 05-1 PSC, for a total cash consideration of US$14.3 million, subject to normal closing adjustments.
On February 22, 2018, Inpex delivered to Jadestone a purported notice of termination of the SPA, despite Teikoku having just received on February 9, 2018, (i) the waiver by Vietnam Oil and Gas Group ('Petrovietnam') of their statutory pre-emption rights, held under Vietnamese law; and (ii) direction from Petrovietnam to complete and submit all documents necessary to effect the transfer of interest to Jadestone. As noted in its press release of February 26, 2018, the Company has not accepted Inpex’s alleged termination, and views the obligations of both parties under the SPA as continuing.
Jadestone and Inpex engaged in negotiations over an extended period in 2018 and 2019, which the Company pursued with the objective of securing its interest in Block 05-1 PSC. Jadestone has assessed its options, including advice from Queen’s Counsel, as the SPA is subject to English law, and has determined that it is in the best interest of shareholders to challenge Teikoku’s purported termination of the SPA, and to seek specific performance by Teikoku to fulfil its obligations under the SPA.
To that end, the Company has filed a notice of arbitration with the Singapore International Arbitration Centre in accordance with terms of the SPA.
Paul Blakeley, President and CEO commented:
'We intend to complete our planned acquisition of a 30% interest in Block 05-1 from Inpex. Prior to the purported termination, the parties had worked together and made very substantial progress toward closing the deal, a process which included Inpex requesting that the deal not be terminated even after the long stop date had passed, and with the objective of obtaining Petrovietnam’s waiver of their pre-emptive rights, which was then achieved in early February 2018. While commencing arbitration is never an easy decision, we have exhausted all avenues to come to an amicable conclusion, and now feel Inpex’s continued unwillingness to complete the SPA constitutes a material breach of their obligations, to the detriment of potential value for Jadestone shareholders.'
Source: Jadestone Energy