By Alex MacDonald
LONDON-- Shares in Oilex Ltd (OEX.AU) fell Wednesday after the
U.K.-listed firm said a request on behalf of its joint venture
partners to terminate a production sharing agremeement in the Timor
Sea at no cost has been rejected by the relevant authority.
Timor Leste's Autoridade Nacional do Petroleo has instead
notified Oilex and its joint venture partners that the contract
will be cancelled in accordance to its own terms, which may include
penalties.
Oilex and the joint venture partners sumbmitted a request to
terminate the agreement in July 2013 after the government of Timor
Leste initiated an arbitration process against the Australian
government over disputed maritime arrangements in the Timor
Sea.
The joint venture is comprised of Oilex with a 10% stake; 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.
Oilex said it sought to terminate the agreement with the ANP by
mutual consent and "without penalty or claim."
The ANP suspended the production sharing contract in January
2014 to consider the request. On Monday it issued a letter which
rejected the request and further alerted the partners to the fact
that the regulator wants to terminate the contract in accordance to
its existing terms.
Oilex said it has yet to receive formal notice of the contract
cancelation and will consider its next step in due course. A person
familiar with the matter said that if the ANP terminates the
contract, it was unlikely to result in a material cost to Oilex
given the size of the company's assets elsewhere, particularly in
India where it's developing the massive Cambay gas field.
At 1031 GMT, Oilex's shares were down 3.6% at 3.38 pence a
share, giving the company a market capitalization of 23 million
pounds ($36 million).
Analysts at SP Angel said the news should created any long term
issue for the company and recommended that investors buy Oilex
shares if shares should weaken.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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