Jura Announces Release of Interim Filings and Settlement of Disputes with Petroleum Exploration (Private) Limited
Jura Energy Corporation (TSX:JEC) (“Jura” or the “Corporation”) announced the filing on SEDAR of its condensed consolidated interim financial statements as at and for the three and six months ended June 30, 2016 and 2015, and its management’s discussion and analysis for the second quarter of fiscal year 2016.
Further, Jura announces that its wholly-owned operating subsidiaries Frontier Holdings Limited (“FHL”) and Spud Energy Pty Limited (“Spud”) have successfully entered into a settlement arrangement for the full and final settlement of various disputes with Petroleum Exploration (Private) Limited (“PEL”).
PEL is the operator of the Badin IV North and Badin IV South Exploration Licenses and the Badar, Ayesha and Kandra Development and Production Leases.
In connection with the settlement of the disputes, FHL, Spud and PEL have agreed to the following:
the two arbitration matters between FHL and PEL before the International Chamber of Commerce (the “Arbitrations”) have been withdrawn;
each party shall bear its own legal and other costs with respect to the Arbitrations and the settlement, and neither party shall claim reimbursement of such costs from the other party;
PEL has irrevocably withdrawn the previously disclosed default notice and forfeiture notice served to FHL with respect to the Badin IV South Exploration License (“Badin IV South”);
PEL has irrevocably withdrawn the application submitted to the Government of Pakistan seeking assignment to PEL of FHL’s working interest in Badin IV South (the “Forfeiture Application”);
PEL has agreed to pay certain current and future exploration and development costs attributable to FHL’s working interest share of expenditures under the Kandra Development and Production Lease and the Badin IV North and Badin IV South Exploration Licenses;
PEL has agreed to pay certain development costs attributable to FHL’s working interest share of expenditure in the Ayesha Development and Production Lease and the Aminah and Ayesha North gas discoveries in Badin IV South;
PEL has agreed to carry a certain percentage of FHL’s working interest in the drilling of an exploration well in the Kandra Development and Production Lease;
FHL have agreed to waive their audit rights in relation to certain past costs;
Spud has agreed to sell its working interest in the Badar Mining Lease to PEL for cash consideration payable upon completion of the transfer, which is subject to customary approvals in Pakistan; and
FHL has agreed to transfer its entire working interest in the Kandra Development and Production Lease and assign its interest in Kandra Power Company (“KPC”) to PEL.
Pursuant to the terms of the settlement, Jura has recognized a provision for loss on settlement amounting to US$ 7.6 million in its condensed consolidated interim financial statements as at and for the three and six months ended June 30, 2016. However, in addition to the longer-term benefits to Jura, the immediate benefits of the settlement are:
the withdrawal of the Arbitrations which were costly and time-consuming and would have taken substantial additional time to enforce in Pakistan, upon successful awards;
PEL’s withdrawal of the Forfeiture Application relating to Badin IV South which was leading to substantial delays in commercialisation of the recent discoveries;
the Corporation will now participate in the development of the three existing Badin IV South gas discoveries but will not be required to fund: (a) its full share of previous expenditures in two of the successful exploration wells; (b) a certain amount of the expenditures incurred in the development of the three gas and condensate discoveries; and (c) the under-advance balance of its joint venture accounts for Badin IV South and Badin IV North as of the date of settlement;
PEL will carry FHL’s entire working interest share of expenditures in an exploration well in the Badin IV North Exploration License planned for drilling in Q4 2016; and
the settlement does not result in any cash outflow for FHL, Spud or Jura.
“I am pleased with the settlement arrangement agreed with PEL. Jura will now focus on building its business, starting with the development of three gas and condensate discoveries in the Badin IV South exploration license area, and targets first gas from these discoveries by the end of Q2 2017. The commercialization of these gas discoveries is expected to transform the Company into a profitable and cash-generative business,”
commented Shahid Hameed, Jura’s Interim Chief Executive Officer.
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