Shoreline Canadian Overseas Petroleum Development (ShoreCan) has reached an agreement in principle with Essar Mauritius bringing an end to a dispute on Nigeria’s OPL 226.
Canadian Overseas Petroleum (COPL), which has a 50% stake in the ShoreCan joint venture, set out the agreement, which has brought a stay in legal proceedings in the High Court of Justice in England and Wales.
The deal will see ShoreCan’s stake in the block reduced and Essar will provide a $5 million carry in the drilling of a first appraisal well.
ShoreCan will transfer 70% of the shares in Essar Nigeria to Essar Mauritius, leaving the joint venture with 10%.
ShoreCan will have a 10% carried interest on all costs on drilling the OPL 226 well. ShoreCan will have an option to increase its stake to 30% by paying for 20% of historic expenditures.
Essar Nigeria will seek an extension to its production-sharing contract, which would see the term extended beyond September 30, 2020.
The deal is contingent on reaching a deal and securing the extension within 35 days.
“This is a great outcome for the company in these uncertain times. We look forward to the future working relationship with Essar to unlock the potential of OPL 226,” said COPL’s president and CEO Arthur Millholland.
Essar Mauritius filed a suit on the Nigerian licence in early April, seeking $63 million of damages and accusing ShoreCan of failing to make progress on the work for four and a half years.