Calgary, Alberta (FSCwire) - Canadian Overseas Petroleum Limited ("COPL" or the "Company") (XOP: TSX-V) & (COPL: LSE), an international oil and gas exploration and development company focused on offshore Africa disclosed in its most recent quarterly update that its 50% owned joint venture company, Shoreline Canadian Overseas Petroleum Development Corporation ("ShoreCan"), is in disagreement with Essar Exploration & Production Limited (Mauritius) ("Essar Mauritius") regarding aspects of the Essar Nigeria Shareholders Agreement (the "Shareholder Agreement"). The Shareholder Agreement governs the relationship between ShoreCan and Essar Mauritius in respect of their respective interests in Essar Exploration and Production Limited (Nigeria) ("Essar Nigeria"), ShoreCan has an 80% interest in Essar Nigeria, which has a 100% contracted interest in OPL226, which is located in shallow to mid-water offshore Nigeria.
No formal proceedings have been issued in respect of the disagreement and the Shareholders Agreement provides for a process of good faith discussions between the respective executive officers prior to any formal proceedings being commenced. ShoreCan has proposed this process to Essar Mauritius and is currently awaiting a reply.
As previously disclosed, ShoreCan and Essar Mauritius, the company that owns 20% of Essar Nigeria shares, are currently in disagreement about whether the other party is in compliance with their respective obligations under the Essar Nigeria Shareholders Agreement. The disagreement centres on the view that ShoreCan has not commenced funding of the $80 million agreed cumulative funding in Essar Nigeria. The parties are in discussions to imminently resolve the disagreement amicably and no formal proceedings have been commenced by either party and, as such, there is no quantifiable impact to the Company's working capital or its operations. The Company's directors believe, based on legal advice, that ShoreCan has several valid defences and counterclaims to any action that might be brought by Essar Mauritius in the event that the current disagreement escalates. In the meantime, ShoreCan continues to pursue the completion of the financing initiatives previously announced for OPL 226 and Essar Nigeria continues to operate as before.
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Source: Canadian Overseas Petroleum Limited (TSX Venture:XOP, LSE:COPL)
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