LONDON (Alliance News) - Argos Resources Ltd on Friday said Noble Energy, in which Argos has a 5% overriding royalty interest, has declared force majeure after terminating its contract with Ocean Rig UDW.
Noble had been planning to drill an exploration well on Licence PL001, which was due to commence shortly using the Eirik Raude drilling rig in the North Falkland Basin. However, due to operational issues with the rig, Noble has cancelled its contract.
It then used its rights under the farmout agreement with Argos to declare force majeure.
Noble intends to apply to the Falkland Islands government for an extension to the current phase of the licence, Argos said, which requires the drilling of a commitment well in order to move to the next phase.
In addition to the royalty interest, Noble also confirmed that future cash payments to Argos will be made, which will be sufficient for it to meet its ongoing running costs.
A new participation agreement between the two parties will replace the farmout agreement to reflect the changes created as a consequence of the force majeure, Argos said.
"We are, of course, very disappointed to have been so close to drilling commencing on our licence, only to suffer this delay. We respect Noble's judgement in this matter, and we are working closely with them. Our overriding royalty interest in the licence will continue into any extension period agreed and our future running costs are covered, so we remain well positioned. Both Noble and the company continue to be very positive about the exploration potential of the licence area," Chairman Ian Thomson said in a statement.
Earlier Friday, Premier Oil PLC and Rockhopper Exploration PLC said they too have terminated their joint venture agreement with Ocean Rig due to the issues with the Eirik Raude drilling unit.
Shares in Argos Resources were trading down 23% at 4.04 pence on Friday morning.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
Copyright 2016 Alliance News Limited. All Rights Reserved.
