4 Apr 2022 07:00
4 April 2022
Victoria Oil & Gas Plc
("VOG" or the "Company")
ICC Partial Final Award
Temporary Suspension of Trading
VOG, whose wholly owned subsidiary in Cameroon, Gaz du Cameroun S.A. ("GDC"), is the onshore gas producer and distributor with operations located in the port city of Douala, announces that the Arbitral Tribunal of the International Chamber of Commerce ("ICC") ("Tribunal") has made its Partial Final Award under ICC Rules ("Award") in relation to the case initiated by RSM Production Corporation ("RSM") against GDC (case number 23991/MK) in October, 2018.
Whilst GDC was awarded two of its counterclaims, and the Tribunal rejected RSM's material claims on drilling costs, it has ruled against GDC for certain of RSM's claims and has made an award totalling approximately US$12.1 million, with interest to be added. In addition, the Tribunal has directed the parties to confer regarding the proposed procedure for resolution of costs and attorney's fees ("Costs") with a target date for resolution by 30 June, 2022.
A large part of the Award is devoted to the treatment of the royalty payments made to Cameroon Holdings Limited ("CHL") in the calculation of the Payout date. Payout occurred on the first day of the calendar month following the month in which GDC had recovered 100% of its costs from the exploration phase of the project (previously disclosed as having been triggered in May 2016, so a Payout date of 1 June, 2016).
The Tribunal concluded that in early 2016 the Company wrongfully started to include the CHL Royalty as a recoverable cost in the calculation of the Payout date, and as a result the Payout date should be moved forward four months to 1 February 2016. The Tribunal has found that the consequence of this earlier Payout date is that RSM is now due US$10.6 million plus interest.
Under the arbitration rules of the ICC, the Award cannot be appealed and is to be paid without delay. Neither GDC, nor the VOG Group, has the ability to pay the Award without some delay and accordingly the trading of VOG shares on the London Stock Exchange will be temporarily suspended as of 7.30am this morning, pending resolution of this fundamental uncertainty to continue as a going concern.
The settlement agreements entered into with RSM on 27 September, 2021 and 30 January, 2022, resolved, re-set and clarified the parties' co-venture relationship on a prospective basis with a view towards avoiding disputes in the future that have otherwise challenged the joint venture and led to the Award. Since 27 September, 2021, significant progress has been made, in consultation with RSM, towards implementing those agreements and we continue to cooperatively work together in that regard. It is against that backdrop, that the Company has been able to engage and continues to engage in constructive dialogue with RSM towards a post-award settlement, albeit such settlement cannot be assured. The parties have agreed to meet face-to-face (either in the US or the UK) to expedite discussions around how to address post-award settlement to prospectively maximize the joint venture's value proposition long-term.
In the meantime, operations at GDC will of course continue with natural gas and condensate being produced and sold to its customers in Cameroon and we would like to reassure GDC's employees, customers, suppliers and other stakeholders in Cameroon that GDC will continue to safely produce and supply gas for the Douala area as usual.
Further announcements will be made as required.
Roger Kennedy, Non-Executive Chairman of Victoria Oil & Gas, commented:
"I am taking the liberty of adding my comments as I am the longest serving Director on the current board, though I joined in H2 2016, after the Payout calculations had been made. The Tribunal's findings are of course disappointing, to say the least, but they cannot be appealed and we must deal with the consequences and move forward.
I find this doubly frustrating as the current management (appointed by me in 2020) inherited this 2018 arbitration and they have been working flat out to deal head-on and decisively with all the issues they had inherited, and they had also found time to cultivate a hopper of exciting business development opportunities.
Moreover, the current management made huge strides towards improving the relationship with RSM, as illustrated by the September 2021 and January 2022 settlements (settling the UNCITRAL arbitration pre-hearing, and non-monetary claims in the ICC arbitration respectively). The Board thus has confidence in the management to navigate through this legacy issue and return the Company to a healthier footing."
The information contained within this announcement is deemed to constitute inside information pursuant to the EU (Withdrawal) Act and amended pursuant to Market Abuse (Amended) (EU Exit) Regulations 2019. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
For further information, please visit www.victoriaoilandgas.com or contact:
Victoria Oil & Gas Plc
Roy Kelly/Rob Collins Tel: +44 (0) 20 7921 8820
Strand Hanson Limited (NOMAD)
Rory Murphy/James Dance Tel: +44 (0) 20 7409 3494