A dispute has arisen between the operator Pioneer Natural Resources, and its
partners in Block H offshore Equatorial Guinea, including Roc Oil, Atlas
Petroleum and PA Resources' subsidiary Osbourne Resources. The essence of the
dispute is a disagreement about how and when a second exploration well should
be drilled in Block H and the costs for this. Arbitration has been claimed and
the drilling of the well is postponed. PA Resources has a 3.1 percent
participating interest in the block.
PA Resources AB (publ) today announces that a dispute has arisen between the
operator Pioneer Natural Resources Equatorial Guinea Limited (“Pioneer”), and
its partners in Block H offshore Equatorial Guinea, including Roc Oil
Equatorial Guinea Company (“ROC EG”), Atlas Petroleum International Ltd
(“Atlas”) and PA Resources AB, through its wholly-owned subsidiary Osbourne
Resources Ltd (“PA Resources”).
The essence of the dispute relates to the Farm-in Agreements, which each
partner in Block H entered into with Pioneer in 2004. These agreements implied,
in brief, that Pioneer gained participating interest in the Production Sharing
Contract for Block H, and in exchange, Pioneer committed to pay a share of the
future costs of drilling two exploration wells in Block H. The two wells are
part of the working obligations for Block H which the state of Equatorial
Guinea has approved.
The first of the two wells, H-1 (Bravo), was drilled in June 2004. Pioneer
thereby discharged its responsibility in that regard. However, ROC EG, Atlas
and PA Resources maintain that Pioneer has breached its obligations with regard
to the second well.
In August 2005, all the partners in the Block H, including Pioneer, resolved to
drill the H-2 (Aleta) well in satisfaction of the work obligations for Block H.
That well would also have discharged Pioneer's obligations to the other
partners under the Farm-in Agreements. The Government of the Republic of
Equatorial Guinea subsequently approved the drilling of the H-2 (Aleta) well.
Until early this year, all partners in Block H were proceeding on the basis
that the well would be drilled, although the precise timing of the drilling was
subject to rig availability.
Earlier this year, Pioneer indicated that it did not wish to proceed with the
drilling of the H-2 (Aleta) well and did not consider itself bound to fund its
parts of the costs of drilling the well. Pioneer further indicated to the
partners that there were two reasons for this: the enactment of a new
Hydrocarbons Law by the Republic of Equatorial Guinea and escalating costs of
drilling the well. PA Resources', as well as the other partners view, is that
Pioneer is not entitled to take the position it has.
In order to seek clarification of certain procedural matters under the terms of
the Joint Venture Agreement which governs the operations and the co-operation
between the companies, Pioneer commenced arbitration actions against ROC EG,
Atlas and PA Resources, on 14 June 2007. Subsequently, ROC EG notified Pioneer
of claims for breach of Pioneer's contractual obligations under the Farm-in
Agreement between ROC EG and Pioneer and further advised Pioneer of its
intention to pursue its claims through arbitration. PA Resources has authorized
ROC EG to pursue the dispute.
Until this dispute is resolved, it is unlikely that the drilling of the well
H-1 (Aleta) will proceed.
Pioneer Natural Resources Equatorial Guinea Limited, a wholly-owned subsidiary
of Dallas-based Pioneer Natural Resources Limited, has a 50 percent
participating interest in Block H. Roc Oil Equatorial Guinea Company has a 18.8
percent participating interest, Atlas Petroleum International Ltd a 28.1
percent participating interest and PA Resources AB has, through its
wholly-owned subsidiary Osbourne Resources Ltd, a 3.1 percent participating
interest.
Stockholm, June 29, 2007
PA Resources AB (publ)
For more information, please contact:
Ulrik Jansson
President and CEO
PA Resources AB
Telephone: +46 70 751 41 84
E-mail: info@paresources.se
PA Resources AB (publ) is a fast growing oil and gas group company with the
business strategy to acquire, develop and exploit oil and gas reserves, as well
as explore new findings. The Group is today one of the largest oil producers in
Tunisia. The Group is also the owner of interests in twelve licenses on the
Norwegian continental shelf as well as in promising exploration areas in
Equatorial Guinea and the Republic of Congo (Brazzaville).
PA Resources AB's net sales amounted to SEK 930 million during 2006. The
company is listed on the SMB-list of the Oslo Stock Exchange and on the OMX
Nordic Exchange in Stockholm. For additional information, please visit
www.paresources.se.
