Atlantic Petroleum – Orlando update – Dispute Notice
Tórshavn, Faroe Islands, 2020-09-10 (GLOBE NEWSWIRE) -- P/F Atlantic Petroleum (“Atlantic Petroleum”) (NASDAQ Copenhagen: ATLA DKK & Oslo Stock Exchange: ATLA NOK) announces that a notice (“Dispute Notice”) has been served on Decipher Production Limited (“Decipher”) disputing the accuracy of information they have supplied concerning the production and sale of petroleum from the Orlando field (“Orlando Petroleum”).
Dispute Notice:
Under the sale and purchase agreement regarding Atlantic Petroleum North Sea Limited’s sale of its Orlando interest made on 14 March 2017 (“Orlando SPA”), subject to a threshold (see below), Atlantic Petroleum North Sea Limited is due to receive a deferred consideration of 2% of the sale proceeds from the first 5MM barrels of Orlando Petroleum. Thereafter, the deferred consideration increases to 4.35% of the proceeds of sale of Orlando Petroleum.
A threshold was agreed such that no deferred consideration is payable in respect of the first USD 50MM of Orlando Petroleum sales proceeds (“Threshold”).
Atlantic Petroleum believes that the Threshold has been reached and that payment of deferred consideration is therefore due to Atlantic Petroleum North Sea Limited. Decipher does not agree that payment of deferred consideration is due.
Atlantic Petroleum North Sea Limited has a right under the Orlando SPA to perform an annual audit of Decipher’s books, records and invoices relating to sales of Orlando Petroleum on giving reasonable notice. An audit notice was given on 18 May 2020 with a view to verifying if the Threshold had been reached. However, Decipher has so far refused to accommodate an audit unless Atlantic Petroleum North Sea Limited and its professional advisers first provide additional confidentiality undertakings (in addition to those already given under the Orlando SPA, which Atlantic Petroleum believes are fit for purpose) despite there being no such requirement or condition in the Orlando SPA in that regard.
In light of these circumstances, pursuant to the terms of the Orlando SPA, Atlantic Petroleum North Sea Limited sent a Dispute Notice to Decipher, disputing the accuracy of information they have supplied concerning the production and sale of Orlando Petroleum and including a calculation of the amount of deferred consideration which Atlantic Petroleum believes is due.
Atlantic Petroleum and Decipher have failed to agree the amount of deferred consideration to be paid within 10 business days after service of the Dispute Notice. Accordingly, the Orlando SPA stipulates that the disputed matter may now be referred to an expert for determination.
If the parties are unable to agree on the identity of an expert to determine the dispute by 21 September 2020 then the decision shall be referred to the Chairman of the Institute of Chartered Accountants to appoint an expert. The determination made by such expert on the matter will be binding on both parties.
Atlantic Petroleum looks forward to resolving the matter through the process defined under the Orlando SPA.
Mark Højgaard CEO said:
“It is highly unusual that a North Sea production company refuses to accommodate an audit in accordance with the terms of an Agreement. We regret to have to take the step to involve external experts, but we believe that to be the best course of action given Decipher’s stance in this matter.”
Atlantic Petroleum in brief:
Atlantic Petroleum participates in oil and gas joint ventures with reputable, international partners. Atlantic Petroleum P/F is based in Tórshavn, Faroe Islands, and the Company currently has subsidiaries and offices in the UK. Atlantic Petroleum’s shares are listed on NASDAQ OMX Copenhagen and on the Oslo Stock Exchange.
Further Details:
Further details can be obtained from Mark T. Højgaard, (markh@petroleum.fo). This announcement will be available, together with other information about Atlantic Petroleum, on the Company's website: www.petroleum.fo.
Announcement no.: 9/2020
Issued: 10-09-2020
P/F Atlantic Petroleum
Lucas Debesargøta 8
P.O.Box 1228
FO-110 Torshavn
Faroe Islands
Website: www.petroleum.fo