Tullow Oil has told Citi Business News its performance this year will not be affected despite the outcome of the court case brought against it by Kosmos Energy.
Tullow says although they find the ruling very disappointing, their expenditure share will not be affected by it.
“It won’t have any effect on that part of our business. This is a one off cost in our business which we could handle. It certainly isn’t good news from our perspective” Head of Communications for Tullow Group George Cazenove expressed.
A panel of arbitrators, working under the jurisdiction of the International Chamber of Commerce, ruled in favour of Kosmos Energy Ghana in relation to its dispute with Tullow Ghana Limited over the West Leo Rig.
Tullow Oil is thus to reimburse Kosmos Energy, some 14 million dollars in addition to interest, as well as certain costs and fees of pursuing the arbitration.
But speaking to Citi Business News, Mr. Cazenove said Tullow is prepared to settle the cost without any hitches to its performance.
“We are all disappointed by the outcome but in terms of our expenditure in Ghana currently ,we have the TEN fields and the Jubilee fields and we are in the process of fulfilling a second rig later this year and that hasn’t changed the result so there is no change to our business” he assured.
Tullow Oil plc (Group) announced that a judgment in the English Commercial Court case brought against its wholly owned subsidiary Tullow Ghana Limited (Tullow) by Seadrill Ghana Operations Limited (Seadrill) had been received.
The Hon. Mr Justice Teare ruled that Tullow was not entitled to terminate its West Leo rig contract with Seadrill on 4 December 2016 by invoking the contract’s force majeure provisions and as such requires Tullow to pay Seadrill a contractual termination fee and other standby fees that accrued in the 60 days prior to termination of the contract.
These fees amount to approximately $254 million.
Tullow is expected to be required to pay these fees within the next 14 days with Tullow being liable for a net amount of approximately $140 million, which compares with the provision of $128 million made in the 2017 Annual Report and Accounts.
Tullow will now examine its options, including seeking leave to appeal the judgment.
As disclosed in the Group’s recent trading statement, Kosmos is disputing separately, through an arbitration against Tullow with the International Chamber of Commerce, its share of the liability (c. 20%) of any costs related to the use of the West Leo rig beyond 1 October 2016.
The arbitration tribunal’s decision is expected shortly.
About Tullow Oil Plc
Tullow is an independent oil & gas, exploration and production group, quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW).
The Group has interests in over 85 exploration and production licenses across 16 countries which are managed as three business delivery teams: West Africa, East Africa and New Ventures.
By: Jessica Ayorkor Aryee/citibusinessnews.com/Ghana.