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Oriental Energy refutes Afren’s allegations of illegal payments

By BusinessNews Staff on October 21, 2014

Energy Resources Limited, the 60 per cent equity owner of the Ebok and Okwok oilfields offshore Nigeria, has described as false and defamatory, a statement by the United Kingdom-listed Afren Plc on the results of the independent review by Wilkie Farr & Gallagher (WFG) of UK into certain transactions undertaken by Afren and whether such transactions should have been announced at the time they were entered into in accordance with requirements of the listing rules.

The Executive Chairman of Oriental, Dr. Muhammadu Indimi, said in a statement yesterday that “Afren’s press release, including their summary of WFG’s findings, was a little more than a collection of suppositions, unsupported innuendoes and a series of false and defamatory statements.” Indimi said it was regrettable that the agreed protocol with Afren that required the company to provide Oriental with an advance draft of any proposed press release for comment was blatantly ignored by Afren.

In setting the record straight, Indimi said Oriental must refute the most egregious misstatements contained in Afren’s statement On the first agreement with Oriental Energy in July 2012, Indimi denied that the forward sale of crude oil transaction of $100 million in July 2012 was a “loan” as mischaracterised by the Afren. According to him, Oriental and Afren entered into the Oriental Ebok Forward Sale of Crude Oil Agreement (Forward Sale Agreement) in July 2012. “Forward sales of crude oil among partners, is a common practice in the international upstream petroleum industry. In fact, the Forward Sale Agreement was an agreement for the prepayment of oil. Oriental agreed to sell approximately one million barrels of its future oil production to Afren thereby permitting Afren to book those reserves in 2012.

The reason the $100 million payment to Oriental was included in Afren’s balance sheet for 31 December 2012 under the line “Prepayment and advances to partners” is because it was, indeed, a prepayment for Oriental’s future oil production In reference to the $100 million forward sale, which Afren erroneously referred to as a loan, Afren properly deducted $100 million in oil equivalent barrels from Oriental’s 2014 Profit Oil,” he said. Indimi also clarified that the amended and restated Ebok Joint Operating Agreement of August 2013 (JOA) was agreed so as to conform with the terms of the original Forward Sale Agreement in allowing Afren to recover $100 million in Profit Oil from Oriental’s post-Payout share of Profit Oil barrels. The Afren chairman also stated that on August 23, 2013, Afren and Oriental signed the JOA which had been under negotiation since the summer of 2012.

He said at no time was there ever any “conjoining of the JOA with the $300 million payment as a quid pro quo to Oriental, as misrepresented by Afren”. Indimi also described as most outrageous Afren’s misrepresentations that “the agreement was conditional on pioneer status being confirmed for Ebok which occurred in October 2013”. According to him, the pioneer status was officially confirmed by letter dated May 15, 2013 and by an official certificate dated September 5, 2013, adding that both dates well in advance of the October 2013 date misstated by Afren. Indimi also stated that there is no such thing as an “Amendment Agreement,” erroneously referred to twice in the first paragraph of Afren’s press release under this heading, and a total of eight additional times in the subsequent paragraphs.

He stressed that an “Amendment Agreement would have been an agreement to agree and there was and is no such document”. “Such careless reference to fictitious dates and nonexistent documents as the basis for its infamous charges in this section only serves to confirm the absence of truth and the complete irresponsibility of Afren and of the report summary attributed to WFG in making these and the other consistently false and unsupported defamatory allegations contained in its October 13 release,” he added.

[This Day]

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