PPL gets $54.8 million in overdue payments from Canadian oil firm

KARACHI: A Canada-based oil firm paid $54.8 million in outstanding payments to Pakistan Petroleum Limited (PPL) after reaching an agreement to settle two-year old dispute on rigs liabilities, a bourse filing said on Friday.

“Pursuant to the settlement agreements a sum of $54,800,000 were paid by AROL (Asia Resources Oil Limited) to the company (PPL) in respect of Gambat South and Kotri North blocks in lieu of its outstanding liabilities, including the final settlement amount and current cash calls,” a notice to Pakistan Stock Exchange (PSX) said. 

In 2014, AROL decided to divest its 10 percent working interest in the fields with potential tight and shale gas reserves in which Pakistan Petroleum Limited holds majority stakes. But, the decision led to a discord over sale of rights as PPL claimed to have privilege to re-acquire shares as per an agreement.  

AROL also filed a court case against the government-owned entity. 

In January, PPL’s board, however, approved proposed settlement agreements with AROL, which, inter alia, provided for the withdrawal of a civil suit filed by the Asia Resources Oil Limited in the Sindh High Court and the payment by AROL of all outstanding cash calls along with late payment surcharge in respect of the blocks.

“AROL also withdrew the civil suit unconditionally against the other defendants and thus the civil suit was disposed of on 10 May, 2017,” the notice added. 

Though AROL’s outstanding liabilities in respect of the Gambat South and Kotri North blocks have been discharged, it didn’t pay the settlement amount related to the Naushahro Feroz block. 

“In terms of the settlement agreement in respect of Naushahro Feroz, Asia Resources Oil Limited’s 10 percent working interest therein would stand irrevocably fortified in favour of the company,” the bourse notice said. 

Analyst Sharoon Ahmed at Elixir Securities said there won’t be any impact on
PPL’s earnings as a result of increase in its stake in the field. 

“We estimate this payment of $54.8 million to result in one-time after tax gain of Rs1.75/share, likely to be booked in second quarter of the current fiscal year,” Ahmed said.

He added that Naushahro Feroz is an exploration block, and after drilling completion of its first appraisal well Naushahro Feroz X-01, initial testing showed negligible flows of 1.3 million metric cubic feet per day.

“Hence, increased Pakistan Petroleum Limited’s stake is not likely to have any material impact on recurring earnings.”