The curtain has fallen on Victoria Oil & Gas’s (LON:VOG) long-running dispute with RSM over the Logbaba oilfield in Cameroon as the court in charge of the arbitration handed down its judgement.
The Secretariat of the International Chamber of Commerce decided that RSM Production Corporation did not automatically forfeit its interest in the licence as Victoria had argued.
That’s because the cure period for its ‘unequivocal default’ should have been 30 days and not the 15 days contended for by Victoria.
RSM must now pay the second cash call, which it failed to make, of US$4.1mln “promptly” or risk a further default. It will also need to stump up more in a third cash call for its 40% share of expenditure incurred since the second cash call in June 2011 to the tune of US$20mln.
If RSM fails to meet the demands within ten days, it will again be in default.
Victoria said it remains entitled to recoup around US$65mln of drilling costs before RSM can claim its share of the profits.
It will also be looking for a payment of US$512,000 relating to unpaid costs awarded to it in the first arbitration.
Logbaba is Victoria's flagship asset. RSM insisted it still held a 38% interest in the field, whereas Victoria, through its wholly-owned subsidiary Rodeo Development Ltd (RDL), claimed it had forfeited the stake.
Shares were suspended on Thursday afternoon pending an announcement of the court’s decision.
“We had a dispute with RSM and it is now resolved,” said Victoria’s chairman Kevin Foo.
“The company now has a contributing partner responsible for 40% share of all costs going forward and who is obliged to pay an outstanding cash call of approximately US$4 million.
“Additional cash calls of approximately US$20mln are also due to be issued imminently. Under agreements with RSM, RDL expects to recoup the majority of its US$65mln capital expenditure on wells 105 and 106 before any profit distribution is due to RSM.
“Furthermore, VOG's subsidiary RDL is entitled to apply for an additional 44 sq. km. area exploration area that borders our existing 20 sq. km. exploitation licence on three sides.”