South East Asia focused oil and gas company Jadestone Energy has started arbitration against Inpex’s subsidiary Teikoku over of Jadestone’s acquisition of an interest in Blocks 05-1 b and c, offshore Vietnam.
Jadestone in August 2016 signed an agreement with Teikoku to buy a 30% working interest in Blocks 05-1 PSC b and c, for $14.3 million.
Per Jadestone, Inpex then on February 22, 2018, delivered to Jadestone a purported notice of termination of the sales and purchase agreement, “despite Teikoku having just received on February 9, 2018, (i) the waiver by Vietnam Oil and Gas Group (“Petrovietnam”) of their statutory pre-emption rights, held under Vietnamese law; and (ii) direction from Petrovietnam to complete and submit all documents necessary to effect the transfer of interest to Jadestone.”
Jadestone has not accepted Inpex’s alleged termination and says it views the obligations of both parties under the SPA as continuing.
“Jadestone and Inpex engaged in negotiations over an extended period in 2018 and 2019, which the Company pursued with the objective of securing its interest in Block 05-1 PSC. Jadestone has assessed its options, including advice from Queen’s Counsel, as the SPA is subject to English law, and has determined that it is in the best interest of shareholders to challenge Teikoku’s purported termination of the SPA, and to seek specific performance by Teikoku to fulfil its obligations under the SPA,” the company said.
To that end, Jadestone has filed a notice of arbitration with the Singapore International Arbitration Centre in accordance with terms of the sales and purchase agreement.
Paul Blakeley, President and CEO of Jadestone said: “We intend to complete our planned acquisition of a 30% interest in Block 05-1 from Inpex. Prior to the purported termination, the parties had worked together and made very substantial progress toward closing the deal, a process which included Inpex requesting that the deal not be terminated even after the long stop date had passed, and with the objective of obtaining Petrovietnam’s waiver of their pre-emptive rights, which was then achieved in early February 2018.
“While commencing arbitration is never an easy decision, we have exhausted all avenues to come to an amicable conclusion, and now feel Inpex’s continued unwillingness to complete the SPA constitutes a material breach of their obligations, to the detriment of potential value for Jadestone shareholders.”