San Leon Loses Round Two in Poland

UK explorer San Leon – the owner of Aurelian – has lost its appeal against the findings of the International Court of Arbitration of the International Chamber of Commerce, relating to exploration work in Poland that it carried out with Dutch-registered E&P company Avobone. It is now taking further legal advice, it said February 16.

The earlier arbitration award against Aurelian related to repayment of a loan it received from Avobone, plus costs, and totalled £13mn.

Aurelian appealed the ICC findings to the UK Commercial Court in October 2015. The findings were that Aurelian's leave to appeal was dismissed and the award stands, the company said February 16.

Last May, San Leon gave an update on the case, in which it said that Aurelian understood the loan to be a tax-efficient way to fund Avobone’s share of the drilling and other costs, with repayments due when Avobone exited after the field had earned enough to pay off the loan. In the event, Avobone left in early 2013, before it generated money.

Africa deadline nears

San Leon’s shares have been suspended from trading since late January as it is in the process of raising money for a reverse takeover that will give it an interest in an asset in Nigeria that it sees as being “transformational”. Some 40% of the onshore licence’s output – 31,600b/d as of September and ramping up – is hedged at $95/barrel until December 2017,or almost three times today's oil price. San Leon will also be able to earn from the provision of oilfield services to the asset. It has undertaken to deliver the purchase price into escrow by February 17, and will pay a reverse break fee to Canadian Mart of $2.2mn in the event that it fails to do so. It hopes the deal will conclude in March.

William Powell