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Gulfsands Petroleum (GPX)

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Tuesday 28 June, 2016

Gulfsands Petroleum

Claim by Al Mashrek Group in Syria

RNS Number : 4027C
Gulfsands Petroleum PLC
28 June 2016
 

 

 

GULFSANDS PETROLEUM PLC

 

Claim by Al Mashrek Group in Syria

 

28 June 2016

 

Gulfsands Petroleum plc ("Gulfsands", the "Group" or the "Company" - AIM: GPX), the oil and gas company with activities in Syria, Tunisia, Colombia and Morocco, wishes to provide the following information on a claim made in the courts in Syria.

 

Claim by Al Mashrek Group in Syria

 

Al Mashrek Global Investment Ltd ("Al Mashrek") has filed a claim with the Courts in Damascus, Syria, against Gulfsands Petroleum Levant Limited (incorporated in Cayman Islands) ("GPLL") and the Syrian registered branch of GPLL on the grounds that Al Mashrek was not properly notified of the Open Offer completed in January 2016 and hence lost the opportunity to subscribe for new shares in the Open Offer and as a result Al Mashrek's equity was subsequently diluted.  

 

The Court of Appeal of Damascus has issued an order of provisional attachment on GPLL's moveable and immovable assets, including GPLL's share of Block 26, to secure Al Mashrek's claim of an amount of Syrian pounds equivalent to US$2 million. 

 

While Gulfsands continues to investigate the alleged claim it is determined to protect it's rights in Syria and will update the market as more information becomes available.

 

Background: Al Mashrek, Rami Makhlouf and EU Sanctions

 

Al Mashrek, a company owned beneficially by Mr Rami Makhlouf and corporate entities in which Mr Makhlouf and other members of his family are involved ("Makhlouf Interests"), subscribed for shares in the Company in 2007. Prior to the Open Offer in January 2016, these shares represented approximately 5.94% of the issued shares in the Company, and following completion of the Open Offer in January 2016 these shares now represent approximately 1.48% of the issued shares of the Company.

 

Since the time of its first entry into Syria in 2000, the Group has had several commercial relationships with various Makhlouf Interests. All such relationships have been conducted on arms-length commercial terms, have been properly documented and have been disclosed as required by relevant laws and regulations, including the AIM Rules for Companies. Following the imposition by the UK in May 2011 of sanctions against certain individuals and organisations in Syria, including Al Mashrek, Mr. Rami Makhlouf and members of his family, the Group has suspended all payments to the Makhlouf Interests under the commercial agreements noted below, and has suspended some of the rights pertaining to the shares in Gulfsands held by Al Mashrek.

 

Commercial agreements related to the Makhlouf Interests

 

Ramak, a company owned beneficially by the Makhlouf Interests, has since 2000 provided various support and administrative services to the Block 26 Joint Venture(s). Ramak was engaged by the original Ocean Energy (80%) and Gulfsands (20%) joint venture to provide advice and to assist in identifying, evaluating and pursuing E&P opportunities in Syria, including in connection with the successful public tender for Block 26. These services, which are all in the ordinary course of business for an E&P venture operating in a foreign jurisdiction, are documented in a service contract with the original joint venture which is governed by English law and has been amended as appropriate from time to time. The fees have been borne by successive joint ventures pro rata to the participants' respective participating interests from time to time and are today the responsibility of the current 50/50 joint venture between the Company and the Sinochem group of companies.

 

Ramak has since the commencement of the original agreement in 2000, received milestone payments totalling US$900,000 from the various joint venture partners. Gulfsands has been responsible for US$270,000 of these payments, reflecting the Company's, pro rata interest in these joint ventures at various points in time. Further, milestone payments may be earned by Ramak in the event various Block 26 production targets are reached.

 

The services agreement entered into with Ramak, provided Ramak with an entitlement to receive a 2.5% Net Profit Interest on Block 26 production attributable to the joint venture and Ramak began to receive payment in respect of this Net Profit Interest during 2010. The cost of the Net Profit Interest has been borne in equal proportions by the Group and Sinochem.

 

No payments to the Makhlouf Interests have been made since the imposition of sanctions.

 

 

Alastair Beardsall, Chairman, said:

 

"The Board of Gulfsands Petroleum recognises the importance of the Company's interest in Block 26, located in Syria, and will vigorously defend this action in the appropriate courts."

 

 

For further information on the contract areas, please refer to the Company's website at www.gulfsands.com or contact:

 

Gulfsands Petroleum Plc

+44 (0)20 7464 4490

Alastair Beardsall, Chairman




Cantor Fitzgerald Europe

Sarah Wharry

Craig Francis

+44 (0)20 7894 7000

 

Certain statements included herein constitute "forward-looking statements" within the meaning of applicable securities legislation. These forward-looking statements are based on certain assumptions made by Gulfsands and as such are not a guarantee of future performance. Actual results could differ materially from those expressed or implied in such forward-looking statements due to factors such as general economic and market conditions, increased costs of production or a decline in oil and gas prices. Gulfsands is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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