Saturday 21 January 2017

Fanning's San Leon Energy considers appeal against £13m court ruling

Published 23/10/2016 | 02:30

Oisin Fanning, chief executive at San Leon Picture: Courtpix
Oisin Fanning, chief executive at San Leon Picture: Courtpix

Oisin Fanning's San Leon Energy is mulling whether to appeal an adverse court ruling in a £13m dispute.

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Last year an international arbitration court ordered the Irish oil and gas explorer to pay that sum to Dutch investment company Avobone.

The row focused on a San Leon subsidiary's attempt to buy from Avobone the remaining 10pc of a Polish asset San Leon already 90pc owned.

Two thirds of the £13m award (which included costs) related to the repayment to Avobone of a loan it had provided the San Leon subsidiary.

San Leon had argued that the loan was a "standard industry-practice mechanism that was used to fund Avobone's share of the drilling and other field-related costs in a tax-efficient manner".

Fanning's company had argued that it should only have had to repay the loan if the field in question had produced enough cash for repayment to be made.

It said no cash had been generated by the time Avobone exited the field in early 2013.

San Leon appealed the arbitration court's ruling to the UK Commercial Court and was unsuccessful. Now a court in Poland has found that the arbitration court's ruling is enforceable in that country.

Fanning, the former boss of Smart Telecom, was unavailable for comment but a spokesperson for San Leon said: "The company does have the right to appeal and is currently reviewing options with its lawyers".

Prior to the unsuccessful UK appeal San Leon said it was "convinced that Avobone's case is substantially without merit".

The adverse ruling comes not long after San Leon was hit with a £500,000 judgment regarding unpaid fees due to law firm Herbert Smith Freehills.

Last month the company raised £170m to complete its entry into the Nigerian onshore oil and gas sector. The company bought a near 10pc stake in a producing asset in Nigeria.

Fanning said the move was "transformational".

"The company has succeeded in finding, funding and executing what we believe is an exceptional deal for shareholders, despite a challenging sector environment," he said.

"We expect the... transaction to underpin the future cash flow of the company with significant returns to shareholders, redeveloping a world-class producing asset," Fanning added.

Funds managed by Toscafund, the investment firm synonymous with London hedge fund manager Martin 'the Rottweiler' Hughes, held more than 54pc of San Leon's shares following the share placing, San Leon said. The deal saw Fanning move from the role of executive chairman of San Leon to chief executive at the firm.

Sunday Indo Business

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