An ICC arbitral tribunal has ruled against Interoil Peru SA (Interoil Peru). Interoil expects to continue operating blocks III and IV under a 12-month license contract and aims to participate in the coming bid round for the same blocks.
The arbitral tribunal ruled against Interoil in the case between Interoil Peru SA and Perupetro.
"We are surprised and disappointed with the arbitration ruling. We, and our legal advisors, are of the strong opinion that all legal merits of this case entailed that the arbitration tribunal would rule in favor of Interoil. Despite this set-back, we are pleased to be in the advanced stages of concluding a 12-month license contract, which allows us to prove over the next year that Interoil Peru is the obvious choice to continue operating the blocks when the licenses are up for renewal in 2015," says Thomas J. Fjell, CEO of Interoil Exploration & Production ASA.
Interoil Peru and Interoil Exploration & Production ASA continue to analyze the award together with their legal advisors to determine whether any further legal action is required.
Interoil's Peru operation has a working interest production of approximately 2,300 barrels of oil equivalent per day. EBITDA from the Peruvian operation was USD 28 million in 2013, despite a six percent decline in production since year-end 2012. The latter was affected by Interoil keeping investments to a minimum until the license situation had been resolved.
In addition to its operation in Peru, Interoil holds a portfolio of two licenses in Colombia. Puli-C is the main producing block, which in February 2014 produced 1,898 boepd. Oil production from Puli-C has increased 66 percent on the back of a 12-well drilling program that started in Q2 2013. Interoil also holds a license in the LLA-47 exploration block in the Llanos Basin in Colombia that shows significant potential.
"Interoil expects the next phase of the Puli-C development program to yield further 40 percent production growth in 2014 and uncover additional gross reserves of approximately five million barrels of oil. The news from Peru combined with the potential in Colombia confirms that Interoil has a strong platform for the future growth of production and reserves," says Thomas J. Fjell.
