West Perth-based ARC Energy has hit back at claims that it breached a confidentiality agreement after it received a writ from Oil Basins Ltd late last week.
West Perth-based ARC Energy has hit back at claims that it breached a confidentiality agreement after it received a writ from Oil Basins Ltd late last week.
On Friday, Victorian company Oil Basins issued a court order to ARC concerning an alleged breach of obligations relating to a three-year confidentiality and non-circumvention agreement signed in November 2006.
The agreements relate to several licences, known as the Blina licences, in the Canning Basin.
ARC hit back today saying the claims were baseless and without merit.
In a statement, ARC said that it had yet to receive a full statement of claims from Oil Basins however notes that one claim is for the alleged breach of the agreement in December 2006 when ARC acquired Terratek Drillings Tools Pty Ltd for $2.8 million.
ARC also stressed that the legal action will have no impact on the merger with Australian Worldwide Exploration Ltd and that a shareholders meeting scheduled for tomorrow regarding the merger and the demerger of Buru Energy will go ahead.
"The claims relate to interests in L6, L8, PL7, EP 129 and 7/05-6 EP in the Canning Basin (the "Blina Licences") which are to be transferred to Buru under the proposed ARC demerger," ARC said.
"Oil Basins has an agreement with Backreef Oil Ltd to earn an interest in a sub-block of these licences.
"ARC notes that it has worked cooperatively with Backreef and Oil Basins in relation to these farmin arrangements in the almost two years since the alleged breach, and the alleged contravention had not been brought to ARC's attention prior to Friday's announcement by Oil Basins."
Oil Basins said it has sought substantial damages and other relief against ARC.
Below are announcements from both companies:
ARC ENERGY
On Friday 1 August 2008 ARC Energy Limited ("ARC") (ASX: ARQ) received a writ from Oil Basins Limited ("Oil Basins") (ASX: OBL) concerning an alleged breach of obligations relating to a Confidentiality and Non-Circumvention Agreement signed by ARC in November 2006 in relation to certain permits in the Canning Basin.
ARC considers the claims made by Oil Basins to be both baseless and vexatious. ARC intends to defend itself vigorously against these wholly unfounded and unwarranted claims.
ARC confirms that the legal action instigated by Oil Basins has no impact on the Merger Implementation Agreement between ARC and AWE, and that the General Meeting and Scheme Meeting concerning the Demerger of Buru Energy and the Merger with AWE will be held on Tuesday 5 August 2008.
ARC has yet to receive a full statement of claims from Oil Basins, but notes that the claims relate to a Confidentiality and Non-Circumvention Agreement between the two companies signed in November 2006, and an alleged breach of this agreement in December 2006 via the acquisition by ARC of Terratek Drillings Tools Pty Limited ("Terratek") for a consideration of $2.8 million and a net well head royalty of 2%.
The claims relate to interests in L6, L8, PL7, EP 129 and 7/05-6 EP in the Canning Basin (the "Blina Licences") which are to be transferred to Buru under the proposed ARC demerger. Oil Basins has an agreement with Backreef Oil Ltd ("Backreef") to earn an interest in a sub-block of these licences.
ARC notes that it has worked cooperatively with Backreef and Oil Basins in relation to these farmin arrangements in
the almost two years since the alleged breach, and the alleged contravention had not been brought to ARC's attention prior to Friday's announcement by Oil Basins.
OIL BASINS
The following ASX Release provides an outline of a legal action brought today by Oil Basins Limited (ASX code OBL or the Company) against Arc Energy Limited (ASX code ARQ). The action, brought in the Supreme Court of Western Australia, is centred around ARQ's use of the Company's information which OBL supplied in good faith and protected under a Confidentiality and Non-Circumvention Agreement lasting three years signed by ARQ in November 2006. OBL contends that geological/geophysical analysis, prognosed hydrocarbon play types and commercial opportunities in the Canning Basin, including the Blina Back Reef Joint Venture Play opportunity and its value, were made known to ARQ and they have subsequently acted in breach of their obligations. OBL has sought substantial damages and other relief against ARQ.
Summary of Oil Basins Limited's claim against Arc Energy Limited
OBL is and was at all material times the owner of or otherwise beneficially entitled to deal with certain information of a confidential character relating but not limited to the tenements geologically and/or geographically proximate to or affected by what is described as Blina Back Reef Play Joint Venture Area, located in the Canning Basin Western Australia, including information in relation to parties holding certain assets including an interest in those tenements, such as a Canadian company Golden Dynasty Resources Ltd ("Golden Dynasty"), and its then Australian subsidiary Terratek Drilling Tools Pty Limited ("Terratek") (confidential information).
OBL and ARQ entered into a binding three year Confidentiality and Non-Circumvention Agreement, dated 9 November 2006 (Agreement), pursuant to which ARQ specifically agreed:
not to disclose the confidential information without OBL's consent; and
not to knowingly circumvent OBL in its dealings with any other party with which OBL may have dealings in respect of the subject matter of the confidential information.
The confidential information was communicated by OBL to ARQ for the sole and limited purpose of negotiating an agreement to be entered into between OBL and ARQ for attaining a joint venture or direct interest in the Blina Back Reef Play Joint Venture Area, either by way of conventional farmin and/or via a swap of interests from the defendant for an interest held by the plaintiff, and for no other purpose.
In breach of the Agreement and/or in breach of confidence, ARQ unlawfully made use of the confidential information and/or unlawfully circumvented the Agreement, in that it entered into and announced to the ASX on 6 December 2006 that it had completed negotiations to purchase from Golden Dynasty the shares held in Terratek for a consideration of $2.8 million, plus a net well head royalty of 2% (royalty).
In respect thereof and arising therefrom OBL claims:
Transfer of ARQ shares in Terratek to OBL and all ARQ's joint and several interests in, and titles to:
petroleum licences, leases and permits in Western Australia known as L6, L8, PL7, EP129 and 7/05-6 EP; and
all associated plant, equipment and infrastructure; together with the payment of all fees, charges, duties and taxes in respect thereof.
Alternatively, damages.
Alternatively, an inquiry as to damages for breach of confidence.
Further, or alternatively, an account of all profits made by ARQ with the use of the confidential information.
An order for the appointment of a receiver to collect and receive all the profits made by the defendant from the use of the confidential information and an order for the giving of all proper directions for that purpose.
Interest on damages pursuant to s32 of the Supreme Court Act 1935, or under the equitable jurisdiction of the Court.
Such other or further relief as the Court deems just; and
Costs.
