ICON Energy (ASX: ICN) has vowed to vigorously defend its position in a dispute with South Australia’s Beach Energy (ASX: BPT), which claims it’s entitled to a 40 per cent stake in Icon’s prized ATP855P tenement.
Beach Energy investor relations manager Chris Jamieson told Gold Coast Business News that an agreement had been met that would see Beach operate farmin activity at the promising shale gas tenement, located in far western Queensland at the South Australian border.
“We were very surprised at Icon’s quarterly report which stated that no agreement had been met. Our position is that an agreement was signed off that beach would operate the tenement and be entitled to 25 per cent interest and an option for a further 15 per cent,” says Jamieson.
Icon Energy company secretary and general counsel Wesley Glanville, says no agreement was entered into and claims a lack of official documentation will be used as evidence. Icon received the initial proposal 17 months ago but Glanville says the negotiation process had yet to occur.
“The proposal was subject to negotiation and the execution of a range of documents and we haven’t got to that position yet,” he says.
“They might say they’re surprised at our position, but we’re flabbergasted. They should know that in this business you don’t make significant operational agreements on two-page documents.
“All we’ve seen in that 17-month period has been two pages outlining the proposal. The proposal also included entry into a share subscription agreement and we only received those documents on Thursday. The (lack of) documentation should speak for itself.”
A request by Gold Coast Business News to obtain the two-page document was rejected by Icon, who says releasing the agreement could jeopardise its case. However the Bundall-based company has documented the status of the proposal in its quarterly reports since its initiation.
Glanville says Icon emitted specific conditions of the proposal from the ASX reports, fearing Beach would declare the negotiations finalised if made prematurely public. Icon today has given Beach notice that it will enter legal proceedings to defend its position if need be.
“Beach is a larger company than Icon, and we don’t feel that it is appropriate for a large company to be pressuring a smaller company to enter into an agreement that may not be in its shareholders best interests,” says Glanville.
“We absolutely will defend our position in any forum and have given Beach notice of that. But we’re not concerned (that negotiations have stalled). We have very positive forecasts for the ATP855P tenement and if we own an 80 per cent interest we are in a better position than owning 40 per cent.”
Industry estimates indicate up to 200 trillion cubic feet of gas may be located in the Nappamerri Trough, where ATP855P is located. The tenement could prove critical in Icon’s supply agreement with China’s Shenzhen SinoGas.
Subsidiaries of Adelaide Energy Limited (ASX: ADE) own the remaining 20 per cent interest in the tenement.
Jamieson says Beach Energy puts the dispute down to ‘miscommunication’ and hopes to resolve the matter and work with Icon in the gas exploration of the area.
Icon shares are trading slightly up today at 23c.
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