ICON Energy (ASX:ICN) has today settled out of court its four-month long dispute with Beach Energy over the ownership interests in a West Queensland gas tenement.
South Australia’s Beach (ASX:BPT) has maintained it was entitled to 40 per cent equity in Icon’s prized ATP855P tenement, however the Gold Coast company claimed no agreement had been met.
In settling the matter outside of court, Icon Energy today agreed to transfer Beach the 40 per cent interest, but in return has secured an additional $9 million of funding to set up the tenement’s drilling operations.
“This is a brand new agreement and secures Icon a lot more money. It’s wise to settle these matters before going to trial and in this case it was Beach who came to us and said they’d like to talk,” says Icon CEO Ray James.
“We got together and within a four-day mediation process have reached a mutually favourable agreement. Beach is one of the most experienced operators in the world; we couldn’t have found a better partner and it’s a pity this dispute has occurred.
“But we’ve shaken hands now and are all friends. These things happen sometimes in joint-ventures. Beach is now bringing in the horizontal drills required to begin mining the tenement.”
Under the terms of the agreement Beach will fund most of Icon’s share of farmin operational costs, which includes the immediate establishment of a coal seam gas well for around $16 million.
Icon will contribute about $1.75 million of the total cost and has also recommended to authorities that Beach be the operator of the ATP855P permit.
As the sophisticated mining equipment is being shipped over from Canada, Beach investor relations manager Chris Jamieson says the companies are committed to working closely together.
“We’re glad the whole thing is over. Our intension is to see that this tenement reaches its full potential, and the only way to do that is to work cooperatively with your joint-venture partners,” says Jamieson.
“We potentially could have been a lot further down the track with this well, but it is what it is. The two companies have reached a resolution and the fact that this dispute occurred won’t affect our ability to work together on this tenement.”
Jamieson confirmed any revenues from successful mining of the tenement will be allocated in-line with equity interests.
Icon and Beach now own 40 per cent of ATP855P each, while Adelaide Energy Limited (ASX: ADE) subsidiaries Deka Resources and Well Traced own 10 per cent each.
Despite signing major gas export deal with a Chinese company earlier the year and commencing work on its largest drilling program to date in April, Icon Energy shares continue to perform poorly.
James says the export deal with Shantou Sinogas Energy Co allows Icon to source gas from any of its tenements or from third parties.
“ATP855P was never an essential factor in the Chinese deal. We can supply gas from a number of sources and haven’t ruled out any options,” he says.
Today ICN stock is trading today slightly up at 18.5 cents, however three months ago were steady at 23.0c. Beach Energy (BPT) stock comparatively rose by half a cent today to 99.0c per share.
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