Cobalt escalates row with Sonangol

HOUSTON, March 14, 2017 – Cobalt has filed a notice of dispute against Sonangol regarding exploration and development milestone extensions not granted for its Angolan assets, the US independent said in a statement Tuesday.

Cobalt listed a USD 1.69-billion impairment in its annual report, USD 1.62 billion of which was impaired in line with accounting standards that call for “‘sufficient progress’ be made with respect to oil and natural gas projects in order to avoid the requirement to expense previously capitalised exploratory or appraisal well costs,” the company statement said, adding that the impairment did not reflect what the company considered the market worth of the assets.

The company issued the notice of dispute March 8, and said it would hold off on material investments until the matter was settled.

“While it is clear that our sale process has been negatively impacted by the uncertainty surrounding the extensions, it is also clear that Sonangol’s preference is for Cobalt to present potential buyers to Sonangol to finalise and grant the extensions,” Timothy J. Cutt, the company’s CEO, wrote in a statement.

“While we continue to work the sales process, we must also continue to work to protect our rights and thus have formally notified Sonangol of our dispute. We hope to resolve things amicably with Sonangol but will be ready for arbitration as well,” he addd.

On August 26, 2016, Cobalt announced the deal to sell its Angolan assets to Angola’s state-owned oil and gas company Sonangol, was cancelled. The company opened a data room to attract other prospective buyers, but this will depend on the NOC granting a licence extension.

The early exploration and appraisal activities that the company did were successful, with six commercial discoveries, including Cameia, Orca, Lontra and Golfinho made on six prospects drilled in blocks 20 and 21.

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