Central Petroleum updates market on Century Energy Services proceedings

Central Petroleum (ASX: CTP) has updated the market regarding the dispute status with Century Energy Services Pty Ltd.

Central said yesterday the Supreme Court of Western Australia published its decision on an application by Central for an injunction restraining Century Energy Services Pty Ltd from demanding or obtaining payment under a Banker's Undertaking.

Central had provided the Banker's Undertaking as security for payment for drilling services provided by Century between May and December 2010.

The contract pursuant to which the services were provided was terminated as a result of a breakdown of the rig on 5 December 2010.

Century had initially claimed that it was entitled to be paid an amount of $795,649.36 in addition to the amounts already paid for services provided up to the point of termination of the contract.

While the Court decided against granting an injunction, Century has through the process reduced its claim to between $312,282.66 and $358,832.66.

In respect to Century’s claim for payment, Central says that it has a claim arising from the breakdown and termination which is for a far greater sum.

It has made a claim against Century for costs incurred as a result of the breakdown and termination, and for the likely costs associated with the logistics and the re-entry and drilling of Surprise 1 to the depth reached at the time of termination of the contract with Century in December 2010.

Central has commenced arbitration proceedings in connection with this claim. Century has disputed Central's claim.

Central and Century are currently engaged in amicable discussions in an attempt to resolve these issues without the need for continuing arbitration proceedings.

If these discussions do not lead to an agreed resolution, these issues will be resolved by arbitration, which would likely occur in April 2012.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/20181/central-petroleum-updates-market-on-century-energy-services-proceedings-20181.html