San Leon Energy plunges over £13m settlement with Avobone

26th May 2015 11:10

Shares in San Leon Energy plunged over 11% on Tuesday, after the oil and gas producer said it would appeal against the decision of the International Court of Arbitration in relation to a dispute with Avobone over the Siekierki asset.On 23 May, the ICA ordered the Ireland-based group to pay £13m to settle a dispute with Holland's Avobone NV over a transaction with Auralian Oil & Gas, which was acquired by San Leon in 2013, concerning the Poland-based facility.The main issue of the dispute is a loan that Avobone, which pulled out of the joint venture early in 2013, provided to Aurelian and that, according to San Leon, should have been repayable only had the group exited the project after the site had generated sufficient capital to repay the loan.The loan, which would total about two-thirds of the £13m settlement, was a "standard industry-practice mechanism" that was used to fund Avobone's share of the drilling, San Leon said in a statement."Following consultation with counsel, the company remains convinced that Avobone's case is substantially without merit, and that the findings of the Court of Arbitration constitute a 'serious procedural irregularity'," the company added.San Leon shares were down 9.42% to 1.18p at 11:31 on Tuesday.