EO Group fails to repay $61.7m debt to Kosmos

Kosmos Energy has revealed that one of the Jubilee Partners at Ghana’s oil fields, the EO Group owes it an amount of $61.7 million and it might have to go to court to claim the amount as the Ghanaian owned oil company has failed to repay the amount on schedule in December 2010.

According to Texas-based oil producer, Kosmos Energy, the money for Development Costs on the oil fields was paid on behalf of  EO.

Kosmos Energy, indicates that under what is termed as the EO Participation Agreement, it was entitled to reimbursement for the development capital expenditures paid for the EO Group’s 3.5% share of costs.

In a filing to the US Securities and Exchange Commission, Kosmos disclosed, “EO Group was obligated to pay their share of costs under the West Cape Three Point (WCTP) Petroleum Agreement pursuant to the joint operating agreement for the WCTP Block among Kosmos Ghana, Anadarko WCTP, Tullow Ghana, EO Group and Sabre Oil and Gas (the WCTP JOA), due to termination of the EO Carry and to reimburse Kosmos Ghana for EO Development Costs in the amount of $61.7 million.” Where JOA is Joint Oil Agreement.

Kosmos continues, “Each non-defaulting party must pay its proportionate share of the EO Group’s default amounts and has done so… EO Group has also not reimbursed Kosmos Ghana for the $61.7 million in EO Development Costs and accordingly currently remains in default under the EO Participation Agreement.”

According to Kosmos, as a defaulting party under the WCTP JOA, the EO Group loses its right to sell its share of oil production which is instead sold by the non-defaulting parties to repay the default amounts paid by the non-defaulting parties.

“Our ability to collect the $61.7 million owed to Kosmos Ghana under the EO Participation Agreement by the EO Group depends on the EO Group’s ability to sell its share of the Jubilee oil production or sell all or part of their interest in the WCTP Petroleum Agreement,” Kosmos says.
Komos meanwhile, threathens to send the EO Group to court if EO fails to pay debt.

“If Kosmos Ghana is not paid, Kosmos Ghana would have a contractual claim against EO Group for the amounts owed under the EO Participation Agreement and our recourse would be to international arbitration”, it says.

http://www.ghanabusinessnews.com/2011/05/24/eo-group-fails-to-repay-61-7m-debt-to-kosmos/