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If you can’t get your hands off of a very valuable piece of property located within the largest oil sand reserves in the world through a joint venture because you can’t agree with the details of the contract, buy the other company instead.
Such is the plan of Mauricio Trevino Zambrano, a minority shareholder of Mercom Oil Sands plc (LSE:MMO), after the deal to acquire 50% interest in the Chard Oil Sands in Alberta, Canada from Nordic Petroleum AS failed to materialise following months of renegotiation.
Ten days ago, Nordic Petroleum stated it was to take “required legal steps to protect their position” after declaring Mercom Oil to be in breach of contract following proposals and counter proposals from both sides that were deemed unacceptable by either party.
Shares of AIM-quoted Mercom Oil plunged 36.84% on 12th November 2012 to 1.50 pence over a possibility of a legal battle, for which the oil and gas explorer said it was taking legal advice about.
Mercom Oil shares were now at 2.125 pence, 21.4% higher than yesterday’s close by 12:30 PM GMT, after revealing Mr. Zambrano’s plans.
Mr. Zambrano formed a company for the purpose acquiring Nordic Petroleum that when successful, will enable him to sell 100% interest to the four Chard Oil Sand leases.
However, Mercom Oil said the company has no involvement with Mr. Zambrano’s plans.
“There is currently no arrangement or understanding between Mercom and Mr Zambrano, but the Board of Mercom find today’s announcement an encouraging sign of shareholder support and will follow any developments with interest,” Mercom Oil said in a statement.
Meanwhile, Nordic Petroleum has not issued any statement regarding Mr. Zambrano’s announcement.
Mercom Oil and Nordic Petroleum signed a farm-in agreement last February to obtain 50% interest after originally granting a loan to fund the development of the said leases.
Volatile oil prices and other investment opportunities, according to Mercom Oil, pushed the company to re-negotiate the terms for a revision of the joint venture in August but both parties did not reach an agreement despite extensions to the deadline of accomplishing the pre-conditions to the deal.
It’s a scam. Over 80% of the shares in Mercom were bought at 0.1p and are now just being dumped on whoever is willing to buy.
Zambrano hasn’t offered anything to Nordic Petroleum shareholders and doesn’t even own a share yet.
To add insult to injury Mercom is being pulled into arbitration proceedings by Nordic for breach of contract. Mercom hasn’t even bothered to put out an RNS since before Christmas.