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HONG KONG, March 10, 2021 (GLOBE NEWSWIRE) -- Primeline Energy Holdings Inc. (“Primeline” or the “Company”) announces that it has received notification from CNOOC China Ltd. (“CCL”), the operator of the LS 36-1 Gas Field, that CCL will shut down production from LS 36-1 as of May 31, 2021, and is suspending performance of its obligations under Petroleum Contract 25/34, under which Primeline holds its 49% interest in LS 36-1. Primeline does not believe CCL has the right to unilaterally shut down production at LS 25/34 or suspend performance of its obligations under the Petroleum Contract, and intends to vigorously contest each.

As previously announced on June 15, 2020, the award (“the Award”) in the arbitration by the Company against China National Offshore Oil Corporation and CCL (together “CNOOC”), upheld counterclaims made by CNOOC for amounts of approximately $US30 million plus interest. While Petroleum Contract 25-34 remains in force following the Award, Primeline is unable to pay the amounts due under the Award and is in default under its credit facility with the syndicate of banks which hold security over Primeline’s interest in LS 36-1 (the “Syndicate”). Primeline is unable to service the debt to the Syndicate as all cash flow from LS 36-1, which is significantly reduced in any event as a result of natural depletion of the field, is being retained by CNOOC and set off of against amounts due under the Award. As a result, Primeline is unable to remedy the default under the credit facility and is therefore insolvent. However, although Primeline is in communication with and co-operating fully with the Syndicate, the Syndicate has yet to determine how they wish to proceed with regard to enforcement of their security interests.

As previously announced on September 11, 2020, Primeline has applied in the High Court of the Republic of Singapore to set aside the Award on the basis of procedural breaches leading to a breach of the rules of natural justice. It has been necessary for Primeline to obtain an order for service of such proceedings out of the jurisdiction of Singapore and Primeline has been informed that the Singapore Courts have sent the necessary documents to China in order that the Courts in China can effect such service. However, the Chinese Courts have not as yet confirmed that they have effected service on CNOOC and therefore no date for a hearing of the application has been fixed.

Primeline confirms that, other than as disclosed in prior press releases, there have been no ‎material business developments since its press release of August 21, 2020 and the filing on February ‎‎13, 2020 of the Company’s latest interim financial report for the period ended December 31, 2019.‎

About Primeline Energy Holdings Inc.

Shares of Primeline are listed for trading on the NEX board of the TSX Venture Exchange under the symbol PEH.

ON BEHALF OF PRIMELINE ENERGY HOLDINGS INC.

Signed “Andrew Biggs”
Chief Executive Officer

Contact:

Please visit the Company’s website at www.primelineenergy.com. 

Some of the statements in this news release contain forward-looking information, which involves inherent risk and ‎uncertainty affecting ‎the business of Primeline. These statements relate to Primeline’s ability to continue operations. Although these ‎statements are based on assumptions management believes to be reasonable, actual ‎results may vary from those ‎anticipated in such statements. CCL may be successful in shutting down production at the LS 36-1 Gas Field, and suspending performance of its obligations under the Petroleum Contract, as it has notified Primeline it intends to do, and if it does Primeline will have no potential source of future revenue, and will be unable to continue operations. The Syndicate may realize on its security interest over Primeline’s interest ‎in LS ‎‎36-1 Gas Field, and if it does that will result in the seizure of all of Primeline’s material assets, in which event ‎Primeline will ‎be unable to continue operations. Primeline may be unsuccessful in its application to set aside the Award, and if it is Primeline will be unable to continue operations. Primeline assumes no ‎obligation to update forward-looking information, except as required by law. ‎Exploration for oil and gas is subject to ‎the inherent risk that it will not result in a commercial discovery.‎

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.