Mr. Andrew Biggs reports
CNOOC AND CCL EXERCISE SET-OFF
Primeline Energy Holdings Inc. has received notification from CNOOC (China National Offshore Oil Corp.) that CNOOC and CNOOC China Ltd. (CCL) will set off the amount due to them from Primeline under the award in the arbitration between CNOOC and CCL announced in Primeline's press release of June 15, 2020, of approximately $30-million (U.S.), plus interest, against amounts due to Primeline from sales under petroleum contract 25/34. CNOOC and CCL are also setting off another amount which Primeline disputes. Regardless of the dispute, although petroleum contract 25/34, which is Primeline's only source of revenue, will remain in effect for the time being, Primeline will cease to receive revenue thereunder.
Primeline has been making only partial payments on its debt due to the syndicate of banks which provided finance for Primeline's share of the cost of development of the LS 36-1 gas field under petroleum contract 25/34, and is in default under the loan. Primeline will now be unable to make any payments to service the debt. The banks hold security over Primeline's interest in the LS 36-1 gas field. Primeline has not yet received any communication from the banks as to how they wish to proceed.
About Primeline Energy Holdings Inc.
Primeline is an exploration and production company focusing exclusively on Chinese natural resources under petroleum contracts with CNOOC in the East China Sea. The LS36-1 gas field has been in production since July, 2014.
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