The Nigerian independent, Bicta Energy, has been dragged to a Federal High Court in Lagos for allegedly reneging on payment of agreed fees for a range of services.
Bicta is the holder of the Ogedeh marginal field in Chevron operated Oil Mining Lease (OML) 90, in shallow water offshore western Niger Delta. Ogedeh is one of the 24 marginal fields awarded to 31 Nigerian companies in February 2003.
Geotechnique, a Lagos based consulting firm run by Billi Folahan, a former Chevron Geoscientist, names Bicta Energy and D&H/James Bay Resources as co-defendants in a suit no FHC/1/CS/1079/14. The firm alsorequests the Department of Petroleum Resources “to suspend and put on hold all work or processing of any issue or development plans regarding the Ogedeh Marginal Field within your department pending the outcome of the lawsuit”.
Geotechnique says that Bicta has refused to pay either its consultancy fees, “even when we graciously agreed to review its total accrued outstanding consultancy fee from $410,000 (Four Hundred and Ten Thousand Dollars) to $250,000”. It alleges that Bicta also reneges on signed agreement for “Geotechnique’s consideration of 25% commission of all money to be paid by the financial and technical partner and the duly assigned 4% undivided participating interest in the Field as agreed in the Contract of Mandate executed”.
The suit adds a pile of burden on Bicta, which is currently confronted with the challenge of getting Ogedeh to first oil, or at least seen as having done appreciable work on its development before the end of 2014, when the licence expires. Nine out of the 24 marginal fields are in consistent production but Bicta is one of the remaining 18 companies which have not managed to get a rig or an equivalent facility to location for the purposes of field development.
Geotechnique is claiming that over a course of two years working to develop business for Bicta, it has pulled in a Technical and Financing Partner for Bicta, and through the transaction helped Bicta to achieve the following:
1. $2,500,000 ($2.5MM) Farm-In Fee
2. $100,000 Exclusivity Fee
3. $30,000 monthly Opex
4. $500,000 sunk cost
Geotechnique also claims it pulled Bicta out of all prior agreements and obligations with (an earlier partner) Linetrale prior to September 2011 and was instrumental to getting Ministerial Approval for Bicta’s Financial and Technical Partner.
Geotechnique argues it also achieved the following for Bicta:
- Conduct of Environmental Impact Assessment on the field.
- Commencement of Community Relations on the field.
- Grant of DPR approval on EIA study for the field.
- Grant of Federal Ministry of Environment approval on EIA study on the field.
- Grant of Well Re-entry Approval by DPR
- Grant of Well Re-Entry approval revalidation by DPR
- Joint Venture approval from Chevron for Transaction
- Expenditure of over $1,500,000 spent on the Ogedeh Field Development project by D&H/JBR as at December 2012.
Geotechnique says that Bicta agreed to pay a consultancy fee for its services rendered under the Consultancy Agreement as follows:
(i) $15,000 (Fifteen Thousand Dollars U.S) per month prior from the commencement of the consultancy agreement until the procurement of the Minister of Petroleum Resources’ approval of the transaction with a Financial and Technical Partner and;
(ii) $30,000 (Thirty Thousand Dollars U.S) per month after the procurement of the Minister of Petroleum Resources’ approval of the transaction with a Financial and Technical Partner.
Geotechnique is claiming that it “negotiated fairly” with Bicta for an adequate consideration for its services to be provided to Bicta, such consideration being:
(i) 25% (Twenty Five Percent) commission of the agreed Exclusivity Fee to be paid by the Financial and Technical Partner to Bicta,
(ii) 25% (Twenty Five Percent) commission of the agreed Farm-In Fee to be paid by the Financial and Technical Partner to Bicta and;
(iii) 4% (Four Percent) undivided Participating Interest in the Field
It also states that in order to give effect to the consideration for the Contract of Mandate, Geotechnique and Bicta further executed:
(1), a deed of Assignment in March 2012 assigning 4% undivided Participating Interest and rights in the Field to Geotechnique, and (2), a Hydrocarbon Sharing Agreement (HSA) on the 13th of June 2012
Yet, during the subsistence of the Consultancy Agreement, which has lasted over two years, “Bicta paid only $10,000 (Ten Thousand Dollars) towards the accrued total consultancy fee due to Geotechnique”.
In its letter to the DPR, Geotechnique said it found it “quite unfortunate that the genuine efforts of a wholly indigenous Nigerian Company to take advantage of the Federal Government’s policy and initiative on Local Content development in the Nigerian Oil and Gas industry, will be deliberately hampered by another Indigenous company purely for selfish economic and financial purposes”.