TomCo Energy plc
("TomCo" or "the Company")
Commencement of Arbitration Proceedings
Further to the announcement of 16 April 2009, TomCo announces that arbitration
proceedings have been commenced by the Company and its wholly owned subsidiary
Luton-Kennedy Ltd against Avenue Group Inc ("Avenue") and Avenue's wholly owned
subsidiary Avenue Energy Israel, Ltd. The claim for arbitration arises under
the Farm-out Agreement ("Farm-out Agreement") and the Joint Operating Agreement
("JOA") made between TomCo and Avenue as of 1 April 2008 under which TomCo
acquired a 50% participating interest in the Heletz-Kokhav and a 25%
participating interest in the Iris oil exploration and development licences
(Licences) in the State of Israel.
Avenue purported to terminate the Farm-out Agreement by way of a notice
received by the Company on 10 April 2009, on the alleged grounds that TomCo had
failed to make a payment required under the terms of the JOA. Avenue claimed
that TomCo was in breach of its obligations and that Avenue was accordingly
entitled to forfeit TomCo's participating interest in the Licences.
TomCo's arbitration case rejects this assertion on the following basis:-
A. Tomco has paid Avenue over $2.9 million pursuant to its contractual
obligations.
B. Avenue has failed to complete the Farm-out transaction in accordance with
the terms of the Farm-out Agreement.
C. Avenue has failed to account to TomCo for the significant expenditures
which TomCo has funded under the terms of the JOA.
D. Avenue has failed to account to TomCo for the substantial revenues it has
received from Licence operations.
E. Avenue has consistently failed to supply information to TomCo which it is
obliged to provide under the terms of the Farm-out Agreement and the JOA.
F. In consequence of its serious and repeated breaches of contract, Avenue is
not entitled to demand continued performance by TomCo of its financial
obligations until it has performed its own contractual obligations.
TomCo is seeking a declaration from the arbitrators that Avenue is in material
breach of its obligations under the Farm-out Agreement and the JOA and must
remedy those breaches forthwith and that Avenue's purported termination of the
Farmout Agreement is invalid and of no effect. TomCo is making further claims
to recover damages in respect of the direct and indirect financial consequences
which flow from Avenue's failure to satisfy its contractual obligations.
The Farm-out Agreement is governed by Israeli law and the arbitration is due to
be heard in Tel Aviv, Israel.
Enquiries:
TomCo Energy plc +44 (0)20 7766 0078
Howard Crosby
Stephen Komlosy
ND