New Stratus Energy Inc (TSX-V:NSE).’s shares collapsed 71% today after the Ecuadorean government said it does not intend to extend contracts for two blocks, 16 & 67, in the Orellana province, which together produce 15,000 barrels of oil per day.
The current contracts expire this month and the company was trying to extend them by 15 years but now the group faces taking the dispute to international arbitration.
The company said it was shocked by what it called a sudden change of posture by the Ecuadorean President who had previously welcomed and encouraged plans to pursue the contractual extensions.
It believed the decision to be politically motivated and would discourage foreign investment in Ecuador.
The group said arbitration would result in minimal cash dilution to shareholders and forecast it would end 2022 with C$0.30/per share in cash and short-term receivables.
New Stratus said it would maintain a strategic alliance with Baker Hughes which, in the short term, will result in new business opportunities outside of Ecuador.
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