Empyrean Energy PLC (AIM:EME) shares collapsed 50% to 0.07p after the company revealed that the operator of the Duyung production sharing contract, West Natuna Exploration Limited, had issued a notice that would effectively strip Empyrean of its stake in the Indonesian gas project.
The notice, formally termed a “Notice of Election of Remedy and Forced Withdrawal”, arrives at a sensitive moment.
Empyrean and WNEL, which is owned by Conrad Asia Energy, have spent months trying to resolve a dispute over unpaid cash calls.
These are requests from the operator for partners to contribute their share of project costs. Empyrean says the contested amount totals $789,815, including interest.
What has shocked investors is that the notice was issued while the partners were still working through the joint operating agreement’s dispute-resolution process.
Empyrean says the talks had even produced a verbal, in-principle understanding on the size of the liability, subject to a formal contract.
The company argues that WNEL’s move pre-empts the agreed process and has asked for the notice to be withdrawn.
If enforced, the notice would treat Empyrean as having chosen to exit the project, with its interest transferred to WNEL.
Empyrean insists this is invalid and says it will take “all necessary action” to protect its position, including seeking arbitration if negotiations are abandoned.
The backdrop is complicated by Conrad’s own situation. The operator has been in a trading halt on the Australian market since mid-November as it works on a farm-down of its 75% stake.
Empyrean believes the forced-withdrawal notice could frustrate “tag-along” rights, provisions that allow minority partners to join a sale on the same terms.
For now, Empyrean is pressing for a cooperative resolution but is reserving its rights over any losses arising from actions it considers contrary to the operating agreement. The market’s verdict so far has been brutal.