Rockhopper Exploration Plc (LON:RKH) told investors it is launching claims against Italy for damages and compensation, after an offshore development was blocked by the government.
The company said it has started international arbitration proceedings in relation to the Ombrina Mare asset.
Italy’s Ministry of Economic Development last February decided not to award Rockhopper a production concession for the field and the company is now seeking recompense for what it believes is a breach of the EU’s Energy Charter Treaty (ECT).
The ECT, which came into effect in 1998, is there to provide a stable platform for energy sector investments, Rockhopper highlighted.
Rockhopper added that, based on legal opinion it has received, it believes it has strong prospects of recovering very significant monetary damages, which would be sought on the basis of lost profits.
The company also told investors that the legal proceedings are supported by an arbitration funding arrangement - essentially a corporate level ‘no win, no fee’ deal - and it expects that it would retain a ‘very material’ proportion of any award if the arbitration claims are successful.
“While it may take some time to produce a result, and there is no certainty of success, Rockhopper is taking all necessary steps to protect its shareholders' interests at no extra cost to the company,” said Sam Moody, Rockhopper chief executive.