PXP Energy likely to terminate Peru venture with Aussie partner

PXP Energy, through its subsidiary Pitkin Petroleum Peru Z-38 SRL, said that it will likely terminate its license contract with Australian partner KEI (Peru Z-38) Pty. Ltd. Sucursal del Peru for its offshore exploration venture

In a disclosure to the Philippine Stock Exchange on Monday, PXP said that KEI was supposed to drill a second well in the venture’s third exploration phase (EP), as stated in its contract. KEI is the venture’s operator. Given that the drilling hasn’t commenced, KEI is still obliged to continue drilling until the fourth EP.

In May, PXP Energy filed a case against KEI for breaching its obligation to drill the second well. It also demanded a settlement of at least $100 million for failing to deliver on its contract. 

Pitkin has then determined that the likelihood of the license will be terminated on account of what it views as KEI’s breach of its obligations to give notice on or before June 27 that it still intends to enter into the fourth EP.

PXP Energy has a 25% participating interest in Peru Block Z-38, through Pitkin Ltd.

Map image from PXP Energy website.