COSL, Statoil in $65 million settlement agreement

6/26/2014

COSL, Statoil in $65 million settlement agreement

BEIJING -- China Oilfield Services Limited (COSL) has reached a settlement agreement with Statoil ASA concerning a dispute related to stand-by fees for operating platforms.

Prior to this, there were disputes between COSL Offshore Management AS (COM), a Norway-based subsidiary of COSL and Statoil Petroleum AS, a subsidiary of Statoil, regarding stand-by fees for two semi-submersible platforms stemming from the installation of third-party equipment.

COM filed a lawsuit with Norway Stavanger District Court in 2013 against Statoil Petroleum AS, claiming a compensation sum aggregating approximately RMB924 million equivalent and overdue interest. Upon acceptance by the Court as a case eligible for further proceedings and after going through the inquisitorial procedures, the two parties conducted settlement negotiations at time and according to procedures specified by the Court.

Statoil Petroleum AS recently agreed to a one-off settlement sum of $65 million payable to COM (about RMB404 million) to release both parties from the previous disputes. After taking into account the ongoing business relationship between the two companies, also considering potential litigation costs, and uncertainties and risks of the final outcome, COSL has agreed to the terms of settlement, and has undertaken to withdraw the lawsuit against Statoil from the Norway Stavanger District Court. The settlement sum will be recognized as revenue for the current period.

COSL's three semi-submersible platforms that are currently providing drilling services to Statoil are operating as usual.

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