re: Ann: SC 6 CADLAO REPUBLIC OF PHILIPPINES... Surprisingly the...

re: Ann: SC 6 CADLAO REPUBLIC OF PHILIPPINES... Surprisingly the latest PKO Cadlao news appears in the quarterly report for Dec 2013 issued on 14 March 2014 and not a follow-up to the ASX announcement of 25 February 2014. Here is an extract:

"Further, subsequent to 31 December 2013, the DOE put Cadco on notice that the DOE considers it is entitled to cancel SC6 Cadlao due to non-performance by Cadco in carrying out the approved Work Program and Budget to date. Following the above, Peak has recommenced the previously suspended arbitration process to protect its rights with respect to the previously earned 25% WI acquired under the Farmin Agreement.

On 4 March 2014, Peak and VenturOil Philippines Inc (VenturOil) met with the DOE and presented an alternate funding and development plan for SC6 Cadlao to the DOE. Peak and VenturOil intend to implement these plans through the joint venture processes. The DOE has verbally agreed not to terminate SC Cadlao for at least two (2) months whilst VenturOil attempts to finalise these matters."

Being prudent, PKO has of at 31 Dec 2013, written off its investment in Cadlao, knowing it can be written back if necessary.

IMHO Peak need get Cadco completely out of the picture for non-performance which is not a new aspect of JVs. The legal specialists will deal with the issue and protect Peak's interests along the way. But the ticking clock is now controlled by DOE. This is now a litmus test for OXX/PKO in how it will conduct business in SE Asia and whether it will succeed. The JV ownership outcome for OXX/PKO can still be favourable but firm and prompt action is required to meet the DOE timeline and demonstrate good faith in the system and also demonstrate OXX/PKO is a can do business partner for the future.