Empyrean Energy PLC (AIM: EME) saw its shares halve to 0.07p after the company revealed it had been hit with a shock notice that could effectively strip it of its stake in the Duyung gas project in Indonesia.
The operator of the Duyung production sharing contract, West Natuna Exploration Limited (WNEL), served what it calls a “Notice of Election of Remedy and Forced Withdrawal” — an escalation that lands at a highly sensitive moment.
For months, Empyrean and WNEL, which Conrad Asia Energy owns, have been locked in negotiations over disputed unpaid cash calls — partner contributions to project costs. Empyrean says the amount at issue totals $789,815 including interest.
What stunned investors is the timing: the notice was delivered while both sides were still engaged in the joint operating agreement’s dispute-resolution process. According to Empyrean, discussions had even produced a verbal in-principle agreement on the size of the liability, pending formal documentation.
Empyrean argues that WNEL’s action pre-empts the agreed process, and has asked the operator to withdraw the notice. If enforced, the move would treat Empyrean as having voluntarily withdrawn from the project, transferring its entire interest to WNEL — a position Empyrean flatly rejects as “invalid”.
The company says it will take “all necessary action” to defend its stake, including arbitration if the operator walks away from negotiations.
The situation is further clouded by Conrad’s own challenges. The operator has been in a trading halt on the Australian market since mid-November as it works to sell down part of its 75% holding. Empyrean fears that a forced withdrawal could interfere with its tag-along rights, which allow minority partners to join a sale on equal terms.
For now, Empyrean says it is still pushing for a cooperative settlement — but is also reserving the right to claim damages for any losses arising from actions it believes breach the operating agreement.
The market’s reaction has been swift and brutal.
