New Stratus announced this morning in a press release from Calgary, Alberta, who has have decided to exercise their legal and contractual rights through formal international arbitration.

New Stratus owns Petrolia, what currentlye manages fields 16 and 67 in the Ecuadorian Amazon, which were previously in the hands of Repsol, and whose shares were sold to New Stratus as part of an international transaction. The contract with Repsol, now Petrolia, ends on December 31, 2022 and the government had started the process of canceling the contract two years ago. However, Pétrolia had requested an extension of the duration (apparently 20 years) and a migration to a participation contract to continue the exploitation of said fields, offering an additional investment. of $200 million.

However, the Minister of Energy, Ferdinand Santos, He had indicated that the time was too short to deal with a question of extension of the mandate. Petrolia, for its part, had insisted that it had the right to at least be heard on its proposed expansion and migration.

However, this December 5, New Stratus (Petrolia) indicated its decision to resort to arbitration, after a meeting in Quito between the oil company and the President of Ecuador, Guillermo Lasso, and his Minister of Energy, Fernando Santos. According to New Stratus’ account, “The Ecuadorian government has signaled that it does not intend to comply with its legal and contractual obligation to appoint the negotiating committee required for the extension and migration of contracts for 16 and 67” blocks.

In this way, the company confirmed that the contracts of Blocks 16 and 67 expire on December 31, 2022.

The company said that after acting in good faith during 18 months of talks with the government, “the company is shocked by this sudden reversal of position by the president, who in several previous meetings had welcomed and encouraged the company’s plans to seek contract extensions”. .

In its press release, the Canadian company specifies that the president and the minister told him “that this decision is politically motivated”. According to the company, the decision will discourage foreign direct investment in Ecuador “given the illegal interpretation of contracts by the government, a clear and flagrant violation of the rule of law”.

• New Stratus said it expects to end the calendar year with about C$0.30 per share in cash and short-term receivables.
• He explained that the social partners of the company are informed of this violation of the law by the government.
• New Stratus will file a legal claim against the government in international arbitration. The Company is committed to exercising its legal and contractual rights with minimal cash dilution for shareholders.
• The Company agrees to be a steward of your remaining capital as you pursue new opportunities.
• The Company maintains a strategic alliance with Baker Hughes which, in the short term, will result in new business opportunities outside of Ecuador.

The company said, “We are deeply saddened to share this news with our trusted shareholders.” He added that the development of the remaining reserves in Blocks 16 and 67 required additional investment and technical expertise which the Company is well placed to provide. The Company’s proposed development plan would have produced significant benefits for Ecuador and the Waorani nationality in terms of income, jobs and social benefits.

Company spokespersons have said in previous statements that the arbitration claim could be as high as $260 million.