Canadian Overseas Petroleum Limited (LON:COPL) (CSE:XOP) has told investors it is confident that the exploration licence for OPL 226 will be extended, with confirmation expected in the fourth quarter.
Earlier this year, in August, shareholders in COPL’s Nigerian affiliate executed an agreement to resolve their disputes and that agreement was subject to OPL 226 being extended beyond September 30, 2020.
The Nigerian affiliate applied in June to extend the exploration licence and since then a number of constructive meetings with the National Petroleum Corporation (NNPC).
COPL is expecting the extension to be confirmed in the fourth quarter and noted that coronavirus (COVID-19) restrictions are creating delays within the NNPC.
No notice of termination has been received by COPL's Nigerian Affiliate and according to the licence terms such notice would’ve been required before September 30, the company added. Moreover, it added that on two prior occasions extensions to drilling licences at OPL 226 were awarded after the actual expiration dates.
"We understand that the length of time that has passed since the process for the extension of the OPL 226 PSC started has caused concern among some shareholders and market participants,” Arthur Millholland, COPL chief executive said in an operations update.
“The COVID-19 situation has caused most governments globally to react to protect their organs of government as well as their citizens through restrictions on meetings or gatherings to air travel. This is true for Canada and the United Kingdom as well as for Nigeria.”
He added: “To date we have only had constructive conversations with NNPC, so we believe this delay is due to COVID-19 bureaucracy pressures. Our company, through ShoreCan and the other shareholder of the Nigerian Affiliate, continues to be confident in the process and its outcome."