FITZROY River has lost an appeal to the Supreme Court of Western Australia that would have seen it receive a larger portion of earnings through a royalty deed.
Fitzroy said it disputed the first royalty it was paid under the deed in July 2012, paid by Buru Energy and Mitsubishi subsidiary company Diamond Resources.
The company argued that payments received by Buru and Diamond for production from EP 391 – which covers the Ungani field, had been calculated by the two payers as a “net payment” of 50 per cent of gross value at the wellhead.
In an announcement released in August 2013, Fitzroy said it had come to the view that it was being paid a net royalty, and argued it was entitled to a gross royalty.
However, when the case was decided on 15 April 2015, Justice Robert Mitchell dismissed the claim, ordering that the position of Buru and Mitsubishi Group were correct.
Justice Mitchell also ordered Fitzroy to pay the litigation costs of Buru Energy and Mitsubishi Corporation following the case.
The company will continue to receive a 2% royalty, based on the value of the petroleum at the wellhead of any wells in that , Buru Energy said.
Buru chief executive Eric Streitberg said Buru was close to finalising its drilling program for the coming dry season.
“We are very pleased that Buru’s interpretation of the royalty deed has been confirmed,” he said.
“Together with the most recent execution of the agreements with the Native Title partners this provides a clear path for the development of Ungani,” he said.
“Buru is also close to finishing its drilling program for the coming dry season and we look forward to adding value for all of our stakeholders,” he said.
Fitzroy River Chairman Malcolm McComas said the company was prepared to move on.
“While the result is disappointing, it is good to have received clarity around the calculation of payment of the royalty by Buru and others,” he said.
“We look forward to working closely in the future towards developing the relationship and opportunities that exist for the parties that work together.”