ConocoPhillips (COP) Settles Terms Of Payment With Ecuador
Zacks Investment Research | Dec 04, 2017 08:48PM ET
ConocoPhillips (NYSE:COP) has finalized the terms of payment by the Republic of Ecuador under a February 2017 International Centre for Settlement of Investment Disputes (ICSID) arbitration award. The payment will be made to the company’s wholly-owned subsidiary — Burlington.
Per the agreement, ConocoPhillips will receive a total of $337 million from Ecuador. On Dec 1, 2017, the company recovered $75 million from Ecuador, while the remaining $262 million will be paid by April 2018.
The settlement amount consists of a compensation of $42 million to Ecuador for decisions on its counterclaims, of which Burlington is allowed an extra $24 million through a third-party contribution.
In December 2012, the ICSID Tribunal ruled that Ecuador illegally seized the company's considerable oil investments in Blocks 7 and 21, in breach of the U.S.-Ecuador bilateral investment treaty.
In February 2016, the tribunal issued a reward on damages. In August 2017, the ICSID Annulment Committee lifted the stay of enforcement, permitting ConocoPhillips to begin enforcing the award.
About ConocoPhillips
ConocoPhillips is a major global exploration and production (E&P) company with operations and activities in 21 countries. The company is involved in exploration, development and production of crude oil and natural gas worldwide.
The bulk of acres that ConocoPhillips holds in the Eagle Ford shale and Permian basin are rich in oil. We also appreciate the company’s initiative to divest non-core assets. Proceeds from the sale can be utilized in the prospective Eagle Ford shale and Permian Basin. The proceeds will also help the upstream company lower debt that has accumulated owing to the persistent slump in oil for more than three years. However, the company’s rising debt load is a concern.
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Shares of the company have gained 16.4% compared with the Zacks Investment Research
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