Leni Gas & Oil has launched legal action against rival Mediterranean Oil and Gas (MOG), alleging it was misled into selling exploration interests off the coast of Malta at a depressed price.
Leni had held a 10pc stake in MOG’s exploration block off Malta, but on July 31 sold that stake to MOG for a nominal $1 plus $19,050 in past liabilities.
Less than a month later, MOG signed a $10m deal to sell a 75pc interest in the same block to Genel Energy (Other OTC: GEGYF - news) , whose chief executive is ex-BP (LSE: BP.L - news) boss Tony Hayward. Analysts said the deal, under which Genel will also pay for drilling two wells, could imply Leni’s stake had been worth $9m.
Serial (Taiwan: 910069.TW - news) entrepreneur David Lenigas, chairman of Leni Gas & Oil, said yesterday that it was the company’s “strong view that it was misled by MOG” ahead of its agreement to sell its 10pc stake.
In a statement Leni said it had “issued proceedings against MOG in the High Court of England and Wales”.
It is understood that Leni’s claim is for the rescission of the sale of the 10pc stake, or for damages in lieu of rescission. It alleges that MOG misrepresented the status of the negotiations with Genel to induce Leni to sell its interest for $1.
In September, Leni demanded more details about the chronology of the Genel deal and about seismic surveys of the Maltese interests, threatening legal action if it did not receive satisfactory answers.
Leni’s chief executive, Neil Ritson, said yesterday: “We have repeatedly asked MOG to answer simple questions explaining the facts at the time the company agreed to sell its interest and since we have not had what we regard as satisfactory answers, [Leni’s] board has found itself with no option but to seek relief through the courts.”
MOG said it “continues to refute the various claims” made by Leni. “MOG has addressed these allegations in lengthy and detailed correspondence over a period of four months,” it said.
“The allegations made are unfounded and the company will defend itself and the interests of its shareholders rigorously and will seek indemnity costs against Leni Gas & Oil.”
It said its deal with Genel and planned drilling work in Malta were unaffected by the dispute.