(Ecofin Agency) - South African-based independent oil and gas company, SacOil has announced that it has entered into a settlement agreement with Nigdel United Oil Company Ltd regarding the latter’s legacy involvement in Oil Prospecting Licence (OPL) 233 in Nigeria.

According to SacOil, after the consideration of the independent legal and financial opinion provided till date, both parties have decided to withdraw their respective litigation and arbitration claims.

“This settlement removes any distraction in relation to our previous participation in OPL 233. The board of SacOil is confident that this is in the best interests of all our stakeholders, based on the sound legal and financial advice we have received. Furthermore, the decision to settle this case is not expected to have an impact on SacOil's financial results for the current year,” Thabo Kgogo (photo), CEO of SacOil, told Reuters.

OPL 233 was re-categorized as an asset held for sale as at February 28, 2015 after the Board vowed to terminate its participation in the asset. Consistent with the termination, SacOil had the right to be refunded for all costs expensed on OPL 233 by Nigdel.

Consequently, SacOil has no future commitments and obligations associated with the appraisal of OPL 233. The asset was impaired by R194.1 million following management's assessment of the recoveries from Nigdel.

The company had said then, that the outcome of the termination negotiations with Nigdel might bring about a reversal of part of the impairment in future.

Anita Fatunji