bmg litigation, page-4

This is all very bizarre. Usually when a joint venture gives the go ahead for a large project and signs contracts for large expenditures you would expect all JV participants to have agreed to the capital expenditure committments. In addition, before making these committments you would expect each JV participant to have determined their source of finance for these committments with some of them signing bank loans/project finance agreements.

Futhermore, you would expect both the loan lenders and each JV participant to require both oil price hedging and were appropriate foreign exchange hedging to be taking out against the projects future production to protect against a fall in the oil prices and movements in foreign exchange.

It does appear that the JV has organised any of these things. Was the joint venture incompetent in entering the LOI without first securing finance and heging or has BW Offshore overstep their authority and incurred expenditure before the operating Lease Contract for the FPSO was finalized?

Anzon's announcement on the LOI is at:

http://clients.weblink.com.au/clients/aza/article.asp?
view=2511746

Regards

SP