Cuba revokes Canadian oil producer's contract

Cuba revokes Canadian oil producer's contract
Fri Jan 23, 2009 5:07pm EST

CALGARY, Alberta, Jan 23 (Reuters) - Pebercan Inc (PBC.TO), a Canadian
company that produces oil in Cuba, said on Friday that Cuba's national
oil company has revoked its production-sharing contract and will pay the
Montreal-based firm $140 million.

Pebercan did not say why Cubapetroleo SA, or Cupet, had revoked the
16-year-old agreement, which was to expire in 2018.

Pebercan had rights to the Canasi, Seboruco and Santa Cruz concessions
located between Havana and Matanzas on Cuba's north coast. Output from
the fields was 18,245 barrels per day in the third quarter and all the
oil was sold to the Cuban government.

The company said its partner in the Cuban oilfields, Sherritt
International Corp (S.TO), would receive $60 million from the lump sum
payment.

Pebercan said in a statement it has agreed to transfer all its assets in
the Caribbean nation to Cupet once it receives the lump-sum payment,
expected by the middle of February.

The company said it will take a charge against its earnings when it
releases its first-quarter results and will look for other opportunities
once it is paid by Cupet.

Cupet declined comment.

Pebercan shares were halted late on Friday afternoon on the Toronto
Stock Exchange, last trading at C$1.40. (Additional reporting by Esteban
Israel)

($1=$1.23 Canadian) (Reporting by Scott Haggett; editing by Peter Galloway)

http://www.reuters.com/article/rbssEnergyNews/idUSN2332957920090123