Stream Oil & Gas Responds to Rumours on 10% Mineral Royalty Tax Neutralization

Stream Oil & Gas Ltd. responded on 04 November to rumours as presented by various Albanian media sources and provides an update on the 10% mineral royalty tax neutralization.

It has come to Management’s attention that a local Albanian TV channel recently asserted claims that several companies have been noncompliant in meeting their obligations regarding concessions in Albania.
In addition, they stated that Albpetrol has commenced procedures to break the Petroleum Agreements (“PAs”) with Stream as result of Stream’s failure to provide its share of pre-existing production (“PEP”). These claims are without merit and have no basis in fact.

Subsequent to entering into the PAs with Stream, the Albanian government levied a new 10% mineral royalty tax (“MRT”) in 2008. Under the terms of PAs, any new financial burdens, including new mineral taxes, are to be immediately neutralized by amendments to the PAs. As previously disclosed, the amount owed to the Company in neutralization totals approximately US$60.0 million. Stream has the right for equitable set off to recoup the taxes levied. Since outset, Stream has provided the PEP share to Albpetrol and paid the mineral royalty tax to the Albanian Government. To conclude the long outstanding MRT neutralization issue, Albpetrol and Stream jointly presented amendments to PAs to the Albanian Government, which included, in part, Stream’s recovery of its past payments through withholding and monetizing Albpetrol’s PEP.

Thereafter, Stream and Albpetrol commenced execution of these amendments as demonstrated by Albpetrol in its refusal to take its PEP. Failure to take their production would have resulted in shut-in production for Stream had it not been disposed of by the Company.

The Company has made and continues to apply its best efforts to have these amendments ratified. “Recent discussions with the Ministry representatives have indicated that the Government is not contemplating any actions against Stream, nor has the Ministry any grounds for such claims,” said Dr. Sotirios Kapotas, President and Chief Executive Officer. “We recently submitted our 2014 work plan and budget, and we will continue to work with the Ministry and Albpetrol to resolve any outstanding issues.”

energjia.al, 05.11.2013