OML120: General Hydrocarbon denies owing First Bank $225m

The General Hydrocarbons Limited, owners and operators of Oil Mining License, OML 120, Deep Offshore Nigeria, has insisted it was not owing First Bank Nigeria $225m as claimed in recent media reports.

The firm issued the clarification following reports that a federal high court in Lagos had restrained all commercial banks in Nigeria from releasing funds or handling assets belonging to the oil firm.

Daily Trust reports that the court had restrained financial institutions in Nigeria from releasing funds to the company owned by Chairman of GHL, Mr. Nduka Obaigbena who also doubles as Chairman of Arise and publisher of ThisDay Newspapers.

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However, GHL in a statement by its Director of Strategy & Operations, Abdelmuizz Bello explained that it entered a legally binding, enforceable Subrogation Agreement with First Bank on May 29, 2021 with FBN agreeing to fund GHL’s exploration, production and development of OML 120 in exchange for sharing profit from oil proceeds at 50:50 ratio and taxes over 8 years.

It explained that the FBN 50% share will then be used to pay down its non-performing loans of about $718million which was discounted to $600m to resolve its solvency issues therefrom.

According to the firm, the agreements signed with GHL enabled the FBN to return to good standing as it would enable FBN to declare a profit of N151Bn ($377.5million) for the year ending December 31, 2021 instead of N302Bn loss at the then exchange rate.

GHL added that the agreements made it clear that the Non-Performing Loan had nothing to do with GHL beyond the fact that 50 per cent of profits from OML 120 due to FBN under the Subrogation Agreement will be used by FBN to settle the hole created in its books by the Non-Performing Loan (NPL).

The statement added, “Following the agreements with GHL, FBN’s market capitalization of N256.6Bn, more than tripled to over N900Bn as of 30th November 2024.

“Essentially, GHL’s grouse is FBN’s failure to meet its agreed and executed financial commitments which GHL had believed would be made, when it signed the agreement resulting in critical challenges for the development of OML 120.”

The firm further explained that FBN’s credit and risk team verified and approved all contracts and invoices due to the contractors engaged for the development and operations of the oil mining lease and made payments directly to these contractors and service providers.

It therefore stated that the allegations of a diversion of the monies advanced to GHL “befuddling and without merit as payment were made by FBN directly to service providers after vetting and approval by its credit and risk teams…”

The firm also faulted the Mareva injunction granted by Justice Deinde Dipeolu of the Federal High Court in Lagos based on an application by First Bank and FBNQuest Trustees Limited.

It added that GHL in seeking to exercise its options under the agreement to find new lenders and partners that can be efficient and cost effective to save the project for Nigeria had approached the Court to seek injunctive reliefs and protective orders to secure its commercial and economic interests and find resolution via arbitration.

According to the statement, the company secured an Order restraining FBN from obstructing or preventing GHL from obtaining or securing loan facilities or funding necessary for the exploration or operation of OML 120.

It got another order restraining FBN from making any calls or demands, or taking any steps whatsoever to enforce any security, receivables, instrument, finance documents or assets of GHL which have been charged as Security while FBN was also restrained “from appointing an operator, asset manager or any person/institution of the same/similar ilk in respect of OML 120, pending the hearing and determination of the arbitration proceedings between GHL and FBN.”