Shortly after acquiring the Strand interest, during February, 2008, CNR offered to purchase the Company's interest. That offer did not reflect the Company's estimate of the value of its interest and Company declined the offer. CNR subsequently presented to the Company a form of an "effluent processing" agreement and suggested that it would like the Company to start paying dewatering fees to CNR. The Company declined to enter into such an agreement, as it had not paid dewatering charges to Strand and had no obligation to agree to pay dewatering charges to Strand's successor in title. Nonetheless, CNR thereafter commenced to unilaterally charge the Company for "de-watering", and has failed to pay the Company for its share of oil production.
The Company has no contract with CNR, and it is the Company's position that there is no basis on which CNR has the right to levy dewatering charges against the Company. Although the Company is required under International Financial Reporting Standards to record such charges as liabilities in its financial statements, the Company denies any liability for such charges. CNR apparently continues to operate the well notwithstanding the fact that its dewatering charges to the Company have consistently exceeded the value of the Company's 60% share of production from the well since CNR took over operation of the well.
During the nine month financial period ended December 31, 2012, CNR offered to purchase the Company's interest. The Company made a counter-offer. CNR responded by commencing legal proceedings against the Company in the Court of Queen's Bench of Alberta (Court File #1201-09029), alleging that the Company is "operator" of the wells, alleging that the Company is a party to a contract with CNR for "effluent processing" and alleging that the Company is indebted to CNR in the amount of approximately $522,000. The Company denies all of those allegations.
Upon receipt of the Company advised the solicitors for CNR that if CNR were to proceed with such a lawsuit, the Company would defend itself and counterclaim against CNR. The Company requested a copy of the contract alleged by CNR. In response, CNR provided an unsigned copy of the form of "effluent processing" contract presented to the Company in 2008 and rejected by the Company. Following additional exchanges between legal counsel, CNR agreed to a suspension of the litigation to permit additional negotiation for the sale of the Company's interest.
CNR ultimately agreed to pay the Company $75,000 and to eliminate the alleged debt for dewatering charges. Subsequently, however, CNR advised by email that it was prepared to pay only approx. $20,000 and was intending to refer the matter back to litigation. The Company reminded CNR of its agreement to purchase the interest for $75,000 and, in response, has been advised that its contact at CNR has sought instructions from CNRL management. The Company is currently awaiting a response. Absent a favourable response, the Company will be claiming against CNR for, among other things, its 60% share of the profit from production and damages.
On Behalf of the Board of Directors
Verona Development Corp.
Gurminder Sangha, Director
This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore, involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Verona Development Corp.
(604) 681-4653 or 1-866-282-8398
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