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Sherritt, Pebercan shares sink on Cuba contract
January 26, 2009 / 9:03 PM / 9 years ago

Sherritt, Pebercan shares sink on Cuba contract

TORONTO, Jan 26 (Reuters) - Shares of Pebercan Inc PBC.TO and Sherritt International (S.TO) fell hard on Monday after Cuba revoked a production-sharing agreement with the Canadian companies.

Pebercan announced on Friday that Cubapetroleo SA, or Cupet, had revoked their 16-year-old agreement, in exchange for a $140 million payment.

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 a day in the third quarter and all the oil was sold to the Cuban government.

The production-sharing agreement had been set to expire in 2018.

Pebercan was down 23.6 percent at C$1.07 on the Toronto Stock Exchange, while Sherritt, a mining company that is Pebercan’s partner in the Cuban oil fields, fell 14.7 percent to C$3.36.

Sherritt said in a statement on Monday that its share of net oil production from the block was about 4,500 barrels a day, or 26 percent of its overall Cuban oil production.

Sherritt will receive about $60 million of the $140 million payment. The company said it continues to operate its 100 percent owned production sharing arrangements with Cuba.

$1=$1.22 Canadian Reporting by Cameron French; editing by Rob Wilson

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