Tuesday, January 27, 2009

Pebercan, Sherritt Plunge as Cuba Ends Oil Contract

Pebercan, Sherritt Plunge as Cuba Ends Oil Contract (Update2)
By John Kipphoff

Jan. 26 (Bloomberg) -- Pebercan Inc., a Canadian company producing oil
in Cuba, dropped to a six-year low in Toronto after it said that the
Caribbean island nation terminated its oil production sharing contract

Pebercan shares plunged 33 cents, or 24 percent, to C$1.07 as of 3:48
p.m. in Toronto Stock Exchange composite trading, the lowest price since
August 2002.

Cubapetroleo SA, the state oil company, notified Pebercan that it
"wishes to prematurely terminate the production sharing contract entered
into in 1993 and scheduled to expire in 2018," Montreal-based Pebercan
said in a statement distributed by Canada NewsWire on Jan. 23 after
markets closed.

Pebercan will get a payment of $140 million (C$170.63 million), of which
it will pass on $60 million to partner Sherritt International Corp.
Sherritt, an oil and nickel producer, fell 14 percent to C$3.39 in
Toronto, the lowest since Dec. 31.

A joint venture with Pebercan accounts for 26 percent of its overall
production in Cuba, Toronto-based Sherritt said in a separate statement
on Marketwire. Its other, wholly owned production sharing contracts in
Cuba continue, Sherritt said.

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