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Hardy Oil & Gas to cut funding to India unit after court ruling, shares slide

Following the court ruling in India, Hardy said it has decided to write-down US$51.1mln of intangible assets associated with CY-OS/2 exploration expenditures
Hardy Oil & Gas to cut funding to India unit after court ruling, shares slide
Hardy is the operator of the CY-OS/2 exploration block located offshore Pondicherry and holds a 75% participating interest

Hardy Oil & Gas PLC (LON:HDY) shares slumped on Thursday after it said it would cut funding to its Indian subsidiary after a court ruling in India went against the company.

Hardy said the Supreme Court of India had upheld Union of India's (UOI) appeal that Indian courts have jurisdiction over hearing an appeal against an arbitration tribunal's ruling.

READ: Hardy Oil and Gas unveils new Indian gas discovery, shares advance

The Supreme Court had been mulling the UOI’s appeal against a judgment by the High Court of Delhi that the India High Court did not have jurisdiction to hear the UOI’s appeal against the merits of an arbitration tribunal's ruling that the relinquishment of the CY-OS/2 exploration licence by the UOI was unlawful.

Hardy Oil & Gas is the operator of the CY-OS/2 exploration block located offshore Pondicherry and holds a 75% participating interest.

"Our considerable efforts to enforce the CY-OS/2 Arbitration Award, handed down in 2013, have not produced a meaningful outcome,” Hardy’s chairman Alasdair Locke said in a statement.

“The UOI has consistently been allowed to adopt strategies to frustrate the enforcement process by the judicial institutions in India, UK and US. Consequently, we are now curtailing funding to the wholly owned Indian subsidiary HEPI and reviewing our strategic objectives for the Group which could include one or more of individual asset sales, a sale of HEPI and a sale of the ongoing CY-OS/2 litigation. I will report back the conclusions of this review to shareholders in due course,” he added.

Having considered India's Supreme Court ruling to allow an appeal of the CY-OS/2 award in India courts, Hardy said it had decided to write-down US$51.1mln of intangible assets associated with CY-OS/2 exploration expenditures.

This resulted in a significantly higher total comprehensive loss of US$54.1mln for the first half of its fiscal year compared to a loss of US$2.0mln of the prior year. General and administrative expenditure included legal expense of US$2.1mln compared with $0.8mln in the comparable period a year ago.

Shares in Hardy were 5.2% down at 4.74p in mid-afternoon trade.

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