Dublin-based exploration company Falcon Oil & Gas is to receive a $3.7 million (€3.49m) cash settlement from Naftna Industrija Srbije (NIS) after it failed to complete a drilling and testing programme at a licence in Hungary.
The Serbian company has agreed to pay the settlement in fulfilment of its contractual obligations.
The two parties signed an oilfield services contract in early 2013 for NIS to complete a three-well drilling programme targeting the Algyo Play, which is part of the Mako Trough licence, by July 2014. The deadline was subsequently extend to December 2014 but by that time, NIS had still only managed to drill and test two wells.
Falcon, which is chaired by industry veteran John Craven, said it still retains a 100 per cent interest in the Mako Trough licence.
The explorer began operations in Hungary in 2005 and the 35-year production licence is the most developed asset in its portfolio.
Losses almost halved at Falcon in the first nine months of the year to $2 million (€1.87m) from $3.97 million (€3.72m) for the same period in 2014, according to results published last week.
Falcon, which trades in Dublin, London and Toronto, has interests in approximately 12.3 million gross acres in three major exploration projects in Australia, South Africa and Hungary.
