In an update to yesterday’s story about the Memorandum of Agreement (MOA) between Oriental Energy, an affiliate company of Oriental Peninsula Resources [ORE 1.01 6.5%], and Marubeni, a diversified Japanese conglomerate, ORE clarified [link] that the agreement itself is set to automatically terminate after two years, and that it represents “a framework to develop and construct renewable power plants”.
ORE referred to its disclosure as “soft”, which it used to say that whatever definitive agreements between Oriental Energy and Marubeni that come to be negotiated for these power projects would “supersede” the MOA. ORE owns 30% of Oriental Energy.
No other terms of the MOA were disclosed.
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There isn’t anything out of the ordinary here.
Agreements like this, whether they be a memorandum of understanding or a MOA, are usually constructed with a term to push the parties to make a decision.
If things are going poorly and little work has been done under the MOA framework, the 2-year anniversary can serve as a useful 360 review point with no hard feelings.
If things are going well, it can serve as a great opportunity to make the agreement a more robust, formal, and binding representation of the balance of risks, rewards, and obligations going forward. Is the MOA legally binding as it is right now?
It’s hard to say. Without access to the agreement itself, it’s hard to say if the typical elements of a contract are there to form a legally binding agreement.
ORE’s message on this disclosure, and the MOA, is pretty clear: “The statements made pertaining to the disclosure do not guarantee future contracts, obligations and/or performance and undue reliance should not be placed upon them.”
In other words, it’s still early days and nothing yet is very certain.
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