Africa Oil Corp. (CVE:AOI
) (PINK:AOIFF) stock price got affect by a dispute between the local authorities concerning the distribution of would be royalties from the company's oil sales.
AOI share price collapsed nearly 15% in what seems to be a slightly exaggerated panic. The trading volume wasn't too significant though at 2.2 million, which was only slightly above the daily average of 1.7 million.
Still, troublesome news were out forcing the price down and the bearish effect could continue until the matter is resolved. On June 13 it was disclosed that a local authority in Turkana, Kenya, wants to force a stop of exploration activities on AOI's 50% owned Ngamia-1 well until the local district is provided with a larger portion of future oil revenues.
The municipal council requires at least 25% of the proceeds. The district is currently promised only 15%.
The news originally surfaced in a Nairobi Star newspaper. There wasn't any official press release from Africa Oil, meaning the activities around Ngamia-1 were likely not affected and the dispute between the local and central governments might have no effect on the company's exploration efforts at this moment.