Santos takeover target Quadrant Energy is chasing more than $US111 million ($156 million) from US-based Apache in a dispute related to its acquisition of the US company’s Australian oil and gas business in 2015.

Quadrant Energy was formed in April 2015 when a consortium led by Macquarie Capital and Brookfield Asset Management bought the North West assets for $US2.1 billion.

In a complete exit from Australia, Apache also sold a stake in the Wheatstone LNG project to Woodside Petroleum and 49 per cent of the Yara Pilbara Fertilisers plant to co-owner Yara of Norway.

In a writ lodged with the Supreme Court of WA, Quadrant claims it is owed the money as Apache had agreed to indemnify it for any costs related to the fertiliser plant or from the oil and gas assets before Quadrant began getting the economic benefit from its purchase.

The legal wrangling between the companies started, according to the writ, in June 2016 when Quadrant served a notice of claim on Apache that it had breached terms of their sale and purchase agreement.

In February a Supreme Court procedural decision revealed that the two companies could not agree how to respond to tax office reviews of income and petroleum resource rent taxes over a period that covered the ownership of assets by both companies.

Under the sale deal, Apache only has to reimburse Quadrant tax liabilities incurred during its ownership if the tax demand is received by April 2019.

In that judgment, Justice John Chaney said Quadrant was concerned that Apache could draw the process out beyond when they would be liable to pay.

He said Apache was concerned Quadrant might not take sufficient steps to minimise any payments by Apache to ensure any assessment was issued early enough for Apache to pay.

Santos announced a deal to buy Quadrant for US$2.15 billion in August.

Asked whether Santos would be financially affected by legal disputes between Quadrant and Apache, a company spokeswoman said it would be inappropriate to comment on a court matter or speculate on future actions.

“However, Santos fully considered all commercial issues as part of its due diligence relating to the proposed Quadrant acquisition,” she said.

Quadrant owns 55 per cent of the Varanus Island and Devil Creek gas plants, and Santos owns the remaining equity.

Their joint venture has a long history of commercial and legal disputes that will disappear if Santos takes full ownership of the assets. The acquisition is expected to be completed by the end of the year.

Source: The West Australian