CALGARY (CP) -- Shares in junior Canadian exploration company Niko Resources Ltd. [TSX:NKO] rose Friday after the global gas producer said a C$250-million lawsuit against the company had been dismissed.
In trading on the Toronto Stock Exchange, Niko stock closed up 2.42% or C$1.43 to C$60.54.
Earlier Friday, Niko revealed that a judge in Texas had dismissed the lawsuit brought against it by residents of Bangladesh who claim they were affected by an uncontrolled release of gas at one of the company's wells last year.
''It's a positive event for the company, for sure,'' president and CEO Ed Sampson said in an interview with The Canadian Press.
The company did not release reasons for the judge's ruling in the suit, which also named the government of Bangladesh.
The blowout dispute with the Bangladesh government has been one of the only drags on Calgary-based Niko, which holds stakes in several potentially massive oil and gas basins offshore India.
''And we consider ourselves well along the way, but only time will bear that out,'' said Sampson.
The Bangladesh government demanded compensation from Niko last year after the company was blamed for two blowouts at its Chattak gasfield that caused devastating fires and damaged trees and crops.
Two separate government investigations found that Calgary-based Niko was responsible for the blowouts, one in January and another in June. The fires burned billions of cubic feet of gas at the Tengratila field in Sunamganj district, some 175 kilometres northeast of the capital, Dhaka.
And while Niko has been producing gas in Bangladesh for nearly two years, it has been 18 months since it has been paid by the government for that production - an amount worth up to C$20 million.
Sampson said his company ''continues to look forward'' to resolving its dispute with the Bangladesh government and has no intention of leaving the country.
''We're very comfortable working in Bangladesh - it's a business situation that'll we'll work our way through.''
Despite the Bangladesh blowout issues, relatively tiny production levels and a recent quarterly loss of nearly C$12 million, Niko remains a stock market darling with a value of nearly C$2.4 billion.
Last week, it completed an equity financing of two million common shares at C$63.25 each - more than 5% more than the trading value.
The company expects that it will now have the cash to cover its share of the initial development costs of a massive natural gas project in the prolific D-6 block off the coast of India.
Though Niko has stakes in several promising exploration plays in the three countries in which it operates, the market is most excited about its 10% stake in the 7,600-square-kilometre D-6 block off India's eastern coast, which holds one of the world's largest recent gas discoveries. India's Reliance Industries Ltd. is the majority owner and operator.
Earlier this year, Niko revealed that an independent engineering report had boosted the estimated amount of gas in place on the D6 block by 197% to 35.4 trillion cubic feet, up from 11.9 trillion cubic feet in the previous year.
That figure doesn't include a further discovery announced in late June on the MA-1 well in the area.
''We've really just touched the tip of the iceberg in terms of resources,'' Sampson told shareholders at its annual meeting last week.
''To put it in perspective, the entire Canadian Arctic doesn't hold 35 (trillion cubic feet) of gas.''
Niko and majority partner Reliance expect construction on the first stage D-6 to carry through next year, with first gas flowing in March 2008.
Niko also expects that future development plans will involve producing the oil that is being discovered at its new wells in the area. Currently the world's fourth-largest importer of crude, India is keen to develop all of its oil reserves concurrent to the gas deposits.
(c) The Canadian Press 2006
