BULA Resources (Holdings) has agreed a settlement with two of its Russian directors, who will now resign from the board.

This follows unsuccessful moves to oust them and will end the simmering dispute between the two parties.

However, the whole exercise, which will have to be approved by the Bula shareholders, will cost Bula dearly, at around £8 million.

As part of the settlement the (two directors, Mr Alexander Marichev and Ms Tatyana Kirillova, who are major shareholders in Russian Corporation, a former partner of Bula in Russia, have agreed to resign.

Russia Corporation has agreed to execute transfer forms which will allow the 71.9 million Bula shares to be sold in the market for the benefit of Bula.

In return, Bula has agreed to pay Russia Corporation $2.1 million over an 18 months period.

Bula, announcing the settlement terms yesterday, said the pursuit of the various legal actions would mean that it would continue to incur significant legal costs.

A large proportion of Bula's management time would be unavoidably devoted to the legal actions.

This appears to have been the main motivation for the settlement. Bula stressed that the various legal actions would probably have become "very protracted before any determination was reached".

Also, as with any commercial litigation, it was always possible that Bula might not obtain the outcome it expected and "to which it fully believes it is entitled".

And there was the possibility, that Bula could have become liable for the legal costs of the other parties involved in the various legal actions, "which might have been substantial".

The dispute arose when Bula entered into an agreement with the Russian Corporation to acquire an option over 51 per cent off the shares in Aki Otyr, a Russian joint stock company, with licences to produce oil from the Shapshinskoye and Ryamnoye oil fields.

But legal problems arose over the title of the shares.

The settlement stipulates that all litigation between the parties ends.

Bula takes over Roskora from the Russian Corporation, the registered owner of 51 per cent off Aki Otyr, even though this holding does not have clear title.

The phased payment to Russia Corporation consists of $1 million on completion of the agreement, $0.5 million in 12 months and $0.6 million in 18 months.

The proceeds from the sale of the 1.9 million Bula shares, broadly equate to these payments.

Bula said the settlement improves the prospects for a successful conclusion to the negotiations with Aki-Otyr on the exploitation of the oil fields, which are estimated to contain 525 million barrels of proven and probably recoverable oil reserves.