Rialto Energy has announced that its subsidiary Rialto Energy (Cote d’Ivoire) Ltd has signed a Memorandum of Understanding with the Cote d’Ivoire Ministry of Oil & Energy, the state owned oil & gas company PETROCI, and Vitol E&P to replace the existing Production Sharing Contract (“PSC”) for Block CI-202 with a new PSC on amended terms.
Key elements of the MOU include:
1) The new PSC is expected to be signed before 9 November 2013 when the second exploration period under the current PSC comes to an end, and will have 3 consecutive exploration periods over a total of 7 years from signature;
2) The Ministry has acknowledged the proposed entry of Vitol into partnership with Rialto on the basis previously outlined and as summarised hereunder;
3) Substantially all petroleum costs incurred to-date by Rialto on Block CI-202 will be carried over for recovery in the new PSC;
4) The outstanding exploration expenditure commitments under the current PSC will be deemed satisfied under shareholding splits agreed for the new PSC. As a result, all remaining liabilities under the current PSC will be deemed to have been satisfied upon award of the new agreement;
5) Following the recent submission by Rialto CdI of a revised Field Development Plan for the development of Gazelle, once it is approved by the Ministry and the new PSC has been signed, a new Exclusive Exploitation Authorisation will be issued to replace the existing one; and
6) Negotiations will be recommenced with CI-Energies, the state owned electricity company, regarding a future gas sales agreement.
The signature of a new PSC will fulfil the major condition precedent to the completion of the transaction with Vitol announced last April whereby Rialto agreed to sell a 65% interest in Rialto CdI to Vitol in return for their provision of an initial US$ 50 million of capital to fund appraisal and development activities on the Block.
Rob Shepherd, Managing Director of Rialto Energy, commented: “We are extremely pleased to be able to announce the signing of the MOU that sets out a clear path for resolution of the key remaining uncertainties surrounding the Company and hence should enable our shareholders to look beyond the present to focus on the future potential of our Company and its assets. On behalf of the Rialto and Vitol team present with me last week in Abidjan, I would like to publicly thank the Director General of Hydrocarbons from the Ministry who led the negotiations most constructively and thus enabled us to address a number of complex legacy issues in an expedient and balanced manner. Certainly work remains to be done, but this agreement gives us a solid foundation upon which to build our planned exploitation and exploration of Block CI-202 and the surrounding area.”
Press Release, September 16, 2013