Hyperdynamics’ subsidiary, SCS Corporation (SCS), South Atlantic Petroleum (SAPETRO), and the government of Guinea have executed a third amendment to the 2006 production sharing contract (PSC), which will enable the transfer of interest in the Guinea concession to SAPETRO.
The second amendment, which received the presidential decree last September, extended the term of the PSC through September 22, 2017.
According to Hyperdynamics’ statement on Wednesday, the third amendment will become effective on the date it is approved by decree of the President of the Republic of Guinea.
The third amendment approves the assignment of 50% of SCS’ participating interest in the Guinea concession to SAPETRO, and it confirms the two companies’ rights to explore for oil and gas on a 5,000-square-kilometer block offshore Guinea.
To remind, Hyperdynamics and SAPETRO in late March executed a farm-out agreement for the assignment of a 50% participating interest in Hyperdynamics’ oil and gas concession offshore Guinea.
The contract requires that drilling operations begin on an initial exploratory well no later than May 30, and additional exploration wells may be drilled within the exploration period at the companies’ option.
The third PSC amendment reaffirms clear title of SAPETRO and SCS to the concession and timing for a $5 million security instrument to be put in place by SAPETRO and SCS scheduled as 30 days from the date of the Presidential Decree, and to be released at such time that the drilling rig for the Fatala well enters Guinea territorial waters. As per the third amendment, SCS and SAPETRO have joint and several liability to the government of Guinea in respect to the PSC.
In addition to the farm-out agreement, SCS and SAPETRO agreed that SCS’s “sufficient financing for the obligation well costs” will be $15 million in “cash and committed financing to the satisfaction of SAPETRO acting reasonably” in addition to costs already incurred, which sets a clear objective to work to for both parties.
Earlier on Wednesday, Hyperdynamics promoted its vice president of commercial development to the role of senior vice president and chief financial officer.