GulfSlope Energy and Texas South Energy have once again extended the term of an exclusive letter of intent (LOI) with a ‘large international oil and gas company’ to jointly drill and develop their oil and gas prospects located in the U.S. Gulf of Mexico.
The LOI was signed in September and included a commitment by an unnamed partner to drill a minimum of three exploratory wells with the option to participate in additional three-well phases on the same basis.
However, on November 1 the parties agreed to extend the term of the LOI until the end of November.
On Monday, December 18 GulfSlope said that all parties have agreed again to extend the term of the LOI to January 8, 2018, or such later time as they mutually agree.
As per conditions of the LOI, the partner would earn a 75% working interest in each prospect by paying 90% of the exploratory costs and making a cash payment of $1.5 million to be split between GulfSlope and Texas South (the farmors) on a 73%/27% basis.
GulfSlope is the initial operator of record and following the farm-out will retain a 20% working interest for the subsalt prospects included in the first phase while Texas South will retain a 5% working interested for the subsalt prospects included in the first phase.
Under certain conditions, the partner will have the right to purchase up to 20% of common stock in each of the farmors.
The company added that the purpose of the LOI was to facilitate further discussions between the parties on an exclusive basis with respect to the negotiation of the contemplated transaction and was a statement of the present intent of the parties to pursue the transaction in good faith.
The LOI is subject to several conditions including completion of additional due diligence, preparation and execution of definitive agreements, and board approvals.