Hyperdynamics Corporation, an oil and gas company with operations in Guinea, has signed a memorandum of understanding with the government Guinea over an extension of the 2006 production sharing contract.
The news follows last week’s agreement between Hyperdynamics, Tullow Oil and Dana Petroleum, where it was agreed that Tullow and Dana would relinquish their respective stakes in the jointly run offshore block, leaving Hyperdynamics a sole owner, with a 100% share.
Hyperdynamics then said that it would meet with the Government of Guinea regarding its submission for a one-year extension for the concession until September 22, 2017. Without an extension, Hyperdynamics said, the current concession expires in September 2016.
According to a statement by the company on Tuesday, a memorandum of understanding was signed on August 19, by Ray Leonard, Chief Executive Officer, and the General Director of the National Petroleum Office of the Republic of Guinea, Diakaria Koulibaly regarding the terms of the one year extension to the 2006 Production Sharing Contract, as Amended (“the PSC”) until September 22, 2017.
The memorandum is not legally binding, but enables the two parties to negotiate mutually acceptable documents for the extension period by September 1, 2016 incorporating the key terms whereby: Hyperdynamics will be Operator and 100% interest holder in the Guinea Concession; The Government of Guinea will grant a one year extension to the current Exploration period until September 22, 2017.
Also, MoU stipulates that Hyperdynamics will retain a mutually agreed area equivalent to 23% of its current acreage in the Concession and it will commit to drill one (1) exploratory well offshore Guinea with a projected start date of April 2017. If the well is not drilled within the one (1) year extension period, Hyperdynamics will owe the Government of Guinea the difference between the actual expenditures related to the well and $46,000,000.
Hyperdynamics reaffirmed that due to the August 15, 2016 withdrawal of Tullow and Dana from the PSC, it is obligated to pay any unused portion of the training program under Article 10.3 of the PSC, estimated to be at $500,000 and agrees to administer it in conjunction with the National Petroleum Office of Guinea.
The cost recovery pool is limited to Hyperdynamics’ share of expenditures in the PSC since 2009.
Hyperdynamics CEO Ray Leonard stated, “I am pleased that the Government of Guinea continues to support Hyperdynamics and we remain committed to the country, negotiating key agreements and drilling the Fatala well offshore Guinea within the proposed timeline”.