Hyperdynamics Corporation is in talks with South Atlantic Petroleum (SAPETRO) to farm out part of its interest in a concession off Guinea. In exchange, SAPETRO will pay part of costs in the upcoming Fatala well.
The two companies have signed a letter of intent to negotiate the assignment of a participating interest in Hyperdynamics’ oil and gas concession offshore Guinea to SAPETRO.
SAPETRO is a privately held Nigerian oil and gas exploration and production company.
Hyperdynamics explained on Monday that the letter of intent, which is non-binding, calls for SAPETRO to take a 20% participating interest in exchange for paying 40% of the costs of the upcoming Fatala well up to a $50 million cap of predicted total well costs. Above that amount, SAPETRO would pay its proportional 20% share.
Just last week, Hyperdynamics signed a definitive drilling services contract with Pacific Drilling to engage the Pacific Bora drillship to drill the Fatala well.
The LOI contemplates that the two companies will work to sign definitive documents within 45 days unless extended by further agreement. SAPETRO’s responsibility for financial commitments related to the concession begins immediately but will not be due for payment until final approvals from the government of Guinea are received.
“The addition of SAPETRO to the Guinea project team represents a big step forward in sharing project-related costs and risks with reputable industry players who recognize Hyperdynamics’ Guinea concession’s economic attractiveness and geologic prospectivity,” said Ray Leonard, Hyperdynamics’ President and Chief Executive Officer.
“SAPETRO’s experience in West Africa, its financial strength and its desire to have an exposure in high-quality, high-reward exploration acreage that will be tested in the near future makes them an ideal partner for us.”