Rialto has completed the previously announced transaction with Vitol E&P (“Vitol”) and also signed a new Production Sharing Contract (“PSC”) for Block CI-202, offshore Cote d’Ivoire, replacing the previous PSC.
As announced on 16 September 2013, Rialto already had in place a Memorandum of Understanding (“MoU”) with the Cote d’Ivoire Ministry of Petroleum & Energy (the “Ministry”), the state owned oil & gas company PETROCI and Vitol to replace the existing PSC for Block CI-202 with a new PSC on amended terms.
The signing of the new PSC took place in Abidjan on 7 November 2013 and was signed by the Minister of Petroleum and Energy for the Republic of Cote d’Ivoire. As is customary with most PSCs, the details of the contract are largely confidential but the key elements of the new PSC are in line with those disclosed in the MoU and are detailed below:
1) The new PSC will have 3 consecutive exploration periods over a total of 7 years from signature;
2) Substantially all petroleum costs incurred to-date by Rialto on Block CI-202 will be carried over for recovery in the new PSC;
3) All remaining liabilities under the previous PSC have been deemed satisfied upon award of the new agreement;
4) Once the Field Development Plan for the development of Gazelle is approved by the Ministry, a new Exclusive Exploitation Authorisation (“EEA”) will be issued to replace the existing one;
5) Negotiations have recommenced with CI-Energies, the state owned electricity company, regarding a future gas sales agreement;
6) The Ministry has ratified the entry of Vitol into partnership with Rialto.
Completion of Vitol Transaction
The signature of a new PSC fulfils the major condition precedent to the completion of the transaction with Vitol announced on 23 April 2013.The Company is pleased to announce that it has subsequently completed the transaction in which Vitol has acquired 65% of the shares in Rialto CdI in exchange for providing US$50 million of loan capital to be invested in a to be agreed Block CI-202 work programme.
The Vitol loan will fund the first US$ 50 million of the Gazelle Field development work programme (but excluding any exploration commitments which will be funded pro-rata by Rialto and Vitol). The transaction formalises the partnership with Vitol, a company with substantial financial and technical capability, with existing assets in Rialto’s area of operations in Côte d’Ivoire and Ghana and a proven track record of monetising upstream assets in West Africa.
Under the terms of the transaction, Vitol has acquired 65% of the shares in Rialto CdI (which held an 85% interest in the Block CI-202 PSC and a 74% interest in the Gazelle EEA which was granted in April 2012).Following completion of the transaction, Rialto CdI now holds an 87% participating interest in the new Block CI-202 PSC and will hold a 71% participating interest in the new Gazelle EEA, once granted, on the assumption that Petroci exercises its back-in rights. Rialto CdI remains the operator of the Block.
Rob Shepherd, Managing Director of Rialto Energy, commented: “The signing of this PSC is a significant milestone for the Company and is testament to the joint efforts of Rialto and Vitol as well as the pragmatic and professional approach of the Director General of Hydrocarbons from the Ministry.
Both the completion of the Vitol Transaction and the signing of the new PSC remove the uncertainty, time constraints and financial obligations that were putting Rialto under significant pressure under the terms of the previous PSC and will enable us, along with our partners Vitol and Petroci, to fully focus on the exciting development and exploration potential within the CI-202 block and beyond.
We are pleased to have completed the transaction with Vitol, with whom we have already established a highly productive working relationship, and both companies look forward to playing a key role in Cote d’Ivoire’s growing energy story.”
Press Release, November 08, 2013