Hyperdynamics Corporation’s subsidiary, SCS Corporation Ltd. (SCS), and South Atlantic Petroleum (SAPETRO) on Friday executed a farm-out agreement for an interest in its Guinea oil exploration program.
Hyperdynamics and SAPETRO, a privately held Nigerian oil and gas exploration and production company, in December inked a letter of intent to negotiate the assignment of a participating interest in Hyperdynamics’ oil and gas concession offshore Guinea.
The duo has been working since then to set the terms of the agreement.
Hyperdynamics said that, under the terms of the agreement executed this Friday, SAPETRO will receive a 50% participating interest in the Production Sharing Contract (PSC) between the Republic of Guinea and SCS in exchange for its commitment to pay 50% of the Fatala well costs (the minimum work program under the PSC) plus reimbursement to SCS of half of the costs previously incurred in preparing for the well since the PSC Second Amendment was signed.
According to Hyperdynamics, the approximate amount of such previous costs is estimated to be approximately $8-10 million depending on the timing of the completion of the farm-out agreement and upon approval of the Guinea Government.
SAPETRO and the Guinea National Petroleum Office signed a tri-partite protocol on March 10 setting a deadline for submission of farm-out documents by April 10 and starting of the Fatala well by May 30.
Hyperdynamics already has the Pacific Drilling-owned drillship, the Pacific Scirocco, lined up to drill the Fatala well.
“We are very excited about SAPETRO’s commitment to join Hyperdynamics in this high-potential opportunity to unlock the value of Fatala and several additional prospects identified by our geoscientists on the 5,000-square-kilometer PSC block,” said Ray Leonard, Hyperdynamics’ President and Chief Executive Officer.
“With funds already invested by SCS in preparation for the Fatala well, past cost reimbursement and SAPETRO gearing up to join the project as a 50% partner, Hyperdynamics’ share of the remaining funding needed is now estimated at $15-20 million. The Fatala prospect alone has an estimated mean recoverable resource of 647 million barrels of oil based on a 2016 Netherland Sewell report, with an estimated 31% chance of success.”