HyperD on Lookout for Another Guinea Partner

Hyperdynamics Corp. is looking to sell or farm-out more of its interest in the Republic of Guinea. The company has engaged BofA Merrill Lynch as its financial advisor to assist in the potential sale of a portion of its 77% interest.  

In a statement the company said that it was seeking to sell, or "farm-out," approximately 50% of its interest in the concession to an experienced oil and gas company that would also serve as operator of the project going forward. The farm-out process is expected to begin in Q2 2012.

"During this farm-out process, we will be evaluating potential partners on a number of criteria, including significant deep water operating experience – preferably along the Atlantic Margin, access to deep water rigs and the operational capacity to fully evaluate the concession over the remaining exploration period of our PSC with the government of Guinea," said Ray Leonard, Hyperdynamics' president and CEO.

"We believe that farming out an additional share of the project to an experienced deep water operator is the best way to maximize shareholder value going forward," he said. "Such a transaction should make available additional capital that would be helpful to continue our exploration program for the basin," Leonard added.

The company originally held the permit with 100% interest until a farm out to Dana Petroleum lessened its stake to 77%. Prior to the Dana farm-out the company was in negotiations with Repsol, with the two signing a LoI in 2010. The deal was later quashed.

In mid-February Hyperdynamics announced results of its first Guinea exploration well, the Sabu-1, which indicated the presence of residual hydrocarbons in multiple layers of sandstones distributed throughout a 1,300-foot interval of Santonian- to Turonian-age sediments in the Upper Cretaceous section.

The partners are in the process of evaluating initial results of a 4,000 sq km 3D seismic survey acquired by CGGVeritas in the deeper water portion of the Guinea concession.

The addition of a new participant and operator to the project would require the consent of the government of Guinea under the terms of its PSC with Hyperdynamics.