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Sunday, September 18, 2016
Hyperdynamics Corp.’s wholly-owned subsidiary, SCS Corp., saw its 2006 PSC with the government of Guinea amended for the second time.
The Second Amendment will be effective on the date it is approved by Decree of the President of Guinea. The Second Amendment was entered into in accordance with the August 2016 MoU between SCS and Guinea and formally extends the PSC to September 22, 2017 and confirms that SCS is the 100% interest holder and operator of the concession.
In addition to clarifying certain elements, the PSC states that Hyperdynamics will retain an area equivalent to approximately 5,000 sq km and during the one-year extension period will drill one well. The company’s well is expected to spud in April 2017 with additional wells optional. Hyperdynamics will have to provide a parent company guarantee for the well obligation, monthly progress reports, and a reconciliation of budget to actual expenditures to the National Petroleum Office. Failure to provide these reports and assurances on a timely basis may result in a notice of termination with a 30-day period to cure.
The company will further guarantee that it will provide a mutually acceptable security for $5 million on customary terms, provided that this security is to be released at the time the drilling rig for the Extension Well is on location offshore Guinea, and no later than April 12, 2017, Hyperdynamics will deliver a mutually acceptable security for the difference between $46,000,000 and the amount spent to date on the extension well.
For the purposes of calculation for this clause, however, only cost spent for services and goods provided in Guinea shall be taken into account until the drilling rig to be used in the drilling of the extension well is located in the territorial waters of Guinea. If Hyperdynamics does not provide either security by the specified dates, the government may terminate the PSC immediately and without prior notice to remedy such deficiency.
If the exploratory well is not drilled within the one-year extension period, Hyperdynamics will owe the government the difference between the actual expenditures in Guinea related to the well and $46,000,000.
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