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Thursday, December 3, 2015
Gulfsands Petroleum revealed that the government of Morocco has chosen not to give the company a further extension for the Rharb Petroleum agreement. The second extension period was granted to the company in 2009 giving the company another five years on the acreage; the extension expired on November 9.
Gulfsands has applied to the government for another two years to allow the company to appraise the gas discoveries made in 2014/15. State parastal Onhym not only advised that the extension would not be forthcoming it also advised that Gulfsands would forfeit its $1 million in restricted cash held as a performance guarantee in relation to its minimum work obligation under the Rharb Agreement.
Onhym is also seeking a penalty equal to the estimated cost of the minimum exploration work program of the extension period less the costs actually incurred in respect of exploration work required; whereby Onhym is claiming a sum of $7.5 million; and Onhym will also, by separate request, seek the outstanding amount under the training obligation of the Rharb Agreement.
Under the second extension the company was obligated to drill nine exploration wells. Since January 2013, Gulfsands has drilled six exploration wells and spent more than $26.7 million on exploration activity on the Rharb permits.
As of June 30 the company reported a carrying value of its exploration and evaluation assets in relation to the Rharb Agreement of $29.3 million. As part of the preparation of its annual report and accounts for the 12-month period ending December 31, it will consider impairing the full value of these assets.
The company said it was disappointed not to have been given an extension to appraise the gas discoveries made in 2014/15 and with regard to Onhym’s various claims for financial sums and penalties it said “we will be seeking legal advice on these matters.”
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