Hyperdynamics Corporation (NYSE: HDY) today announced that its wholly owned subsidiary, SCS Corporation Ltd, has entered into an agreement with Tullow Guinea Ltd., a subsidiary of Tullow Oil plc, for the sale of a 40% gross interest in Hyperdynamics’ oil and gas exploration concession offshore Guinea and the transfer of operatorship to Tullow.
Subject to the completion of due diligence, the sale is expected to close by year-end following the satisfaction of certain closing conditions and approval of the assignment by Guinea’s Ministry of Mines and Geology.
At closing, the interests of SCS, Tullow and Dana Petroleum E&P Limited in the concession will be 37%, 40% and 23%, respectively.
The parties intend to commence drilling a well to test a deepwater fan prospect in the concession no later than April 1, 2014. According to the terms of the agreement, Tullow will reimburse SCS in respect of its past costs in the amount of $27 million cash at closing and will carry SCS’ participating interests share of future expenses up to a gross expenditure cap of US$100 million, from the date of entry into the next exploration period until 90 days after the drilling of the well. Tullow will also carry SCS’s share of costs associated with an appraisal well of the initial exploration well, if drilled, subject to an additional gross expenditure cap of $100 million.
“We are delighted to have reached this agreement with Tullow,” said Ray Leonard, Hyperdynamics President and Chief Executive Officer. “Tullow fulfills all the requirements we were looking for: expertise and exploration success in the Atlantic Margin off West Africa – particularly the Transform Margin play that is present on the Guinea acreage – along with experience in deepwater production, the financial strength needed to explore this large block and availability of a suitable rig to initiate the deepwater drilling. Our decision to choose Tullow was made in consultation with the Guinea Ministry of Mines and Geology.
“We believe this agreement with Tullow enhances the future of Hyperdynamics’ Guinea exploration program and represents the best opportunity for us to realize maximum potential value for our shareholders as we explore the potential of this large and prospective petroleum basin,” Leonard said.
BofA Merrill Lynch, acting as financial advisor, assisted Hyperdynamics in connection with the sale.