Hyperdynamics Corporation (OTCQX:HDYN) today announced that its wholly owned subsidiary, SCS Corporation Ltd. ("SCS"), South Atlantic Petroleum ("SAPETRO") and the Government of the Republic of Guinea have executed a Third Amendment to the 2006 Production Sharing Contract ("PSC"). The Third Amendment will become effective on the date it is approved by Decree of the President of the Republic of Guinea.
The Third Amendment approves the assignment of 50% of SCS' participating interest in the Guinea concession to SAPETRO, and it confirms the two companies' rights to explore for oil and gas on a 5,000-square-kilometer block offshore the Republic of Guinea. The contract requires that drilling operations begin on an initial exploratory well no later than May 30, and additional exploration wells may be drilled within the exploration period at the companies' option.
The Third PSC Amendment reaffirms clear title of SAPETRO and SCS to the Concession and timing for a US $5 million security instrument to be put in place by SAPETRO and SCS scheduled as 30 days from the date of the Presidential Decree, and to be released at such time that the drilling rig for the Fatala well enters Guinea territorial waters. As per the Third Amendment, SCS and SAPETRO have joint and several liability to the Government of Guinea in respect to the PSC.
In addition to the earlier signed Farmout Agreement, SCS and SAPETRO agreed that SCS's "sufficient financing for the Obligation Well Costs" shall be $15 million in "cash and committed financing to the satisfaction of SAPETRO acting reasonably" in addition to costs already incurred, which sets a clear objective for both Parties to work to.