Hyperdynamics has signed an agreement for exclusive dealing and letter of intent (the "LOI") with Spanish-based Repsol YPF, under which the two companies will negotiate the assignment to Repsol of a 37 percent interest in Hyperdynamics' oil and gas concession offshore the Republic of Guinea.
The LOI gives Repsol exclusive negotiating rights to take a 37 percent share in Hyperdynamics' concession for $31.5 million. Repsol also would be the operator of the Guinea project, subject to government and third-party approvals and consents as required. Under the terms of the LOI, the two companies will work to sign definitive documents no later than January 31, 2010. The LOI otherwise terminates unless further extended by both parties.
Prior to the execution of definitive documents as described in the LOI, Repsol has the right to participate with Hyperdynamics in the evaluation of geological and geophysical data, subject to licensing obligations with the various seismic services companies. It also has the right to participate in the preparation for negotiations with the Ministry of Mines, Energy and Hydraulics of the Republic of Guinea regarding the terms of the clarification of the production sharing contract pursuant to the terms of the Memorandum of Understanding that the Company has recently entered into with the government.
The LOI with Repsol satisfies the clause in Hyperdynamics' existing LOI with Dana Petroleum PLC of the U.K. that envisioned Dana's option right to take up to an additional 27 percent of the concession if Hyperdynamics did not secure the participation of a major oil company by November 30, 2009.
Ray Leonard, Hyperdynamics President and Chief Executive Officer, said, "Dana Petroleum and Repsol bring significant experience to jointly explore our concession in Northwest Africa, as Dana has led in discoveries made in Morocco and Mauritania, and Repsol is a partner with Anadarko in the Upper Cretaceous Venus discovery in Sierra Leone. Repsol and Dana have successfully partnered in the past on exploration projects in Northwest Africa.
"Assuming we reach definitive agreements with both Dana and Repsol, Hyperdynamics will retain a 40 percent working interest in the Guinea concession and will be in a stronger financial position, with more than $51 million upon the entry into full legal effect of the production sharing contract clarification to fund our share of 3D seismic and drilling required during the exploratory period. We look forward to working with both companies to explore and develop this large, highly prospective offshore tract."
Spain's largest oil company, Repsol is a fully integrated oil and gas company that operates in Latin America, the Middle East and North Africa. The company's exploration program has made discoveries in recent years offshore Brazil, Venezuela and West Africa.
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