Hyperdynamics investigation forces Tullow to declare Force Majeure (Guinea)

Business & Finance

March 12, 2014

Tullow has declared a Force Majeure on its operations in Guinea after the U.S. authorities opened investigations into the activities of one of its partners in a concession off the African country’s coast.

Hyperdynamics, the partner in question, said that Tullow stated in its notice, dated March 11, that the decisions by the U.S. Department of Justice and the U.S. Securities and Exchange Commission to open investigations into the activities of Hyperdynamics in obtaining and retaining the Concession rights constitute a Force Majeure event under the terms of the PSC and JOA.

Reportedly, Tullow states in its notice that the asserted Force Majeure event prevents Tullow from performing its contractual obligations under the PSC.

“Hyperdynamics is unable to predict the outcome or timing of the results of Tullow’s assertion of the Force Majeure,” Hyperdynamics said today in a press release.

The members of the consortium in the offshore Guinea block are Tullow – 40%, Hyperdynamics’ subsidiary, SCS Corporation – 37% and Dana Petroleum (E&P) Limited – 23%.

To remind, in November 2012, Hyperdynamics sold a 40% stake in its offshore block in Guinea. Under the contract, Tullow agreed to reimburse Hyperdynamics in respect of its past costs in the amount of $27 million cash at closing and will carry Hyperdynamics’ 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.

Also, under the original agreement, Tullow agreed to carry Hyperdynamics’ 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.

According to data from 2012, the companies had agreed to drill the first well in the licence no later than April 1, 2014.

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Offshore Energy Today Staff, March 12, 2014