Dana Petroleum signs LOI for offshore Guinea interest

Offshore staff

LONDON -- Dana Petroleum has signed an exclusive letter of intent with Hyperdynamics Corp. to acquire a 23% working interest in its concession offshore the Republic of Guinea. The 80,000-sq km (30,888-sq mi) concession encompasses all of offshore Guinea, equivalent to 330 UK blocks.
According to the LOI, Dana and Hyperdynamics will sign definitive binding documents no later than Dec. 31. During this period, Hyperdynamics is bound to deal exclusively with Dana regarding the 23% interest. Dana has the option to negotiate for an additional interest of up to a further 27% (bringing its total interest to 50%) if Hyperdynamics does not sign a letter of intent with a second partner by Nov. 30.

Hyperdynamics has recently signed a Memorandum of Understanding with the government of Guinea which confirms its title to the Production Sharing Contract. It requires relinquishment of 64% of the current acreage by the end of the year and review of the existing PSC by the end of March 2010.

The company already has 2D seismic data in the acreage and will begin a new $10-million 2D survey before the end of this month. The seismic dataset will be used to evaluate which parts of the concession to relinquish. Following the relinquishment, the acreage will still cover the equivalent of 119 UK blocks.

Subject to agreeing to the definitive binding documents by year-end 2009, Dana will pay Hyperdynamics $5 million, which will be applied to the seismic acquisition cost. Dana will pay Hyperdynamics a further $15 million, in either cash or shares (at Dana’s election), on signature of the revised PSC.

10/19/2009