Item 1.01
Entry into a Material Definitive Agreement
On April 21, 2017, Hyperdynamics Corporation (Hyperdynamics, the Company, we or us), through its wholly-owned subsidiary, SCS Corporation Ltd. (SCS), received an implementing Presidential Decree from the Republic of Guinea authorizing a Third Amendment (the Third Amendment) to the Hydrocarbon Production Sharing Contract, dated September 22, 2006, between SCS and the Republic of Guinea, as amended on March 25, 2010, and on September 21, 2016 (the Production Sharing Contract). The Third Amendment was signed by Mr. Diakaria Koulibaly, General Director of the National Petroleum Office of the Republic of Guinea; Ms. Malado Kaba, the Minister of Economy and Finance of the Republic of Guinea; Ray Leonard, President and Chief Executive Officer of Hyperdynamics and Director of SCS, and Dale Rollins, Managing Director of South Atlantic Petroleum Limited (SAPETRO) on April 12, 2017. The Third Amendment was subject to the authorizing Presidential Decree and the Closing of the farmout agreement between SCS and SAPETRO for the acquisition by SAPETRO of a 50% interest in the Contract from SCS (Farmout Agreement). The Third Amendment was entered into in accordance with the Tri Party Protocol between SCS Corporation Ltd. SAPETRO and the Government of Guinea dated March 10, 2017 (Protocol).
A copy of the Production Sharing Contract was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K that was filed with the Securities and Exchange Commission (the SEC) on September 28, 2006. A copy of the First Amendment to the Production Sharing Contract was filed as Exhibit 99.1 to the Companys Current Report on Form 8-K that was filed with the SEC on May 14, 2010. A copy of the Second Amendment to the Production Sharing Contract was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K that was filed with the SEC on September 22, 2016. A copy of the Protocol was filed as Exhibit 99.2 to the Companys Current Report on Form 8-K that was filed with the SEC on March 13, 2017. A copy of the Farmout Agreement was filed as Exhibit 10.1 to the Companys Current Report on Form 8-K that was filed with the SEC on April 6, 2017.
The Third Amendment records and confirms the approval of the assignment of a 50% interest in the Production Sharing Contract and the validity of the rights under the Production Sharing Agreement to SCS to SAPETRO (the Contractors). The Government of Guinea also undertakes that it shall not terminate, revoke or restrict the Contract or the rights of the Contractors to conduct Petroleum Operations based on the failure of SCS to have provided the Security Instrument as required under the Second Amendment. The Contractors further agree that within 30 days following the date of execution of a Presidential Decree approving the Third Amendment, the Contractors will provide a security instrument in the amount of $5 million, issued by a bank acceptable to the Government, whose approval shall not be unreasonably withheld, provided however such performance guarantee shall be released and cancelled at the time the drilling rig to be used in the drilling of the extension well is located in the shelf waters of the Republic of Guinea, including its territorial waters. The Protocol states that SAPETRO will provide the $5 million security interest upon Government of Guinea approval to enter the Concession and completion of the Farmout Agreement.
The Third Amendment appoints SCS as the Operator of the Concession and requires that the project commencement date of drilling operations on an initial exploratory well to be drilled to a minimum depth of 2,500 meters below the seabed for an estimated amount of $46,000,000 be no later than May 30, 2017. Additional exploration wells may be drilled within the exploration period at the Contractors option.
The foregoing disclosure concerning the Third Amendment is qualified in its entirety by reference to the Third Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
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