Gulfsands Petroleum plc (“Gulfsands”, the “Group” or the “Company” – AIM : GPX), the oil and gas company with activities in Syria, Tunisia, Colombia and Morocco, today announces that it has signed a Farmout Agreement relating to the Colombian, Putumayo-14 Exploration and Production of Hydrocarbons Contract No 2 of 2013, (the “PUT-14 Contract”).
The Farmout Agreement has been agreed with Samarium Energy & Resources Corporation, a fully owned subsdiary of Samarium Tennessine Corporation and Samarium Investment Corporation, acting as Guarantor (together “Samarium”). The Company has also simultaneously entered into a Joint Operating Agreement (“JOA”) with Samarium Energy & Resource Corporation regarding the operations of the PUT-14 Contract.
All Agreements are subject to various closing conditions including the approval of the Agencia Nacional de Hidrocarburos in Colombia (“ANH”) and the Company will update the market as and when those conditions are met or otherwise waived.
Under the terms of the Farmout Agreement:
- Samarium will initially take a 70% Participating Interest in the PUT-14 Contract for nil consideration.
- Samarium has the right, prior to receiving ANH approval of the transfer of the Participating Interest, to terminate the Agreement at its sole, reasonable discretion should it determine that ANH cannot or will not grant an extension to the PUT-14 Contract of at least 9 months from 7th November 2017.
- In addition, Gulfsands has granted Samarium an option to acquire the remaining 30% interest in the PUT-14 Contract (the “Option”). The Option shall be exercisable for nil consideration but shall be subject to ANH approval, transfer of full Operatorship to Samarium, and the release to Gulfsands and replacement by Samarium, of the $1.7m Letter of Credit (held as a long term financial asset in the Company’s accounts as at 31 December 2015) which is in place to guarantee performance under the PUT-14 Contract.
- Prior to the exercise of the Option, Samarium will carry Gulfsands, by funding 100% of the Minimum Exploration Programme costs and certain other pre-approved costs related to the PUT-14 Contract, up to a cap of $16.1 million..
- On the valid exercise of the Option, Samarium shall hold a 100% operating interest in the PUT-14 Contract.
- Under the JOA and prior to the exercise of the Option, Gulfsands will remain the License Operator; responsible for all administrative functions in relation to the performance of joint operations, and Samarium will immediately become Technical Operator; responsible for all technical functions in relation to the joint operations.
- It is the intention of all parties that, subject to ANH approval, Samarium will ultimately assume full operatorship covering both Licence Operator and Technical Operator responsibilities.
For further information, please refer to the Company’s website at www.gulfsands.com or contact:
|Gulfsands Petroleum Plc
John Bell – Managing Director
Andrew Morris – Finance Director
James Ede-Golightly – Non-Executive Chairman
|+44 (0)20 7464 4490|
|Cantor Fitzgerald Europe
|+44 (0)20 7894 7000|
Certain statements included herein constitute “forward-looking statements” within the meaning of applicable securities legislation. These forward-looking statements are based on certain assumptions made by Gulfsands and as such are not a guarantee of future performance. Actual results could differ materially from those expressed or implied in such forward-looking statements due to factors such as general economic and market conditions, increased costs of production or a decline in oil and gas prices. Gulfsands is under no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable laws.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (“MAR”). Upon the publication of this announcement via Regulatory Information Service (“RIS”), this inside information is now considered to be in the public domain.