This does seem more of a continuance and agreement to agree rather than anything definitive.
After going over it several times, it seems to me that:
1. SApetro still has no firm commitment (other than "reasonable negotiation efforts" or any "skin in the game" for the PSC). They have have agreed apparently to front the Security deposit, but only after final approval of the "transaction documents". Whereas the earlier Sapetro deal was for the full PSC (all wells), with a 40% Fatala payment for a 20% PSC interest, we have no idea what the parameters of this new deal may be; is it the same, is it 50/50 JV, or something else entirely- The preamble to this refers only to Fatala.
2. Along that line, the wording of these announcements has to be closely read --as the lead-in is--"The joint objective of the Protocol is to drill the Fatala well in the most effective way and in the case of a discovery, and with unanimous agreement, to proceed with drilling an optimal number of follow-up exploration wells within the terms of the PSC Second Amendment. Drilling of the Fatala well must commence no later than May 30, 2017;..." Parsing that sentence, one could interpret as folows;
a. 'drill the Fatala well in the most effective way"-The commitment is apparently only for Fatala. and what does "most effective way mean- would they drill in an ineffective way??
b. "and in the case of a discovery, and with unanimous agreement, to proceed with drilling an optimal number of follow-up exploration wells..."-- They slipped in the phrase "and with unanimous agreement" - presumably then SApetro and or Guinea can veto any follow on drilling after Fatala. There is some experience with how a veto worked under the Tullow / Dana JOA (not good).
c. "Drilling of the Fatala well must commence no later than May 30, 2017;"-- While this appears positive on the surface, I believe it can really mean that Guinea reserves the right to pull the plug if there are delays beyond May 30. (Drilling must commence...)
3. April 10 is about 4 weeks form now--to finalize the term sheet with SApetro, complete the P&S, and the JOA; very ambitious but possibly doable, another few days/ week for Guinea review and approval; leaves a May 10 spud date just under Ray's 60 days. Of course with a 42 day Fatala drill, this leaves a July 12 completion and 70 days left in the PSC (not counting any time for well results evaluation)- the tightest of tight schedules (baring any extensions).
4. Still no news on bridge financing (were they waiting for this announcement??--bridge financing must be fully material to HDY's results, given the discussion of lack of cash and going concern exemption from auditors- so one would expect a full disclosure). Also unknown whether there is still a third partner negotiation going on (the 50/50 JV discussion) and the resulting need for dilutive equity issue.
5. The good news is that Guinea is apparently being helpful / supportive and has agreed to delay there $5m security instrument default until April 10 and any drilling spud default until May 30...
JMHO...
I guess these remain still exciting and uncertain times...
As usual GLTA.
