Hyperdynamics Corp (HDYNQ)

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http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20060921:MTFH17113_2...

CONAKRY, Sept 21 (Reuters) - A new deal between Guinea and Texas-based oil firm Hyperdynamics Corp (HDY.A: Quote, Profile, Research) could open the West African country's offshore to more oil prospectors, government and company officials said on Thursday.

Hyperdynamics said this week it had completed negotiations for a new production-sharing agreement with the Conakry government, allowing it to resume preparations for test drilling in Guinea's offshore area, one of the biggest oil exploration concessions ever granted in Africa.

Guinea, the world's biggest exporter of bauxite which is used to make aluminium, has no oil production but is hoping like many countries in West Africa to cash in on high oil prices and a global drive to discover alternatives to Middle Eastern oil supplies.


No precise details of the production sharing portion of the agreement have yet been published, but government and company officials said the new deal included a provision for third-party operators to be brought into the concession area.

"At the start, Hyperdynamics wanted all the Guinean offshore area, which is not possible. We have therefore decided on a division to allow other companies to come and invest in the country," said Cece Noramou, a senior official at the mines ministry, which has handled the negotiations.

"At present, if the convention is signed, Hyperdynamics will itself finance prospecting at its own risk and peril, until the first wells start to pump. From then on, production will be shared between us, according to modalities which I can not reveal for the moment," Noramou added.

A source close to the mines ministry said around eight other companies had showed in interest in Guinea's oil sector.

AWAITING PRESIDENTIAL SIGNATURE

Noramou said the deal, which is awaiting President Lansana Conte's signature, kept one third of the offshore area to Hyperdynamics, allowing the government to bring in other partners to the other two thirds.

But a source close to Hyperdynamics in the capital Conakry told Reuters the U.S. company would still retain complete control over 30,000 sq. km of the overall 64,000 sq. km (25,000 sq. mile) concession.

Hyperdynamics was granted the concession under a 2002 agreement which will be replaced by the new deal following tensions with the government which the U.S. company has blamed on officials no longer working for the state.


Mike Watts, a senior official with Hyperdynamics, told Reuters from its Sugar Land, Texas headquarters that the company was resuming preparations for test drilling while it awaited final signature of the new agreement.

"We're starting to gear up again. We've been kind of staying still for a year ... They are the ones who requested the new agreement and we've done all we can do. We're going to put our focus back on exploration," he said.

He said the precise starting time of test drilling would depend on availability of rigs and other drilling equipment.

Hyperdynamics shares were down 5.48 percent at $2.07 by 1706 GMT on Thursday.

(Additional reporting by Alistair Thomson in Dakar)