LONDON (Alliance News) - Gulfsands Petroleum PLC said Monday an agreement with Morocco's state oil company has not been extended for a further two years, as it had requested, and that furthermore the state oil company is seeking a penalty in relation to the agreement.
Gulfsands said that as at end-June it reported a carrying value in relation to the exploration and evaluation assets covered by the agreement of USD29.3 million. It will impair the full value of these assets in its accounts for 2015.
Gulfsands is an oil and gas exploration company with activities in Syria, Morocco, Tunisia and Colombia. It had an agreement, covering the Rharb Centre and Rharb Sud permits with Morocco's state oil company Office National des Hydrocarbures et des Mines. Gulfsands had sought to have the agreement extended for a further two years to allow it to appraise gas discoveries it made in 2014 and 2015.
However, the company said it had been informed that the extension request was not possible. Gulfsands will forfeit its USD1.0 million in restricted cash that had been held as a performance guarantee in relation to a minimum work obligation under the Rharb deal.
Furthermore the state oil company is seeking a penalty equal to the estimated cost of the minimum exploration work programme covered by the agreement, less the costs actually incurred in respect of exploration work, which it is claiming is a sum of USD7.5 million, as well as seeking the outstanding amount under the training obligation of the Rharb agreement.
"We are disappointed not to have been given an extension to appraise the gas discoveries made in 2014/15. With regard to ONHYM's various claims for financial sums and penalties, we will be seeking legal advice on these matters," said Chairman Alastair Beardsall in a statement.
Shares in Gulfsands were down 19% at 3.05 pence Monday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
