LONDON (Alliance News) - Hydrocarbon explorers Wessex Exploration PLC Wednesday said it is looking to reduce its beneficial interest in a permit for the Juan de Nova territory north-west of Madagascar, pending the approval of its application by French authorities.
Instead of seeking to maintain its 70% beneficial interest in the permit, it is pursuing a five-year contract renewal for 50% of the permit after it cited "insufficient time to convert this beneficial interest into full legal title prior to the deadline for the permit renewal so Wessex was unable legally to participate in the renewal process".
Chief Financial Officer Andy Yeo told Alliance News the delay occurred because joint-venture partner Global Petroleum Limited owns the legal interest in the permit, suggesting there was less pressure for Wessex to renew as a result.
The partners have been looking for a farm-in partner for the permit, though Wessex provided no update on that.
"Seventy percent is a big commitment, so [dropping to] 50% made economic sense for us but having a five-year renewal gives us good scope," Yeo said in a telephone interview.
Yeo denied that maintaining the 70% interest would have been difficult, but said reducing the interest to 50% over the course of five years would be "comfortable".
Yeo also said dropping its share makes sense if Wessex and Global Petroleum do manage to find another partner for the territory, though he didn't provide further details of when or if another partner will be found.
AIM-listed joint-venture partner Global Petroleum Limited, through a subsidiary, owns 100% of the legal interest in the permit, and if French authorities allow it to renew its legal interest, Wessex will reduce its beneficial interest to 50%, in accordance with an agreement made with Global Petroleum which would give Wessex the right to apply to the authorities to convert its beneficial interest into a legal interest, recognised by the French authorities, leaving each partner with a 50% legal interest. The agreement will come into force if Global's own application is successful.
"The results of the seismic interpretation undertaken earlier this year were sufficiently encouraging for us to make an application to renew the permit with an appropriately staged work programme. The northern part of the permit in particular has a good address, given its proximity to the licensed areas offshore Madagascar. We have therefore agreed with Wessex that if the renewal is granted by the French authorities, Global would assume the operatorship and increase our equity," Peter Hill, Global chief executive, said in a statement.
Wessex shares were Wednesday quoted at 1.030 pence, up 0.005 pence.
Global Petroleum shares were Wednesday quoted at 5.50 pence, down 0.25 pence.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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