Gulfsands Petroleum provides the following update on the Fes Petroleum Agreement.
The Extension Period of the Fes Agreement, granted under Amendment No 3, expired on 24th September 2015. Gulfsands submitted a request to Office National des Hydrocarbures et des Mines (ONHYM), the state oil company of the Republic of Morocco, to further extend the Fes Agreement for a period of 6 months to allow the Company to continue its farm-out process that was underway; however no extension was forthcoming.
ONHYM has called the $5 million Bank Guarantee held for the performance of the agreed minimum work programme, of which 350km of 2D seismic, 100km2 of 3D seismic and drilling of 3 wells remain outstanding. As a result $5 million of restricted cash has been forfeited.
In recognition of the uncertainty of securing an industry partner before the expiry of the Fes Agreement, at 30 June 2015 the Company impaired its exploration and evaluation assets by $22.1 million, comprising the full amount of expenditure incurred in relation to the Fes Agreement including restricted cash balances and the fair value attributed at acquisition.