Rialto Energy has signed a Memorandum of Understanding (“MoU”) with the Cote d’Ivoire Ministry of Oil & Energy (the “Ministry”), the state hydrocarbon company PETROCI, and Vitol E&P to replace the existing Production Sharing Contract (“PSC”) for Block CI-202 with a new PSC on amended terms.
The company has been working on the Gazelle structure on the acreage, which it estimates to hold total mean contingent recoverable liquids and gas Resource of 40 MMbbls and 270 Bscf respectively.
Key elements of the MOU include:
1) The new PSC is expected to be signed before November 9, 2013, when the second exploration period under the current PSC comes to an end, and will have three consecutive exploration periods over a total of seven years from signature;
2) The Ministry has acknowledged the proposed entry of Vitol into partnership with Rialto on the basis previously outlined and as summarised hereunder;
3) Substantially all petroleum costs incurred to-date by Rialto on Block CI-202 will be carried over for recovery in the new PSC;
4) The outstanding exploration expenditure commitments under the current PSC will be deemed satisfied under shareholding splits agreed for the new PSC. As a result, all remaining liabilities under the current PSC will be deemed to have been satisfied upon award of the new agreement;
5) Following the recent submission by Rialto of a revised Field Development Plan for the development of Gazelle, once it is approved by the Ministry and the new PSC has been signed, a new Exclusive Exploitation Authorisation will be issued to replace the existing one; and
6) Negotiations will be recommenced with CI-Energies, the state owned electricity company, regarding a future gas sales agreement.
“The signature of a new PSC will fulfil the major condition precedent to the completion of the transaction with Vitol announced last April whereby Rialto agreed to sell a 65% interest in Rialto CdI to Vitol in return for their provision of an initial $ 50 million of capital to fund appraisal and development activities on the Block”, Rialto concludes in its release.