Pura Vida has 15 days to explain to Gabon govt why it should keep its licence
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Oil explorer Pura Vida Energy has 15 days to tell the Gabon government what it’s achieved with its offshore exploration licence, as the company seeks to make changes to the contract.
The Africa-focused oil explorer met with Gabon’s Director General of Hydrocarbons to discuss its Nkembe production sharing contract. Gabon believes the licence commenced when the contract was signed, which would mean it expired on January 11.
Pura Vida (ASX:PVD) argues the licence started when the contract received a Presidential Decree approving the terms — meaning it wold expire on December 4, 2019.
Pura Vida went into a trading halt on February 1, and is still suspended at 5.1c.
Under production-sharing contracts, oil and gas companies commit to undertaking a certain amount of work and expenditure.
Exploration costs are paid out by the government as a share of the oil produced.
If the agreed work (such as drilling a certain number of wells) is not done, the government can take steps to rectify that — including cancelling a licence.
The Gabon Director-General has asked Pura Vida to provide a detailed overview of work it’s done — and what it’s spent — within 15 days.
In January, Pura Vida said it had confirmed an average unrisked contingent resource of 15.7 million barrels of oil at the Loba area of the licence, and a mean unrisked prospective resource of 11.7 million barrels of oil at Loba Deep.
The company wants to change the terms around the word program and expenditure of the licence contract to attract funding and facilitate the proposed work programme.
“It is anticipated that these proposed changes to the work program and expenditures under the Nkembe PSC will reflect those that will, subject to government approvals, enable completion of work under the technical services agreements with [contractors] Add Energy and Havoc… thereafter develop future work programs.
Pura Vida had $9.2 million in cash available at the end of the last quarter, and planned to spend almost $1 million this quarter.
The company is still confident the Gabon government is supportive of Pura Vida developing the block.