RCS - Gulfsands Petroleum - MUTUAL TERMINATION OF LLANOS-50 CONTRACT

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26/05/2022 08:15

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RNS Number : 8318M  Gulfsands Petroleum PLC  26 May 2022

26 May 2022

 

GULFSANDS PETROLEUM PLC

 

MUTUAL TERMINATION OF LLANOS-50 CONTRACT

 

Gulfsands Petroleum plc ("Gulfsands" or the "Company"), the oil and gas
company focused on the Middle East and broader MENA region, is pleased to
announce that it has reached mutual agreement with the Agencia Nacional De
Hidrocarburos ("ANH") in Colombia to terminate the Llanos-50 ("LLA-50")
E&P Contract ("Contract") on environmental grounds, prioritizing
environmental protection in an area of particular ecological sensitivity.

 

The mutual termination was agreed without liability to either the Company or
ANH under regulations which allow for such termination in situations where it
is not possible to perform activities due to environmental limitations. As a
result, the original contractual work commitment of US$15.2 million has been
cancelled, and the Certificate of Deposit ("CDT") funds, which secured those
work commitments, totaling £1.22 million (US$1.52 million), have been
returned to the Company

 

Environmental concerns specific to the LLA-50 area were first raised in 2017
and 2018 as a result of preliminary environmental studies; the Environment
Impact Assessment ("EIA") and the Medidas de Manejo Ambiental ("MMA").  The
Company has worked diligently with the ANH, and environmental authorities,
since then to assess the various possibilities for development, with the
protection of the Llanos natural environment as a priority.  After
pronouncements obtained from the local Environmental Agency ("Corporinoquia")
confirming the non-viability of the exploration program due to the severe
environmental restrictions present within the Block, we have now agreed to the
mutual termination agreement of the Contract.

 

Gulfsands accepts this decision and believes that this is the correct decision
for the ANH, the Company and for the environmentally sensitive area of LLA-50.

 

This is one of the particular instances available under the provisions of the
relatively new regulation "Agreement 2" of 2017, whereby contracts can be
terminated by mutual agreement where there are demonstrable special
environmental conditions applicable to a particular location. Under article 7
of Agreement 2, ANH seeks to prioritize the environment protection over oil
and gas contractual obligations. In this case it was evident to both the
Company and the ANH, that in situ conditions within the LLA-50 area had to
prevail.

 

LLA-50 was Gulfsands' last outstanding Contract in Colombia, following the
successful farm-out of its Putumayo-14 contract to Amerisur Resources Plc in
2018.  Following this termination of the LLA-50 E&P Contract, the Company
will now focus on completing its orderly administrative exit from Colombia, in
compliance with applicable regulations.

 

Gulfsands' Managing Director, Mr. John Bell commented:

"We are sorry to be leaving Colombia, but environmental considerations must be
paramount in both ours and the Colombian Government's thinking.  We are
pleased, however, that this long running issue has been amicably resolved with
an outcome that suits all parties. This process that we have been through,
which is specifically addressed under Colombian regulations, shows that the
oil and gas industry can make the right and responsible decisions in respect
of environmentally sensitive areas, and we are pleased to have been part of
this ground-breaking process in Colombia, with the collaboration of the
environmental authorities and ANH.

 

Gulfsands has now completed the tidy-up of all its legacy assets and now has a
clean platform from which to focus on its return to Syria, when circumstances
allow, and to explore further business development opportunities in the MENA
region."

 

For further information, please refer to the Company's website at
www.gulfsands.com (http://www.gulfsands.com)   or contact:

 

 Gulfsands Petroleum Plc                    +44 (0)20 3929 9476
 John Bell, Managing Director

 Andrew Morris, Finance Director

 Michael Kroupeev, Non-Executive Chairman

 Camarco                                    +44 (0)20 3757 4983
 Billy Clegg / Owen Roberts

 

Certain statements included herein constitute "forward-looking statements"
concerning the Company within the meaning of applicable securities
legislation. These forward-looking statements are based on certain assumptions
made by Gulfsands and as such are not a guarantee of future performance. These
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those expressed or implied in such
forward-looking statements. Many of these risks and uncertainties relate to
factors that are beyond Gulfsands' ability to control or estimate precisely,
such as general economic and market conditions in various countries and
regions, political risks, environmental and physical risks, legislative,
fiscal and regulatory developments, drilling and production results, reserves
estimates, changes in demand for Gulfsands' products, increased costs of
production or price fluctuations in crude oil and natural gas. Gulfsands
cannot give any assurance that such forward-looking statements will prove to
be correct. Gulfsands does not undertake any obligation to update or revise
publicly any forward-looking statements set out herein, whether as a result of
new information, future events or otherwise, except as required by applicable
laws.

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