Tullow Halts Work Off Guinea as Partner Investigated by U.S.Eduard Gismatullin
Tullow Oil Plc, a U.K. explorer operating mostly in Africa, suspended work at a project off Guinea as its partner at the site is investigated.
A U.S. probe into Hyperdynamics Corp. means Tullow, which had planned to start drilling a deepwater well by April 1, is unable to meet its contractual obligations. The company “cannot proceed with its activities on the license until these issues are resolved,” spokesman George Cazenove said today by phone.
Hyperdynamics plummeted as much as 79 percent in New York trading. It was the biggest intraday slump since 1998 and led to a brief halt in trading. The stock was down 57 percent at $2.27 at 1:03 p.m. Tullow dropped 0.8 percent to 800 pence in London.
The U.S. Department of Justice and the U.S. Securities and Exchange Commission are probing Houston-based Hyperdynamics over the acquisition and retention of exploration rights in Guinea. Since last year the U.S. also has been examining how iron-mining rights were awarded in the West African nation’s Simandou area.
Tullow, the operator of the oil and gas project, joined the concession in 2012 by acquiring 40 percent from Hyperdynamics, which now has 37 percent. The London-based company agreed to pay $27 million in cash to Hyperdynamics to cover past costs and as much as $200 million for future expenses, it said at the time.
“Tullow hopes for a speedy resolution of these issues and looks forward to continuing operations,” Cazenove said today. Korea National Oil Corp.’s Dana Petroleum unit also is a partner in the venture.
Tullow’s exit from its contractual arrangements, declaring what’s known as force majeure, follows a Feb. 7 filing from Hyperdynamics, which said it may be subject to fines and “civil and criminal penalties” if violations of the Foreign Corrupt Practices Act are uncovered.
“We have retained legal counsel to represent us in these matters, initiated an internal investigation, and we are cooperating fully with the government,” Hyperdynamics said at the time.
Guinea ranks 150th out of 177 nations in Transparency International’s 2013 Corruption Perceptions Index.