UPDATE 1-Hyperdynamics to sell 40 pct stake in Guinea asset to Tullow Oil

Tue Nov 20, 2012 2:00pm EST

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By Vishal Krishnan

Nov 20 (Reuters) - Oil and gas explorer Hyperdynamics Corp said it will sell a 40 percent interest in its primary asset, a license offshore Guinea, to Britain's Tullow Oil Plc .

Tullow will pay Hyperdynamics $27 million for its past costs and also carry a share of the company's future expenses up to $100 million.

Hyperdynamics, whose liquidity has shrunk due to higher-than-expected drilling costs, said in April it was looking to sell about half of its 77 percent stake in the 25,000-square-km (9,652-square-mile) license.

"With this money, they will be able to survive another year," Global Hunter Securities analyst John Malone said.

Reuters, quoting a source, reported earlier this month that Guinea was reviewing three resource agreements, including one with Hyperdynamics. But Chief Executive Ray Leonard told Reuters on Tuesday there was no review of its contract with Guinea.

"We have met with the government... there has been no mention whatsoever, by any ministerial people, of a review of our contract," Leonard said. "We are in touch with the government and it has (also) supported the deal with Tullow."

The sale to Tullow is expected to close by year-end following an approval from Guinea's mines and geology ministry.

Upon closing, Hyperdynamics will have a 37 percent stake in the concession, Tullow 40 percent and Dana Petroleum E&P Ltd 23 percent.

"The reason we have gone down to 37 percent is that after the initial well it was clear to us that it was time to bring in a party with the expertise to drill in deepwater prospects," Leonard said, referring to Tullow.

Hyperdynamics shares, which rose as much as 29 percent on Tuesday, reversed course to trade down 7 percent at 84 cents in afternoon session on the New York Stock Exchange.

KLR Group analyst Jeffrey Hayden said the deal value was slightly on the light side of what he had been expecting.

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