06 June 2015, Sweetcrude, Houston – Sterling Energy plc (the Company), the AIM listed oil and gas exploration company, announced Wednesday that its wholly owned subsidiary, Sterling Energy Mauritania Limited (SEML), has signed a sale and purchase agreement with Tullow Mauritania Limited (Tullow) to acquire a 13.5 percent interest in the Production Sharing Contract for Block C-10 (the PSC), located offshore in the Islamic Republic of Mauritania (the SPA).
The current holders of the PSC are:
Tullow Mauritania Limited (Operator) – 90 percent
Societe Mauritanienne des Hydrocarbures et de Patrimoine Minier (SMHPM) – percent
SALE AND PURCHASE AGREEMENT
Under the terms of the SPA, on completion:
a) SEML will assume a 13.5 percent participating interest in the PSC from Tullow, including an entitlement to some of the past costs associated with the participating interest; and
b) SEML will pay Tullow $50,000 in cash as consideration and in repayment of interim period costs
Completion of the transaction remains subject to the approval by the Government of the Islamic Republic of Mauritania.
Following completion, the holders of the PSC will be:
Tullow Mauritania Limited (Operator) – 76.5 percent
Sterling Energy Mauritania Limited – 13.5 percent
SMHPM – 10 percent
SEML will finance the acquisition through existing cash resources.
Tullow Mauritania Limited is a subsidiary of Tullow Oil Plc.
The PSC, awarded in 2011, is in the second phase of the exploration period (Phase 2) and covers Block C-10, offshore Mauritania, comprising an area of approximately 4,141 square miles (10,725 square kilometers). The current phase will expire Nov. 30, 2017 and has a minimum work obligation of 1 exploration well.
The block surrounds the Chinguetti field and lies in water depths of 164 feet (50 meters) to 7,874 feet (2,400 meters) with full 3D seismic coverage. Block C-10 lies within a proven petroleum basin and offers exposure to multiple play-types from the under-explored Jurassic and lower Cretaceous carbonates to Cretaceous and Tertiary clastic plays. The potential for the extension of the Cenomanian and Albian plays recently established by the Tortue-1 well drilled by Kosmos in Block C-8 will be investigated on Block C-10.
The operator has identified a drill ready Neocomian carbonate prospect in water depth of approximately 328 feet (100 meters). Technical work will focus on maturation of the prospect inventory following the receipt of recently merged, reprocessed and depth migrated, 3D seismic.
The joint venture anticipates that the exploration well will be drilled in 2016. The gross cost of the well is anticipated at $77 million ($11.55 million net to SEML). Should the joint venture not fulfil the minimum work obligation, the joint venture’s gross liability to the Government would be $7.5 million ($1.125 million net to SEML).
Following the completion of Phase 2, the joint venture may elect to enter into Phase 3 (with a 3 year term) with a minimum work obligation of 2 wells.
SEML and Tullow will carry SMHPM’s ten percent (10 percent) interest proportionally during the exploration period of the PSC.
Eskil Jersing, the Company’s CEO said: “We are very pleased to be joining Tullow and SMHPM in Block C10 in Mauritania, in addition to the recently announced inboard C3 block entry. We consider the block highly prospective with a drill ready prospect in an untested play segment. We look forward to working with Tullow in the exploration of this block on what is proving to be an exciting emerging margin.”
In accordance with the guidelines of the AIM Market of the London Stock Exchange, Matthew Bowyer, exploration manager of the Group, who has been involved in the oil industry for over 18 years, is the qualified person that has reviewed the technical information set out above.
*Sterling Energy Plc, press release