Acquisition of interest in Block C-3 Mauritania

RNS Number : 4691E

Sterling Energy PLC

10 February 2015

 



10 February 2015

Acquisition of an interest in Block C-3, Mauritania

Sterling Energy Plc, the AIM listed oil and gas exploration company (AIM: SEY), is pleased to announce that its wholly owned subsidiary, Sterling Energy Mauritania Limited ("Sterling"), has signed a sale and purchase agreement with Tullow Mauritania Limited ("Tullow") to acquire a 40.5% interest in the Production Sharing Contract for Block C-3 (the "PSC"), located offshore in the Islamic Republic of Mauritania (the "SPA").

The current holders of the PSC are:

·     Tullow Mauritania Limited (Operator)                                                                                  90%

·     Société Mauritanienne Des Hydrocarbures Et Du Patrimoine Minier ("SMH")    10%

Sale and Purchase Agreement

Under the terms of the SPA, on completion:

a)    Sterling will assume a 40.5% participating interest in the PSC from Tullow, including an entitlement to a corresponding interest in all past costs; and

b)    Sterling will pay Tullow approximately US$2.5m in consideration and repayment of past 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)                   49.5%

·     Sterling Energy Mauritania Limited                         40.5%

·     SMH                                                                                       10%

Sterling will finance the acquisition through existing cash resources.

Tullow Mauritania Limited is a subsidiary of Tullow Oil Plc.

Block C-3

The PSC, awarded in 2013, is in the first phase of the exploration period ("Phase 1") and covers Block C-3, offshore Mauritania, comprising an area of approximately 9,800 square kilometres. Phase 1 of the PSC is due to expire on 30 June 2016. Tullow has acquired 1,600km of 2D seismic in 2014 which will be processed during 2015. Completion of the acquisition and processing of the 2D seismic data represents the minimum work obligation during Phase 1. 

Following completion of Phase 1, the joint venture may elect to enter into (a) Phase 2 and (b) Phase 3 (each with a 3 year term) with a minimum work obligation of: (a) 700km² of 3D seismic and 1 well; and (b) 1 well, respectively.

Sterling and Tullow will carry SMH's ten percent (10%) interest proportionally during the exploration period of the PSC.

This shallow water block lies in an underexplored area of the Mauritanian shelfal region that has seen very limited drilling and seismic acquisition. Block C3 provides Sterling entry to both a multi-play exploration setting and to an emerging shelf margin play, the latter recently highlighted by the SNE-1 well (P50 of 330mmbbls) discovered by Cairn Energy to the south in Senegal.

Comment

Sterling Energy Plc's Chairman, Alastair Beardsall, said:

                "We are very pleased to be joining Tullow in Block C3 in Mauritania, which we consider to be highly prospective.  Block C-3 has an active work program and we look forward to working with Tullow in the exploration of this largely unexplored block."

Qualified person

In accordance with the guidelines of the AIM Market of the London Stock Exchange, Mr Matthew Bowyer, Exploration Manager of Sterling Energy Plc, 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.

Further Information

Further information can be found on Sterling Energy's website at www.sterlingenergyplc.com

Sterling Energy Plc                                                                          ([phone])

Alastair Beardsall (Chairman)

Peel Hunt LLP                                                                                    ([phone])

Andy Crossley
Richard Crichton

 

END

 

 

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