Sterling Energy PLC
27 February 2006
27 February 2006
STERLING ENERGY PLC
('Sterling' or 'the Company')
FIRST OIL FROM CHINGUETTI FIELD
OFFSHORE MAURITANIA
Sterling Energy, the AIM listed (symbol: SEY) independent oil & gas exploration
and production company, today announces that crude oil production has begun from
the Chinguetti oilfield, in PSC B offshore Mauritania. This has been achieved in
line with the production schedule issued by Sterling and its partners.
The Chinguetti development consists of 6 production wells tied in to the Berge
Helene Floating Production Storage and Offtake (FPSO) vessel. Production is
expected to rise to a plateau of 75,000 bopd in 2Q 2006. The field has
estimated proven and probable reserve of 140mmbo. The original discovery was
made in 2001; since then, the partners have invested in the region of £400
million in the successful development of the field.
Sterling has two economic interests in the Chinguetti development. The first is
through the Funding Agreement with the Mauritanian Government, signed in
November 2004, which enabled the Government to directly participate in the
Chinguetti development through the recently renamed Societe Mauritanienne des
Hydrocarbures (SMH). In return for funding the 12% SMH share, Sterling will
gain an approximate 8% economic interest in the field's gross production.
Sterling is proud to have worked closely with SMH to develop Mauritania's first
oil field.
The second interest is through a farm-in agreement signed with Premier Oil PLC
in 2003 covering PSC A and PSC B, under which each net attributable barrel of
Chinguetti produced, equivalent to 5.28% of the field's production, is subject
to a sliding scale royalty at a rate linked to the realised oil price. At an
oil price in the band $58 - $61, the royalty payment would currently be around
$7.25 per barrel.
Sterling anticipates development announcements to be made in the next 6 months
on the Tevet and Oualata (Tiof) discoveries in PSC B, and exploration drilling
continues in both PSC B and PSC A, in which Sterling has royalty rights and
discovery bonus entitlements.
Sterling expects to announce its preliminary results for the year ended 31
December 2005 in late April, 2006.
Harry Wilson, Chief Executive of Sterling Energy Plc, said:
'We are delighted by the news that Chinguetti has produced its first oil and
within the time schedule outlined last year. This outcome endorses Sterling's
innovative Funding Agreement with the Mauritanian Government signed in November
2004, which could pave the way for similar agreements in the future. The
substantial increase in our cash flow that will now follow from the start of
production in Chinguetti offers us many opportunities to invest in significant
new oil & gas projects.'
Enquiries
Sterling Energy (01582 462 121) Web site: www.sterlingenergyplc.com
Harry Wilson
Graeme Thomson
Citigate Dewe Rogerson (020 7638 9571)
Media enquiries: Martin Jackson / George Cazenove
Analyst enquiries: Nina Soon
This information is provided by RNS
The company news service from the London Stock Exchange R
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