SEY.L Share News (SEY)

Oil and gas exploration company Sterling Energy has sold off its US business for an initial $90m.Sterling announced its intention to sell its US business in April 2008 but found it difficult to find a buyer at the right price in the midst of the global financial crisis.With the price of gas stabilising and the price of oil recovering, the company has been able to secure a satisfactory price for the assets, most of which are situated on the Gulf Coast and shallow waters of the Gulf of Mexico.The company has sought to reap the benefit of any further rises in the price of gas and oil by augmenting the deal with a three year 'upside sharing agreement.'This will entitle Sterling to a 40% share of the annual excess net production proceeds if the average realised oil price exceeds $90 per barrel and/or the realised gas price exceeds $9 per million cubic feet during the period from 2010 to 2012, inclusive.The assets being sold had, at 1 April 2009, estimated proved and probable reserves of 53bn and 41bn cubic feet of gas equivalent respectively, of which 73% is gas and 27% is oil.The sale has been back-dated to 1 April, 2009, which means that the final amount that changes hands will be reduced to take into account revenues Sterling has already received from the assets.The company expects the final payment to be in the region of $79m on completing, which will be used to repay all of Sterling'' outstanding bank debt of $73m.