8 Nov 2013 07:00
8 November 2013
Additional farmin to Odewayne Block (Republic of Somaliland)
On 6 November 2013, Sterling Energy Plc, the AIM listed independent oil & gas exploration and production company (AIM: SEY), announced that its wholly owned subsidiary, Sterling Energy (East Africa) Limited ("Sterling"), had completed a farmin for a 10% participating interest in the Production Sharing Contract for the Odewayne Block (the "PSC"), located onshore in the Republic of Somaliland.
Sterling Energy Plc is now pleased to announce that Sterling has signed a further Farmout Agreement for the PSC with Jacka Resources Somaliland Limited ("Jacka").
The current holders of the PSC are:
• Genel Energy Somaliland Limited (Operator) 50%
• Sterling Energy (East Africa) Limited 10%
• Petrosoma Limited 10%
• Jacka Resources Somaliland Limited 30%
Under the terms of the Farmout Agreement with Jacka, Sterling will:
a) assume an additional 15% interest in the PSC from Jacka, effective on completion;
b) pay Jacka US$3 million on signature of the Farmout Agreement, with future conditional payments of US$12m based on various operational milestones being met; and
c) be carried by Genel for the costs of all exploration activities during the Third Period and the Fourth Period of the PSC.
The PSC covers block SL6 and part of blocks SL7 and SL10, onshore Somaliland, comprising an area of 22,840 square kilometres. The PSC, awarded in 2005, is in the Third Period (expiring November 2014) with an outstanding minimum work obligation of 500 km of 2D seismic. The minimum work obligation during the Fourth Period of the PSC (expiring May 2016) is for 1,000 km of 2D seismic and one exploration well.
During 2013 an aero-magnetic and gravity survey confirmed the geometry of a broad basin over the Odewayne block believed to be of Jurassic to Cretaceous origin, analogous to productive basins in Yemen. Fieldwork in the block has highlighted the presence of numerous seeps giving encouragement that a working hydrocarbon system is present in this undrilled basin. The forward work program includes acquisition of an extensive 2D seismic programme in 2014 to define drillable targets.
Completion of the transaction with Jacka remains subject to approval by the Government of Somaliland.
Jacka Resources Somaliland Limited is a subsidiary of Jacka Resources Limited (ASX: JKA). Jacka Resources Limited is an oil and gas exploration and company with interests in Australia, Tunisia, Nigeria, Tanzania and Somaliland.
Genel Energy Somaliland Limited (Operator) is a subsidiary of Genel Energy Plc (LSE: GENL) and Petrosoma Limited is a privately owned company.
Sterling Energy Plc.'s Chairman, Alastair Beardsall, said:
"We are very pleased to have entered into the Farmout Agreement with Jacka for the Odewayne Block in Somaliland. By purchasing an additional 15% carried interest we will have built a material stake of 25% in the PSC. Our financial exposure during the Third and Fourth Periods is limited to the immediate and deferred consideration. We consider the Odewayne Block to be highly prospective and look forward to working with our joint venture partners in the exploration of this largely unexplored block."
Details about Somaliland and the Odewayne Block can be found in Sterling's Investor Presentation which can be viewed on the Company's website at www.sterlingenergyplc.com.
Further information:
Sterling Energy Plc. (+44 20 7405 4133)
Alastair Beardsall (Chairman)
Phil Frank (Exploration Director)
Liberum Capital Limited (+44 20 3100 2000)
Simon Atkinson
Tim Graham
Peel Hunt LLP (+44 20 7418 8900)
Andy Crossley
Richard Crichton