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Monday, November 11, 2013
Sterling Energy increased its stake in Somaliland’s Odewayne Block. The company signed a farm-out agreement for a 15% participating interest in the Odewayne Block from Jacka Resources.
The company just recently completed a farm-in agreement with Petrosoma for a 10% stake in the block. The latest agreement will give it a total of 25% in the Odewayne PSC.
Under the terms of the agreement with Jacka, Sterling will assume an additional 15% interest in the PSC from Jacka, effective on completion. The company will pay Jacka $3 million on signature of the farm-out agreement and payments of $12 million based on various operational milestones being met.
Sterling will be carried by the operator Genel Energy for all the exploration activities during the third and 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 sq km. 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.
Sterling Energy Plc.’s chairman, Alastair Beardsall, said: “We are very pleased to have entered into the farm-out 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.”
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