Petroleum Africa
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Tuesday, October 29, 2013
Sterling Energy’s wholly-owned subsidiary, Sterling Energy (East Africa), signed a farm-out agreement for a PSC in Somliland. The PSC signed with Petrosoma covers the Odewayne Block. The current holders of the PSC are Genel Energy Somaliland (operator) 50%, Petrosoma 20%, and Jacka Resources Somaliland 30%.
Under the terms of the agreement, Sterling will on completion assume a 10% interest in the PSC, pay Petrosoma $2 million with future conditional payments of $8 million based on various operational milestones being met, and be carried by Genel for the costs of all exploration activities during the third period of the PSC. This includes an outstanding minimum work obligation of 500 km of 2D seismic. It also includes a carry for the minimum work obligation in the fourth period which calls for a 1,000 km of 2D and one exploration well.
The PSC covers Block SL6 and parts of blocks SL7 and SL10; an area of 22,840 sq km. 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 program in 2014 to define drillable targets.
Completion of the transaction 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 a Farmout Agreement for the Odewayne Block in Somaliland; by purchasing a 10% carried interest 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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