Sterling Energy plc, a London based oil and gas exploration company, has signed a sale and purchase agreement with Tullow Mauritania Limited (Tullow) to acquire a 13.5% interest in the Production Sharing Contract for Block C-10 (the PSC), located offshore in the Islamic Republic of Mauritania (the SPA).
According to Sterling, the acquisition was done through its wholly owned subsidiary, Sterling Energy Mauritania Limited (SEML).
The current holders of the PSC, as Sterling informs in the press release, are the operator, Tullow Mauritania Limited with 90% interest, and Société Mauritanienne des Hydrocarbures et de Patrimoine Minier (SMHPM) with 10% interest.
As said in the press release, the Sale and Purchase Agreement Under the terms of the SPA, defined that SEML will on completion assume a 13.5% participating interest in the PSC from Tullow, including an entitlement to some of the past costs associated with the participating interest, and that SEML will pay Tullow $50,000 in cash as consideration and in repayment of interim period costs.
Sterling says that completion of the transaction remains subject to the approval by the Government of the Islamic Republic of Mauritania.
Following completion, Tullow Mauritania Limited will remain the operator of the PSC but with 76.5% interest, Sterling Energy Mauritania Limited will have 13.5% and SMHPM 10% interest.
According to the press release, SEML will finance the acquisition through existing cash resources.
Sterling further explains that the PSC, awarded in 2011, is in the second phase of the exploration period (Phase 2) and covers Block C-10, offshore Mauritania, comprising an area of approximately 10,725 km2. The current phase will expire on November 30, 2017 and has a minimum work obligation of 1 exploration well.
The block surrounds the Chinguetti field and lies in water depths of 50m to 2,400m with full 3D seismic coverage. Block C-10 lies within a proven petroleum basin and offers exposure to multiple play-types from the under-explored Jurassic and lower Cretaceous carbonates to Cretaceous and Tertiary clastic plays. The potential for the extension of the Cenomanian and Albian plays recently established by the Tortue-1 well drilled by Kosmos in Block C-8 will be investigated on Block C-10.
According to Sterling, the operator has identified a drill ready Neocomian carbonate prospect in water depth of approximately 100m. Technical work will focus on maturation of the prospect inventory following the receipt of recently merged, reprocessed and depth migrated, 3D seismic.
Sterling says that the joint venture anticipates that the exploration well will be drilled in 2016. The gross cost of the well is anticipated at $77 million. Sterling says that should the joint venture not fulfil the minimum work obligation, the joint venture’s gross liability to the Government would be $7.5 million. Following the completion of Phase 2, the joint venture may elect to enter into Phase 3, with a 3 year term, with a minimum work obligation of 2 wells. SEML and Tullow will carry SMHPM’s ten percent interest proportionally during the exploration period of the PSC.
Eskil Jersing, the Chief Executive Officer of Sterling said: “We are very pleased to be joining Tullow and SMHPM in Block C10 in Mauritania, in addition to the recently announced inboard C3 block entry. We consider the block highly prospective with a drill ready prospect in an untested play segment. We look forward to working with Tullow in the exploration of this block on what is proving to be an exciting emerging margin.”