Sterling Energy Plc will buy a 40.5% interest in the Production Sharing Contract for Block C-3, located offshore in the Islamic Republic of Mauritania from Tullow Oil.
Sterling will assume a 40.5% participating interest in the PSC from Tullow, including an entitlement to a corresponding interest in all past costs; and will pay Tullow approximately US$2.5m in consideration and repayment of past costs.
The current holders of the PSC are: Tullow Mauritania Limited (Operator) 90%; Société Mauritanienne Des Hydrocarbures Et Du Patrimoine Minier (“SMH”) 10%
Completion of the transaction remains subject to the approval by the Government of the Islamic Republic of Mauritania.
Following completion, the holders of the PSC will be: Tullow Mauritania Limited (Operator) 49.5%; · Sterling Energy Mauritania Limited 40.5%; · SMH 10%
Sterling will finance the acquisition through existing cash resources.
The PSC, awarded in 2013, is in the first phase of the exploration period (“Phase 1”) and covers Block C-3, offshore Mauritania, comprising an area of approximately 9,800 square kilometres.
Phase 1 of the PSC is due to expire on June 30, 2016. Tullow has acquired 1,600km of 2D seismic in 2014 which will be processed during 2015. Completion of the acquisition and processing of the 2D seismic data represents the minimum work obligation during Phase 1.
Following completion of Phase 1, the joint venture may elect to enter into (a) Phase 2 and (b) Phase 3 (each with a 3 year term) with a minimum work obligation of: (a) 700km2 of 3D seismic and 1 well; and (b) 1 well, respectively.
Sterling and Tullow will carry SMH’s ten percent (10%) interest proportionally during the exploration period of the PSC.
This shallow water block lies in an underexplored area of the Mauritanian shelfal region that has seen very limited drilling and seismic acquisition. Block C3 provides Sterling entry to both a multi-play exploration setting and to an emerging shelf margin play, the latter recently highlighted by the SNE-1 well (P50 of 330mmbbls) discovered by Cairn Energy to the south in Senegal.
Sterling Energy Plc’s Chairman, Alastair Beardsall, said: “We are very pleased to be joining Tullow in Block C3 in Mauritania, which we consider to be highly prospective. Block C-3 has an active work program and we look forward to working with Tullow in the exploration of this largely unexplored block.”