Sterling Energy Plc announced the following updates in the Sangaw North Production Sharing Contract ("PSC") in Kurdistan.
2D Seismic Acquisition:
The acquisition of 2D seismic data in the Sangaw North PSC, which commenced in July, has now been completed. Data was successfully acquired (73 miles or 117 kilometers) and is now being processed, with final results expected in the fourth quarter of 2012.
Interpretation of the new seismic data, which supplements the 2D seismic data previously acquired in the contract area, is expected to better define the potential of a secondary target along the flank of the main structure, analogous to the recent discoveries made in adjacent acreage to the south east of the Sangaw North PSC area. Based on this interpretation, the joint venture partnership may elect to drill an exploration well in 2013.
Change of Interests:
The Korean National Oil Corporation (KNOC) has assigned its 20 percent working interest in the Sangaw North PSC back to the Kurdistan Regional Government of Iraq (KRG) effective August 5, 2012; the interest was first assigned to KNOC on September 12, 2008, at the option of the KRG under the terms of the PSC. Under the terms of the current assignment, from the effective date the future exploration costs associated with this 20 percent interest will be paid by the remaining contractor entities in proportion to their equity interests; consequently, Sterling's paying interest in the PSC has increased from 53.33 to 66.67 percent and Addax's has increased from 26.67 percent to 33.33 percent, while their equity interests remain unchanged at 53.33 percent and 26.67 percent respectively.
The KRG has the option to assign the 20 percent interest to a third party before March 31, 2013, in which case the carried costs will be reimbursed to Sterling and Addax and their paying interests will revert to their equity share of 53.33 percent and 26.67 percent respectively. If an assignment is not completed, the KRG may retain the 20 percent interest and pay its share of the costs from the effective date, August 5, 2012.
Sterling and Addax have also agreed to notify the KRG before January 31, 2013 whether the partnership intends to drill a further exploration well on the Sangaw North block before the end of the current exploration phase which runs to November 2013, with the option for a further one year extension in the event that further exploration and/or appraisal work is warranted. Under this agreement, if Sterling and Addax elect not to drill, then the PSC will terminate on February 1, 2013.
"We are pleased to have completed the acquisition of additional 2D seismic data in the Sangaw North block and look forward to the integration and interpretation of this data, which may lead to the drilling of an exploration well in 2013," Sterling's Chief Executive Angus MacAskill said.
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