Sterling was granted a 100% interest and operatorship of the two licenses which were signed in July 2004 and formally ratified in November 2004. The licenses cover approximately 20,800 sq km and 13,147 sq km, respectively of the Ambilobe and the Majunga Basins. The total exploration license term in each license is 8 years and in the event of a commercial discovery a 25 year production license will be granted.
Under the terms of the deal with Sterling, ExxonMobil will pay for a significant exploration work program in return for a 70% interest in the licenses. The agreement is subject to certain milestones being achieved with the initial ExxonMobil commitment for the first two exploration phases under the license covering technical studies and 2D seismic. Assuming a positive outcome of this initial work, which could take up to a further 3 years, ExxonMobil will then finance 3D seismic and up to two wells per license. The transaction remains subject to approval of the Government of Madagascar.
The Ambilobe and Ampasindava licenses cover a large under-explored area offshore Madagascar in which all of the geological elements for a working petroleum system are believed to be present. Madagascar has seen an increase in exploration activity - in 2004 ExxonMobil and Norsk Hydro farmed-in to Vanco's exploration license in the Majunga basin, adjacent to Sterling's Ampasindava license.
Sterling Chief Executive, Harry Wilson, said: "The signing of this deal with a partner such as ExxonMobil, with their extensive existing interests in Madagascar, reflects the potential of this acreage. Sterling will benefit from its residual 30% carried interest in the licenses without the financial risks of an exploration work program."
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