Sterling Resources Completes Farmout of Interest in UK Southern Gas Basin

UK Southern Gas Basin
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Sterling Resources Ltd. has completed the farmout with Grove Energy (UK) Ltd. under which Grove will acquire a 25% interest in Block 42/13 located in the UK Southern North Sea Gas Basin and approval of the UK Department of Trade and Industry (DTI) has been obtained. Sterling's working interest will reduce to 75% as a result of the farm out. Sterling will remain operator.

The farmee will earn its interest by paying 50% of the dry hole costs of a well to the Carboniferous formation. Costs in excess of the turnkey cost of drilling the well and any testing costs will be paid by the parties according to their working interests.

Block 42/13 was one of the Blocks awarded to Sterling in the UK 22nd Licensing Round. Studies completed by Sterling's consultants confirm the potential for a large structure within which a 400 foot gas column which was proven by a well drilled in 1997. The study further shows that the discovery well had significant well bore damage and that an undamaged well should have produced rates of natural gas on test ranging from 10 to 25 mmscfd.

Sterling is now soliciting turnkey drilling proposals for a jack up rig and commencing applications for the necessary pre-drilling approvals from the various regulatory bodies.

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