Sterling and RegEnersys have agreed to farmout terms under which RegEnersys will acquire a 15% working interest in UK offshore Blocks 42/13 and 42/12 which contain the Breagh gas discovery. Completion is subject to final agreement and normal UK Government and partner approvals. Post completion, Sterling will retain a 50% working interest in the blocks. RegEnersys is a substantial natural resources investment fund, established to invest in opportunities within the energy sector. The Breagh interest is the first for RegEnersys in the North Sea and reflects the potential for significant infrastructure development assuming success of the forthcoming appraisal well. Sterling and RegEnersys have also agreed to terms that enable RegEnersys to acquire working interests in Sterling's significant acreage position which has been built up around the Breagh discovery. RegEnersys has preferred access to the Heerema Group of Companies who are international players in the oil and gas industry and the construction and infrastructure markets.
In the Central North Sea, following the Sheryl discovery located in Block 21/23a (Sterling 35%), plans for 2007 are to evaluate further prospects on the block. The operator has a well planned for the Constance prospect, located in the north-east sector of the block, for the second half of 2007. Success at Constance would have a direct impact on optimizing potential export routes for future 21/23a development options. Sterling has also mapped two prospects in the adjacent 21/22 block (Sterling 50% interest and operator).
In the Northern North Sea, mapping over Block 211/11b (Sterling 100%) is complete and farm out efforts are ongoing. The long offset seismic shot across the retained 210/29, 30 area (Sterling 60%) in late 2006 is being received from processing and will be incorporated into the prospect evaluation during the first quarter.
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