Sterling in Placement to Raise Funds for Sangaw North Block Project
Sterling has raised approximately £11.0 million gross of expenses (US$22.3m) through a placing of 78,510,027 ordinary shares of 1p each at 14p per Placing Share. The net proceeds of the Placing will be used to fund the initial costs relating to the Production Sharing Contract entered into with the Kurdistan Regional Government of Iraq (KRG) for the Sangaw North exploration block, announced on November 12, 2007.
The Block, which covers an area of 492 sq km is located approximately 140 km south east of Erbil and 50 km south west of Suleimaniah. It lies in a highly prospective area around 50 km south east of the giant Kirkuk oil field and on trend with the major Taq Taq and Chemchemal oil and gas discoveries. The Block itself contains a large surface anticline with the possibility of multiple reservoir targets, in common with many existing fields in the area, providing strong encouragement for exploration success.
The terms of the PSC are in accordance with the terms and conditions published by the KRG. Sterling has 100% interest in the PSC subject to back in rights for the KRG and local industry partners.
The PSC has an initial 3-year exploration period during which Sterling plans to acquire approximately 200 km of 2D seismic and drill at least one exploration well. The Company will start work immediately, having already established an office in Erbil earlier this year. It is anticipated that expenditure over this period, including initial costs, could be in the order of US$35 million.
Sterling's signature of the PSC, together with other recently signed agreements with the KRG, brings the number of international oil companies now working in Kurdistan to 25.
In an operating update published on 12 November 2007, Sterling announced that Q3 net group production averaged c. 6,100 boepd, an increase of 25% over the first half. The Company also confirmed the imminent start of drilling offshore Gabon on the 5-20 million bbls Admiral prospect in which it has a c. 28% interest, as well as continued drilling in the USA and the start of Phase 2b development work in Mauritania in early 2008.
The Placing Shares:
The Placing Shares will rank pari passu in all respects with the existing ordinary shares of 1p each and will represent 4.76% of the Company's enlarged issued share capital. Application has been made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that admission will become effective and dealings in the Placing Shares will commence on AIM on Tuesday, 20 November 2007 (”Admission”).
Following Admission the Company will have 1,648,710,585 ordinary shares of 1p each in issue.
Commenting today, Harry Wilson, Chief Executive of Sterling Energy Plc, said:
"The proceeds of this Placing will fund the initial costs on the Sangaw North exploration block, which is the latest addition to our growing portfolio of near-term drilling projects. The upside in these exploration targets, when combined with our producing US and Mauritanian assets, positions the Company well for the future."
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