Sterling has conditionally agreed to farmout an 18% interest in the Iris Marin Production Sharing Contract (PSC), offshore Gabon. Following the farmout, Sterling will retain a 32% interest in the PSC.
Sterling's interest in Iris Marin is held through two group companies. Sterling will reduce its interest in the PSC to 32% through the sale of its wholly owned subsidiary, Sterling Energy (Iris Marin) Limited, which holds an 18% interest in the PSC. As part of the conditional sale to an existing partner, Addax Petroleum Overseas Limited, Sterling has received $3.3 million in cash and will, in respect of its remaining 32% interest, be carried for well costs on an 18% interest in up to two wells on the PSC. There is a monetary cap on the carry in any second well. Sterling will seek to transfer operatorship.
The ICM-1 exploration well on the Charlie prospect on Iris Marin is due to spud in late June. This well will test a target of 20-40 million barrels of oil. Sterling's initial estimates are that an 8 million barrels find could be commercial.
"This farmout reaffirms our strategy of managing our exploration portfolio risk whilst retaining a material interest in the upside potential," said Graeme Thomson, Chief Executive of Sterling. "In essence, this deal more than covers our expected share of costs of the Charlie exploration well and, in the event of success, for over half of our costs in any subsequent well. This deal also materially improves our near-term cash flow."
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