Sterling Resources Ltd. has announced its interim operating results for the quarter ended June 30, 2008.
Sterling's activity during the second quarter focused primarily upon the commencement of our offshore drilling program, planned for the second half of 2008. Site surveys were completed, environmental approvals obtained and three offshore drilling rigs have been contractually secured. Drilling of the first of these wells has been successfully completed in offshore Romania and in mid-August the jackup rig for the offshore UK commenced operations with the East Breagh well (42/13-4) spudding early on August 18.
"Our focus during the first half of the year has been upon laying the ground work for the execution of the drilling programs in the UK North Sea and offshore Romania. With these important planning milestones completed, we are excited to be back completing appraisal and exploration drilling in and around our significant discoveries in the UK and Romania. We were pleased to announce on August 14 the successful completion of the Doina-4 well, the first of a number of wells to be drilled during the remainder of 2008," stated Stewart Gibson, Chief Executive Officer of Sterling.
Key operational achievements during the second quarter of 2008 included:
- Early in the second quarter, we contracted the ENSCO 70 jackup rig to complete our planned three well program in the UK Southern North Sea. Originally expected to commence work for Sterling in July, the rig remained with the previous operator until early August due to additional well operations. Now on contract to Sterling, the rig moved to the first well in East Breagh, of which Sterling holds a 45 percent interest, and started drilling on August 18.
- The planned infill seismic program across Blocks 42/8 and 42/9 (Sterling 60 percent interest after farm-out) was completed during the quarter and the data is currently in for processing. The survey was planned to assess the economic feasibility of additional drilling in the area immediately north of the Breagh gas discovery. The surveyed area is part of the greater Breagh area, which as previously reported, was recently farmed out to Petro Ventures International Limited.
- We participated in the recent UK Offshore 25th Licencing Round, however our level of success in obtaining additional licences will not be known until late 2008.
- During early July we announced the contracting of the Prometeu jackup rig to drill follow-up appraisal wells to the Doina and Ana (formerly Doina Sister) discoveries, of which Sterling holds a 65 percent interest after farm-out. The rig moved to the Doina-4 location in late July and we reported on August 14, 2008 the successful completion of this well to a target depth of 1,250 metres. Given the equivalent reservoir was tested in the previously drilled Doina-2 well at 17.5 million cubic feet per day, and calculations for the current well indicate similar productivity potential, the Doina-4 well has been suspended for possible re-entry as part of any future development program.
- The option to drill a second well, referred to as Ana-2, with the Prometeu rig has been exercised. Ana-2 is planned as a directional step-out well from the same seabed location as Ana-1.
- The Eleventh Amendment to the Exploration and Production Sharing Agreement, which will convert it to a tax royalty agreement, continues to move through the government approval process and is still expected to be converted before year end. In terms of the ongoing border discussions between Romania and Ukraine, we understand that the International Court will enter the next phase of the process in September of this year in order to move the issue closer to resolution.
- In the Craiova concession onshore Romania (Sterling 60 percent), plans for the drilling of three wells targeting shallow gas have been delayed, largely due to the very wet conditions at one of the planned sites. However, we still intend to have drilling commence before year end 2008.
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