Sterling Resources announced the commencement of an eight-well exploration and appraisal program, covering several key assets, which is anticipated to be completed by mid 2010. This drilling program includes several high impact offshore wells, with rig tenders, long lead item purchases and necessary site surveys already in hand.
"Since completion of the previous drilling campaign earlier in the year, the Company has been focused upon securing the partial sale of the Breagh field in the UK North Sea. Discussions are progressing with the Royal Bank of Scotland to secure funding for the related development program. In conjunction with the sales proceeds these funds will provide sufficient funding to continue the development and re-initiate our strategy of growth through exploration drilling during 2010. We are particularly pleased that the future exploration program continues to address the potential upside in the Greater Breagh Area," stated Stewart Gibson, Sterling's Chief Executive Officer. "With the Breagh transaction now closed and given that the Company's two main offshore development projects in the United Kingdom and Romania will be operated by two established operating companies, the team at Sterling is focusing on adding value to the remainder of our extensive prospect portfolio by applying the drill bit and searching out new prospects," added Mr. Gibson.
The first well of a three well program is expected to spud in mid-November on the Craiova EIII-7 concession in onshore Romania. The commencement of this program follows the approval by the Romanian National Agency for Mineral Resources (ANRM) of the assignment of the 50% working interest from Midia Resources SRL (a wholly owned Romanian subsidiary of Sterling Resources Ltd.) to the TransAtlantic Romanian subsidiary (TransAtlantic Worldwide Romania SRL) and the procurement of all local and Government permits and certificates. As previously announced, TransAtlantic will be fully responsible for the cost of these three wells in order for them to earn the 50% interest. These wells are designed to establish the presence of shallow gas and favourable reservoir characteristics in multiple prospects within the expansive Neogene play. This play has been recognized by both Sterling and TransAtlantic as potentially prolific. Should these wells be successful in de-risking the play, there would be significant upside already identified in further prospects and leads on the block. Sterling will retain a 50% working interest following the three well carried work program.
In addition to this onshore drilling activity in Romania, planning is underway to drill an offshore exploration well during 2010. Several prospects have been identified on the Midia and Pelican Blocks with the current focus on a well on the Ioana prospect (formerly named Midia SE), which is located just to the south and east of the established gas bearing Doina trend.
Two wells are currently planned for the Greater Breagh Area in Quad 42 of the Southern North Sea in which Sterling holds a 30% interest. With drilling anticipated to start early in the second quarter of 2010, the Airidh and Macanta wells located to the south and east of the Breagh field respectively, will target the first potential satellite tiebacks to the developing Breagh infrastructure.
In the Southern North Sea the Grian prospect in Quad 48 is also planned for drilling in 2010 in order to evaluate a Rotliegendes prospect located just to the west of the Hewett gas field. Sterling will operate the well which will be drilled to secure this prospect that was obtained in the 24th Round Licensing process. Prior to drilling, a partial farm down of Sterling's 40% working interest may be considered.
A follow up well to the Cladhan discovery in the Northern North Sea (announced November 17, 2008) is also planned for early in the second quarter of 2010. This new well is designed to provide additional information regarding the potential significant upside around the exciting discovery well which did not establish the full extent of the oil reservoir. The Cladhan program may involve an additional sidetrack and testing, with such decision to be taken following evaluation of the data from the new well. Sterling operates Cladhan with a 39.9% working interest.
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