Sterling Resources Farms Out Stake in North Sea Block to Oilexco

Sterling Resources has signed a letter agreement with Oilexco North Sea Limited under which Oilexco proposes to acquire a 65% interest in and become the operator of Block 21/23a in the UK Central North Sea by paying 95% of the costs of a well to test an Eocene channel sand prospect on the Block. Sterling currently holds 100% interest in Block 21/23a. It will pay 5% of the well cost and retain a 35% interest.

Oilexco will endeavor to drill the well by the end of the year using Transocean's semisub, Sedco 712, which it currently has under long term contract.

Block 21/23a is one of the Blocks awarded to Sterling in the UK 22nd Licensing Round. Since the award, Sterling has acquired 3D seismic over the Block and has completed technical evaluations in conjunction with its outside consultants. The well to be drilled is within a clearly defined channel system.

The arrangement is subject to a mutually acceptable formal agreement and the approval of the UK Department of Trade and Industry.

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