Sterling Energy plc, the AIM listed upstream oil and gas company with interests in Africa, has reported that completion has now occurred under the sale and purchase agreement between its wholly owned subsidiary, Sterling Energy Mauritania Ltd (SEML) and Tullow Mauritania Ltd (Tullow) to acquire a 13.5% working interest in the production sharing contract for Block C-10. The block is located offshore in the Islamic Republic of Mauritania (The PSC).
The holders of the PSC are now:
- Tullow (Operator) 76.5%
- SEML 13.5%
- Société Mauritanienne des Hydrocarbures et de Patrimoine Minier (SMHPM) 10%
The PSC, awarded in 2011, is in the second phase of the exploration period (Phase 2) and covers Block C-10, offshore Mauritania, comprising an area of approximately 10 725 km2. Phase 2 of the PSC is due to expire on 30 November 2017 and has a minimum work obligation of 1 exploration well.
Block C-10 lies in water depths of 50 m to 2400 m with full legacy 3D seismic coverage. Tullow has matured a drill ready Neocomian carbonate prospect in water depth of approximately 100 m. The joint venture anticipates that an exploration well to test this prospect will be drilled in 2017. The gross cost of the well is likely to be substantially less than the $77 million ($11.55 million net to SEML) initially budgeted, given market conditions. Should the joint venture not fulfil the minimum work obligation, the joint venture’s gross liability to the Government would be $7.5 million ($1.125 million net to SEML).
Following the completion of Phase 2, the joint venture may elect to enter into Phase 3 (with a 3 year term) with a minimum work obligation of 2 wells. SEML and Tullow will carry SMHPM’s 10% interest proportionally during the exploration period of the PSC.
The block is within a proven petroleum basin and offers exposure to multiple play-types from the under-explored Jurassic and lower Cretaceous carbonates to Cretaceous and Tertiary clastic plays.
Block C-10, along with the recently completed entry to Block C-3, provides SEML entry to a multi-play exploration setting on an emerging shelf margin; the latter recently highlighted by the SNE-1 well (P50 of 330 million bbls) discovered by Cairn Energy to the south in Senegal. Exploration success has continued in the basin with the April 2015 Tortue-1 deep water gas discovery (P50 of 8TCF) announced by Kosmos Energy in block C-8, offshore Mauritania.
Eskil Jersing, the Company’s Chief Executive Officer, stated: “We are pleased to have the opportunity to partner with Tullow and SMHPM in the C-10 block in addition to the recent C-3 entry. As a result of recent play opening discoveries, this part of the West African margin has rapidly become an exciting new oil and gas province. The Company looks forward to de-risking the remaining potential on block, including the deeper shelf carbonate play, leading to an exploration well with Tullow in early 2017.”
Edited from press release by Angharad Lock