October 27, 2004: Sterling Energy plc, the AIM-quoted oil and gas company, has secured a
position as a strategic partner of the Mauritanian government. It has reached a conditional
agreement to share in the revenues from the government's 12% interest in the 120 million
barrel Chinguetti offshore oil field.
Sterling Chief Executive, Harry Wilson said: “This represents a stunning deal for Sterling,
and establishes us as a key player in Mauritania, now recognised as one of the global
hotspots for oil exploration and development activity. It cements our close relationship with
the Mauritanian Government going forward as we have been confirmed as a strategic
partner of the Government to help it develop its additional oil and gas assets.”
Chinguetti, due on stream in early 2006, and operated by Woodside, is expected initially to
produce 75,000 barrels of oil per day.
Sterling is paying a $15.5 million signature bonus, and providing a letter of credit for $130
million to cover the Government’s share of past costs, forward development costs and
contingencies. In return, Sterling will receive income from a sliding scale share of the field’s
Sterling is seeking to raise £97 million (US$ 175 million) to fund the deal and supplement its
cash balances, through an institutional placing. A shareholders’ meeting has been
convened for 18 November.
Sterling is already involved in Mauritania as a result of its successful £40 million take-over
last December of Fusion Oil & Gas plc. That gave Sterling production royalty interests in
offshore licence areas PSC A and PSC B – with no future capital costs paid by Sterling.
A 20-well programme is currently under way in PSC A and B, which includes development
drilling on Chinguetti, appraisal of the 2003 Tiof discovery, and a five well exploration
programme, the first well of which resulted in the Tevet discovery last month.