Sterling Energy Plc, the AIM listed independent oil & gas exploration and production company, is pleased to announce that its wholly owned subsidiary, Sterling Energy (East Africa) Limited (Sterling), has signed a Farmout Agreement for the Production Sharing Contract of the Odewayne Block (the “PSC”), located onshore in the Republic of Somaliland, with Petrosoma Limited (Petrosoma).
The current holders of the PSC are:
• Genel Energy Somaliland Limited (Operator) 50%
• Petrosoma Limited 20%
• Jacka Resources Somaliland Limited 30%
Under the terms of the Farmout Agreement, Sterling will on completion:
a) assume a 10% interest in the PSC from Petrosoma;
b) pay Petrosoma US$2 million with future conditional payments of $8m based on various operational milestones being met; and
c) be carried by Genel for the costs of all exploration activities during
i. the Third Period of the PSC (expiring November 2014) with an outstanding minimum work obligation of 500 km of 2D seismic; and
ii. the Fourth Period of the PSC (expiring May 2016) with a minimum work obligation of 1,000 km of 2D seismic and one exploration well
The PSC, awarded in 2005, is in the Third Period and covers block SL6 and part of blocks SL7 and SL10, onshore Somaliland, comprising an area of 22,840 square kilometres. During 2013, an aeromagnetic and gravity survey confirmed the geometry of a broad basin over the Odewayne block believed to be of Jurassic to Cretaceous origin, analogous to productive basins in Yemen. Fieldwork in the block has highlighted the presence of numerous seeps giving encouragement that a working hydrocarbon system is present in this undrilled basin. The forward work programme includes acquisition of an extensive 2D seismic programme in 2014 to define drillable targets. Completion of the transaction remains subject to approval by the Government of Somaliland.
Genel Energy Somaliland Limited (Operator) is a subsidiary of Genel Energy Plc, Jacka Resources Somaliland Limited is a subsidiary of Jacka Resources Limited and Petrosoma Limited is a privately owned company.
Sterling Energy Plc.’s Chairman, Alastair Beardsall, said:
“We are very pleased to have entered into a Farmout Agreement for the Odewayne Block in Somaliland; by purchasing a 10% carried interest our financial exposure during the Third and Fourth Periods is limited to the immediate and deferred consideration. We consider the Odewayne Block to be highly prospective and look forward to working with our joint venture partners in the exploration of this largely unexplored block.”
Background on Somaliland
Somaliland is situated in the Horn of Africa and was, until 1960, a protectorate of the United Kingdom. After gaining independence in June 1960, the State of Somaliland united with the Trust Territory of Somalia, formerly a colony of Italy, to form the Republic of Somalia. The government of the Republic of Somalia was ousted in a coup in 1969 and replaced by a military government which was itself forced from power by a coalition of armed opposition groups in the early 1990’s, leading to civil war.
The local government in Somaliland declared independence from the Republic of Somalia in May 1991 and has, since then, developed the institutions and structures of democratic government. The government of Somaliland is headed by the Executive Branch, which consists of a directly-elected President, a Vice President, and a Cabinet nominated by the President and approved by Parliament. The Parliament of Somaliland is the legislative branch of government and consists of two houses, the House of Elders and the House of Representatives, each with 82 members.
Although not officially recognised as an independent country, Somaliland maintains political contacts with its neighbours Ethiopia and Djibouti, and a number of international countries, including the United Kingdom.
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