27th Feb 2006 07:03
Sterling Energy PLC27 February 2006 27 February 2006 STERLING ENERGY PLC ("Sterling" or 'the Company") FIRST OIL FROM CHINGUETTI FIELD OFFSHORE MAURITANIA Sterling Energy, the AIM listed (symbol: SEY) independent oil & gas explorationand production company, today announces that crude oil production has begun fromthe Chinguetti oilfield, in PSC B offshore Mauritania. This has been achieved inline with the production schedule issued by Sterling and its partners. The Chinguetti development consists of 6 production wells tied in to the BergeHelene Floating Production Storage and Offtake (FPSO) vessel. Production isexpected to rise to a plateau of 75,000 bopd in 2Q 2006. The field hasestimated proven and probable reserve of 140mmbo. The original discovery wasmade in 2001; since then, the partners have invested in the region of £400million in the successful development of the field. Sterling has two economic interests in the Chinguetti development. The first isthrough the Funding Agreement with the Mauritanian Government, signed inNovember 2004, which enabled the Government to directly participate in theChinguetti development through the recently renamed Societe Mauritanienne desHydrocarbures (SMH). In return for funding the 12% SMH share, Sterling willgain an approximate 8% economic interest in the field's gross production.Sterling is proud to have worked closely with SMH to develop Mauritania's firstoil field. The second interest is through a farm-in agreement signed with Premier Oil PLCin 2003 covering PSC A and PSC B, under which each net attributable barrel ofChinguetti produced, equivalent to 5.28% of the field's production, is subjectto a sliding scale royalty at a rate linked to the realised oil price. At anoil price in the band $58 - $61, the royalty payment would currently be around$7.25 per barrel. Sterling anticipates development announcements to be made in the next 6 monthson the Tevet and Oualata (Tiof) discoveries in PSC B, and exploration drillingcontinues in both PSC B and PSC A, in which Sterling has royalty rights anddiscovery bonus entitlements. Sterling expects to announce its preliminary results for the year ended 31December 2005 in late April, 2006. Harry Wilson, Chief Executive of Sterling Energy Plc, said: "We are delighted by the news that Chinguetti has produced its first oil andwithin the time schedule outlined last year. This outcome endorses Sterling'sinnovative Funding Agreement with the Mauritanian Government signed in November2004, which could pave the way for similar agreements in the future. Thesubstantial increase in our cash flow that will now follow from the start ofproduction in Chinguetti offers us many opportunities to invest in significantnew oil & gas projects." Enquiries Sterling Energy (01582 462 121) Web site: www.sterlingenergyplc.comHarry WilsonGraeme Thomson Citigate Dewe Rogerson (020 7638 9571)Media enquiries: Martin Jackson / George CazenoveAnalyst enquiries: Nina Soon This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SEY.L