By John Lee.
Shares in Sterling Energy were up more than 1% in early trading on Monday, following the publication of the company's interim management statement.
Sterling made the following statement on operations in Iraqi Kurdistan:
"The Company completed the acquisition of 117 km of 2D seismic data in the Sangaw North block in south east Kurdistan. This data, which supplements the 2D seismic data previously acquired in the contract area, is expectedto better define the potential of atarget along the flank of the main structure, analogous to the recent discoveries made in adjacent acreageto the south east of the Sangaw North PSC area. Following the interpretation of the new 2D seismic data, the joint venture partnership may elect to drill an exploration well in 2013.
"The Korean National Oil Corporation (KNOC) assigned its 20% working interest in the Sangaw North PSC to the Kurdistan Regional Government of Iraq (KRG) effective 5 August 2012. Under the terms of the assignment, from the effective date the future exploration costs associated with this 20% interest will be carried by the remaining contractor entities in proportion to their equity interests; consequently, Sterling's paying interest in the PSC has increased from 53.33% to 66.67% and Addax's has increased from 26.67% to 33.33%, while their equity interests remain unchanged at 53.33% and 26.67% respectively.
"The KRG has the option to assign the 20% interest to a third party before 31 March 2013, in which case the carried costs will be reimbursed to Sterling and Addax and their paying interests will revert to their equity share of 53.33% and 26.67% respectively. If an assignment is not completed, the KRG may retain the 20% interest and pay its share of the costs from the effective date, 5 August 2012.
"Sterling and Addax agreed to notify the KRG before 31 January 2013 whether the partnership intends to drill a further exploration well on the Sangaw North block before the end of the current exploration phase which runs to November 2013, with the option for a further one year extension in the event that further exploration and/or appraisal work is warranted. Under this agreement, if Sterling and Addax elect not to drill, then the PSC will terminate on 1 February 2013."
Angus MacAskill, Sterling's Chief Executive, said:
"The Company continues to make progress towards testing the exploration potential of the existing portfolio and enlarging that portfolio with the addition of new ventures. The completion of acquisition of 2D seismic data in Kurdistan will allow the joint venture to make an informed decision by early next year on whether to drill an exploration well in 2013, and continued progress in Madagascar supports a resumption of exploration activity in early 2013. In new ventures, our team continues to identify and evaluate potential opportunities to enhance our portfolio."