Sterling acquires Mauritania interest

Image: map of Mauritania block C-10/Sterling Energy

Sterling Energy has announced that completion has now occurred under the sale and purchase agreement between its wholly owned subsidiary, Sterling Energy Mauritania Ltd. (SEML) and Tullow Mauritania to acquire a 13.5% working interest in the production sharing contract for Block C-10, located offshore in the Islamic Republic of Mauritania (PSC).

The holders of the PSC are now: the operator Tullow (76.5%), SEML (13.5%), and 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 10,725sq km. 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 50-2400m with full legacy 3D seismic coverage. Tullow has matured a drill ready Neocomian carbonate prospect in water depth of approximately 100m. 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 US$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 $7.5m ($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 MMbbl) 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.