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Sterling in deal with ExxonMobil and OMV

Sterling in deal with ExxonMobil and OMV
Oil and gas explorer Sterling Resources said today it is no longer looking to sell off its stake in a North Sea field after signing a deal which could be worth around £48million for some of its Romania assets.

Oil and gas explorer Sterling Resources said today it is no longer looking to sell off its stake in a North Sea field after signing a deal which could be worth around £48million for some of its Romania assets.

The firm, run out of Aberdeen and London, is to sell a 65% holding in part of its deep water offshore Romania Midia block to oil supermajor ExxonMobil’s Romanian exploration and production arm and OMV Petrom.

The deal comes after Sterling said it was looking to sell its remaining stake in the northern North Sea Cladhan field, which it discovered, as well as Romanian acreage.

This had followed delays and cost overruns on its southern North Sea Breagh gas development, operated by RWE Dea SNS.

Today, Sterling revealed the Breagh project had been delayed yet again, to next March, and would cost yet more, but that it would no longer be looking to sell its Cladhan interest.

Cladhan is now operated by Taqa Bratani, which bought a 13.5% stake in the field off Sterling earlier this year for an initial £29million, taking its holding to 40.1% and leaving Sterling with 26.4%.

Mike Azancot, Sterling’s president and chief executive, said the deal with ExxonMobil and OMV was evidence of increasing interest in offshore Romania and meant Sterling would be able to focus on prospects in shallower waters offshore Romania, where operations should be less expensive.

But he said: “We are extremely frustrated and highly disappointed in the further delay to Breagh first gas production.”

Total costs have risen to £632million, up from £623million in the last update. Original costs had been put at £485million, with first gas in July this year.

The cost increase and delays were due to factors including “late design completion, rework of certain systems and late material deliveries”, relating to the onshore terminal, the Teesside Gas Processing Plant, the need for additional rock dumping on offshore pipelines and work on onshore pipeline installation.

Mr Azancot said these issues were “a source of major concern for us” and that Sterling was doing all it could to “ameliorate unacceptable outcomes on this critical part of the project”.

However, the firm added that offshore drilling at Breagh had “again exceeded expectations”. These first three wells on the field are planned to be flow-tested in November.

The deal with Exxon and OMV, subject to government consent, could be worth around £48million – with £18.1million on completion, £18.1million conditional on gas being discovered in the block and £11.7million to be paid on first production.

In a separate but connected deal, Exxon and OMV will buy a further 20% in the same acreage from Sterling’s partner, Petro Ventures Europe.

The area to be farmed-out by Sterling contains the recent Anca and Maria prospects and is close to Exxon and OMV’s deepwater Neptun block, containing the Domino-1 gas discovery.

Sterling said the area for sale was about 11% of the total area of its Midia and Pelican concession, but did not include the Ioana-1 well, currently being drilled.

Sterling is listed in Canada and has gas assets in the UK, Romania, France and the Netherlands.

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