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Sterling Energy - Farm-out boosts exploration upside

May 2005

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • SEY
  • Price:
  • 17.25p
Sterling has just signed a "farm-out" deal to bring in Malaysian oil & gas firm, Markmore Energy, as a partner in its Dome Flore offshore licence, which covers a block in West Africa, offshore Senegal and Guinea Bissau. Markmore will be given a 55% stake as well as the operatorship of the licence, with Sterling retaining a 30% interest. In return, Markmore has agreed to pay Sterling for the following costs: previous work done on the licence, a new feasibility study and Sterling's costs of an exploration well in 2006/7, plus a bonus if a discovery is made. This "farm-out" effectively brings this large 800m barrel prospect into play in a block where some of the previous wells have found oil. ...

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