Offshore staff

HERTS, UK -- Sterling Energy Plc. has published its preliminary results for 2006, reporting that it plans to drill a record number of wells in the next 12 months. More than 35 of the wells will be in the US and at least four in Africa, the company says.

Sterling also provided an update on its Africa program, noting among other things, that its Mauritania activities fell short of expectations last year. Production did not meet target on the Chinguetti field, Sterling said. Recoverability per well was much lower than had been forecast because the complex field is more faulted and compartmentalized than the operator originally had estimated.

"The production from Chinguetti in 2006 was disappointing, but with the $145 million Whittier acquisition completed at the end of March 2007, this year has started very well. We now have a stronger financial, operational and strategic base from which to grow, and I expect a sizeable increase in production cash flow over the next year. 2007 will be our most active drilling period ever, and I look forward to seeing the upside unlocked in our assets. We plan to continue our growth both organically and through acquisition while recognizing that the competitive environment requires an innovative approach," said Harry Wilson, chief executive.

Woodside, which operates Chinguetti, is studying ways to optimize future production and reserve recovery. A 2007 seismic campaign to acquire high-resolution 3D and 4D data is complete. The data will be processed and interpreted through the year so field recovery and economics can be optimized. It is expected that three or four additional development wells will be drilled in 2008.

At neighboring Tiof, development plans have been delayed, but Sterling says it is hopeful that a field development plan will be proposed this year. The company expects the development to include a tension leg platform tied back to Chinguetti for an initial estimated 40-60 MMbbl development. First oil could be up to 50,000 b/d in 2010/11, the company says.

Sterling also provided an overview of its holdings off Madagascar, where acquisition and processing of over 4,000 km (2,485 mi) of new 2D seismic and reprocessing of 4,000 km of vintage 2D seismic took place last year. This provides a modern processed regional seismic dataset covering both blocks that will be used for prospect generation, Sterling says.

Initial interpretation of seismic data shows that both blocks contain some large structures. The current focus is to evaluate these. In the coming year or so, exploration of this frontier region is expected to enter a new phase. ExxonMobil and partners in the Majunga PSC reportedly are planning the first deepwater exploration well, subject to rig availability and other considerations, in 2008.
The company also gave updates on its acreage off Gabon, Guinea-Bissau, and Cameroon, where appraisals are underway, but where there is no additional drilling planned for the immediate future.

5/16/2007