E&P takes off offshore Madagascar

Offshore staff

Independent E&P company, Sterling Energy Plc, signed a farm-out deal with Exxon Mobil Corp. for the Ambilobe and Ampasindava licenses offshore Madagascar.

Sterling secured 100% interest and operatorship of the two licenses, which cover 33,947 sq km in the Ambilobe and the Majunga basins. The exploration license term for each license is eight years. A 25-year production license will be granted in the event of a commercial discovery.

Under the terms of the deal, ExxonMobil will pay for a significant exploration work program in return for 70% interest in the licenses. The agreement is subject to certain milestones being achieved with the initial ExxonMobil commitment for the first two exploration phases under the license covering technical studies and a 2D seismic survey.

Assuming a positive outcome of this initial work, which could take up to three years, ExxonMobil will finance a 3D seismic survey and drill up to two wells per license. The transaction remains subject to approval of the government of Madagascar.

The Ambilobe and Ampasindava licenses cover a large under-explored area offshore Madagascar in which all of the geological elements for a working petroleum system are believed to be present. Madagascar has seen an increase in exploration activity. Last year, ExxonMobil and Norsk Hydro farmed in to Vanco's exploration license in the Majunga basin, adjacent to Sterling's Ampasindava license.

07/20/05