Sterling farms out interest offshore UK

Offshore staff

UK's Sterling Resources signed a letter agreement with Lundin Petroleum AB subsidiary Lundin Heather Ltd., under which Lundin will acquire 40% interest in blocks 210/25b, 210/29, and 210/30 in the UK North Sea. Sterling holds 60% interest in the blocks until the transaction is final.

Lundin will earn its interest by paying 61.54% of the first £10-million dry hole costs of a well to test an Upper Jurassic play on the blocks. Partners will pay costs in excess of this amount according to their working interests. Upon conclusion of the farm-in, Lundin will operate the blocks.

Lundin operates the nearby Heather oilfield and platform, and brings a facility to the joint venture through which a discovery could be produced.

Sterling plans to farm out an additional 10-12.5% interest prior to drilling and is now in discussions with interested parties.

The agreement is subject to the approval of the UK Department of Trade and Industry, a formal agreement, and certain other conditions.

05/16/05